Question 1

A scattergraph is a simple graph that shows

Accepted Answer

A) Total costs in relation to volume. 
B) The fixed portion of a total cost. 
C) The variable portion of a total cost. 
D) The point where revenue equals total costs. 
A) Total costs in relation to volume. 
B) The fixed portion of a total cost. 
C) The variable portion of a total cost. 
D) The point where revenue equals total costs. A

Question 2

To estimate total cost using the high-low method,identify the highest and lowest level of activity and compute the slope of the line.

Accepted Answer

A) True 
 B)False  True

Question 3

The contribution margin ratio can be used to

Accepted Answer

A) Determine the increase in profits from a given dollar increase in sales revenue. 
B) Determine the impact of fixed costs on contribution margin. 
C) Both to determine the increase in profits from a given dollar increase in sales revenue and to determine the impact of fixed costs on contribution margin. 
D) Neither to determine the increase in profits from a given dollar increase in sales revenue nor to determine the impact of fixed costs on contribution margin. 
A) Determine the increase in profits from a given dollar increase in sales revenue. 
B) Determine the impact of fixed costs on contribution margin. 
C) Both to determine the increase in profits from a given dollar increase in sales revenue and to determine the impact of fixed costs on contribution margin. 
D) Neither to determine the increase in profits from a given dollar increase in sales revenue nor to determine the impact of fixed costs on contribution margin. A

Question 4

If activity level decreases, what happens to the unit variable cost?

Accepted Answer

A) It remains the same. 
B) It decreases. 
C) It increases. 
D) It depends on how much the activity level increases. 
A) It remains the same. 
B) It decreases. 
C) It increases. 
D) It depends on how much the activity level increases.

Question 5

Which of the following is not an example of a variable cost for a manufacturer of bicycles?

Accepted Answer

A) Number of tires. 
B) Gallons of paint. 
C) Wages for factory workers. 
D) President of the company's salary. 
A) Number of tires. 
B) Gallons of paint. 
C) Wages for factory workers. 
D) President of the company's salary.

Question 6

A discretionary fixed cost

Accepted Answer

A) Remains the same per unit regardless of the level of activity. 
B) Increases as the level of activity increases. 
C) Can be changed in the short run. 
D) Can be changed over the long run. 
A) Remains the same per unit regardless of the level of activity. 
B) Increases as the level of activity increases. 
C) Can be changed in the short run. 
D) Can be changed over the long run.

Question 7

On a scattergraph,once the individual points have been plotted,

Accepted Answer

A) Enter the information into a statistical calculator to calculate the total cost. 
B) Count the points and divide by variable cost per unit. 
C) Draw a line through them to estimate the cost relationship. 
D) Multiply the high point by the variable cost per unit to calculate the total cost. 
A) Enter the information into a statistical calculator to calculate the total cost. 
B) Count the points and divide by variable cost per unit. 
C) Draw a line through them to estimate the cost relationship. 
D) Multiply the high point by the variable cost per unit to calculate the total cost.

Question 8

A committed fixed cost is one that cannot be changed over the short run.

Accepted Answer

A) True 
 B)False

Question 9

Companies should reduce fixed costs whenever possible during times of falling profits.

Accepted Answer

A) True 
 B)False

Question 10

Discretionary fixed costs are fixed costs that cannot be changed over the short run.

Accepted Answer

A) True 
 B)False

Question 11

There are four common cost behavior patterns that serve as the foundation for cost-volume-profit analysