Question 1

The use of either absorption or variable costing will make little difference in companies:

Accepted Answer

A) with large inventories. 
B) using just-in-time inventory methods. 
C) with high fixed costs. 
D) with high variable costs. 
A) with large inventories. 
B) using just-in-time inventory methods. 
C) with high fixed costs. 
D) with high variable costs.

Question 2

A manager can increase income under absorption costing by increasing:

Accepted Answer

A) variable costs. 
B) production. 
C) fixed costs. 
D) leased assets. 
A) variable costs. 
B) production. 
C) fixed costs. 
D) leased assets.

Question 3

Which of the following costs is an example of a fixed cost?

Accepted Answer

A) Salary of plant manager 
B) Sales commissions 
C) Direct materials 
D) Delivery costs 
A) Salary of plant manager 
B) Sales commissions 
C) Direct materials 
D) Delivery costs

Question 4

Which of the following statements describes variable costs?

Accepted Answer

A) They are fixed per unit and vary in total. 
B) They are fixed in total. 
C) They vary per unit of output. 
D) They decrease per unit as production volume increases. 
A) They are fixed per unit and vary in total. 
B) They are fixed in total. 
C) They vary per unit of output. 
D) They decrease per unit as production volume increases.

Question 5

Ricco was reviewing the water bill for his carwash business and determined that the highest bill,$6,000,occurred in July when 2,000 cars were washed.The lowest bill,$4,500,occurred in February when 1,000 cars were washed.What was the variable cost per carwash?

Accepted Answer

A) $3.00 
B) $1.50 
C) $0.67 
D) $4.50 
A) $3.00 
B) $1.50 
C) $0.67 
D) $4.50

Question 6

What are scatter plots useful for?

Accepted Answer

A) Identifying potential outliers 
B) Determining the overall strength of the relationship between historical cost and volume 
C) Neither of the above 
D) Both of the above 
A) Identifying potential outliers 
B) Determining the overall strength of the relationship between historical cost and volume 
C) Neither of the above 
D) Both of the above

Question 7

Fresno Home Oil Services wants to determine a fuel surcharge to add to its customers' bills based on the number of miles driven to each area.It wants to separate the fixed and variable portion of the truck's operating costs so it has a better idea of how distance affects these costs.Fresno Home Oil Services has the following data available. $$\begin{array} { | l | c | c | } 
\hline \text { Month } & \text { Miles driven } & \text { Total operating costs } \
\hline \text { January } & 15,900 & \$ 9,000 \
\hline \text { February } & 17,300 & \$ 9,860 \
\hline \text { March } & 14,500 & \$ 8,600 \
\hline \text { April } & 16,100 & \$ 8,800 \
\hline \text { May } & 17,100 & \$ 8,600 \
\hline \text { June } & 15,500 & \$ 8,100 \
\hline
\end{array}$$ Fresno Home Oil Services uses the high-low method to determine its operating cost equation and earns $0.50 per mile for 18,000 miles.
-What would its operating income (loss)be for a month if Fresno Home Oil Services prepared a contribution margin income statement for the month?

Accepted Answer

A) $ 900 
B) ( $1,175) 
C) $ 8,100 
D) $ 9,000 
A) $ 900 
B) ( $1,175) 
C) $ 8,100 
D) $ 9,000

Question 8

The variable cost per unit of activity increases as activity increases.

Accepted Answer

A) True 
 B)False

Question 9

Fresno Home Oil Services wants to determine a fuel surcharge to add to its customers' bills based on the number of miles driven to each area.It wants to separate the fixed and variable portion of the truck's operating costs so it has a better idea of how distance affects these costs.Fresno Home Oil Services has the following data available. $$\begin{array} { | l | c | c | } 
\hline \text { Month } & \text { Miles driven } & \text { Total operating costs } \
\hline \text { January } & 15,900 & \$ 9,000 \
\hline \text { February } & 17,300 & \$ 9,860 \
\hline \text { March } & 14,500 & \$ 8,600 \
\hline \text { April } & 16,100 & \$ 8,800 \
\hline \text { May } & 17,100 & \$ 8,600 \
\hline \text { June } & 15,500 & \$ 8,100 \
\hline
\end{array}$$ Fresno Home Oil Services uses the high-low method to determine its operating cost equation and earns $0.50 per mile for 18,000 miles
-What would its operating income (loss)be for a month if Fresno Home Oil Services prepared a traditional income statement for a month?

Accepted Answer

A) $ 9,000 
B) $ 900 
C) $ 8,100 
D) ($1,175) 
A) $ 9,000 
B) $ 900 
C) $ 8,100 
D) ($1,175)

Question 10

The data points with the__________ and the __________ should be selected for use in the high-low method.

Accepted Answer

A) highest volume; the lowest volume 
B) highest cost; the lowest cost 
C) highest volume; the lowest cost 
D) highest cost; the lowest volume 
A) highest volume; the lowest volume 
B) highest cost; the lowest cost 
C) highest volume; the lowest cost 
D) highest cost; the lowest volume

Question 11

Under variable costing,variable manufacturing costs are treated as inventoriable product costs.

Accepted Answer

A) True 
 B)False

Question 12

Pedro Company has total fixed costs of $480,000.Total fixed and variable costs are $600,000 at a production level of 125,000 units.The fixed cost per unit at a production level of 300,000 units is:

Accepted Answer

A) $4.00. 
B) $3.20. 
C) $2.00. 
D) $1.60. 
A) $4.00. 
B) $3.20. 
C) $2.00. 
D) $1.60.

Question 13

Feathered Nests produces decorative birdhouses.The company's average cost per unit is $20.00 when it produces 2,000 birdhouses.If $4,800 of the costs are fixed,and the plant manager uses the cost equation to predict total costs,his forecast for 2,200 birdhouses will be:

Accepted Answer

A) $ 4,000. 
B) $40,000. 
C) $43,520. 
D) $44,000. 
A) $ 4,000. 
B) $40,000. 
C) $43,520. 
D) $44,000.

Question 14

Harbor Manufacturing is trying to predict the cost associated with producing its anchors.At a production level of 4,000 anchors,Harbor Manufacturing's average cost per anchor is $50.00.If $20,000 of the costs are fixed,and the plant manager uses the average cost per unit to predict total costs,her forecast for 5,000 anchors will be:

Accepted Answer

A) $250,000. 
B) $245,000. 
C) $200,000. 
D) $ 50,000. 
A) $250,000. 
B) $245,000. 
C) $200,000. 
D) $ 50,000.

Question 15

When using the high-low method,fixed costs and variable costs appear in the same cost equation.

Accepted Answer

A) True 
 B)False

Question 16

Toby's Farm Store buys portable generators for $500 and sells them for $800.He pays a sales commission of 5% of sales revenue to his sales staff.Toby pays $2,000 a month rent for his store,and also pays $1,800 a month to his staff in addition to the commissions.Toby sold 200 generators in June.
- If Toby prepares a traditional income statement for the month of June,what would be his operating income?

Accepted Answer

A) $ 72,000 
B) $ 48,200 
C) $ 60,000 
D) $160,000 
A) $ 72,000 
B) $ 48,200 
C) $ 60,000 
D) $160,000

Question 17

Suzy's Cool Treatz is a snow cone stand near the local park.To plan for the future,the owner wants to determine her cost behavior patterns.She has the following information available about her operating costs and the number of snow cones served. $$\begin{array} { | l | c | c | } 
\hline \text { Month } & \text { Number of snow cones } & \text { Total operating costs } \
\hline \text { January } & 3,500 & \$ 5,000 \
\hline \text { February } & 3,800 & \$ 4,800 \
\hline \text { March } & 5,000 & \$ 6,800 \
\hline \text { April } & 3,600 & \$ 5,450 \
\hline \text { May } & 4,700 & \$ 6,200 \
\hline \text { June } & 4,250 & \$ 5,950 \
\hline
\end{array}$$ Suzy uses the high-low method to determine her operating cost equation and sells 4,500 cones in a month for $3.00 each.
-What would her operating income be if she prepared a contribution margin income statement for a month?

Accepted Answer

A) $ 8,100 
B) $ 7,300 
C) $13,500 
D) $ 5,400 
A) $ 8,100 
B) $ 7,300 
C) $13,500 
D) $ 5,400

Question 18

When using the high-low method,the "low" point should be chosen as the data point with the lowest cost (not the lowest volume).

Accepted Answer

A) True 
 B)False

Question 19

For most businesses,annual straight line depreciation expense on the company's building is what type of cost?

Accepted Answer

A) Variable 
B) Fixed 
C) Mixed 
D) Step 
A) Variable 
B) Fixed 
C) Mixed 
D) Step

Question 20

In a regression output,the "X variable 1 coefficient" represents the fixed cost component of a mixed cost equation.

Accepted Answer

A) True 
 B)False

The use of either absorption or variable costing will make little difference in companies:

A manager can increase income under absorption costing by increasing:

Which of the following costs is an example of a fixed cost?

Which of the following statements describes variable costs?

Ricco was reviewing the water bill for his carwash business and determined that the highest bill,$6,000,occurred in July when 2,000 cars were washed.The lowest bill,$4,500,occurred in February when 1,000 cars were washed.What was the variable cost per carwash?

What are scatter plots useful for?

The variable cost per unit of activity increases as activity increases.

The data points with the and the should be selected for use in the high-low method.

Under variable costing,variable manufacturing costs are treated as inventoriable product costs.

Pedro Company has total fixed costs of $480,000.Total fixed and variable costs are $600,000 at a production level of 125,000 units.The fixed cost per unit at a production level of 300,000 units is:

Feathered Nests produces decorative birdhouses.The company's average cost per unit is $20.00 when it produces 2,000 birdhouses.If $4,800 of the costs are fixed,and the plant manager uses the cost equation to predict total costs,his forecast for 2,200 birdhouses will be:

When using the high-low method,fixed costs and variable costs appear in the same cost equation.

When using the high-low method,the "low" point should be chosen as the data point with the lowest cost (not the lowest volume).

For most businesses,annual straight line depreciation expense on the company's building is what type of cost?

In a regression output,the "X variable 1 coefficient" represents the fixed cost component of a mixed cost equation.

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, lean Production, and the Costs of Quality

Process Costing

Cost-Volume-Profit Analysis

Short Term Business Decisions

The Master Budget and Responsibility Accounting

Flexible Budgets and Standard Costs

Performance Evaluation and the Balanced Scorecard

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 6: Cost Behavior

The use of either absorption or variable costing will make little difference in companies:

A manager can increase income under absorption costing by increasing:

Which of the following costs is an example of a fixed cost?

Which of the following statements describes variable costs?

Ricco was reviewing the water bill for his carwash business and determined that the highest bill,$6,000,occurred in July when 2,000 cars were washed.The lowest bill,$4,500,occurred in February when 1,000 cars were washed.What was the variable cost per carwash?

What are scatter plots useful for?

The variable cost per unit of activity increases as activity increases.

The data points with the__________ and the __________ should be selected for use in the high-low method.

Under variable costing,variable manufacturing costs are treated as inventoriable product costs.

Pedro Company has total fixed costs of $480,000.Total fixed and variable costs are $600,000 at a production level of 125,000 units.The fixed cost per unit at a production level of 300,000 units is:

Feathered Nests produces decorative birdhouses.The company's average cost per unit is $20.00 when it produces 2,000 birdhouses.If $4,800 of the costs are fixed,and the plant manager uses the cost equation to predict total costs,his forecast for 2,200 birdhouses will be:

When using the high-low method,fixed costs and variable costs appear in the same cost equation.

When using the high-low method,the "low" point should be chosen as the data point with the lowest cost (not the lowest volume).

For most businesses,annual straight line depreciation expense on the company's building is what type of cost?

In a regression output,the "X variable 1 coefficient" represents the fixed cost component of a mixed cost equation.

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, lean Production, and the Costs of Quality

Process Costing

Cost-Volume-Profit Analysis

Short Term Business Decisions

The Master Budget and Responsibility Accounting

Flexible Budgets and Standard Costs

Performance Evaluation and the Balanced Scorecard

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Filters

The data points with the and the should be selected for use in the high-low method.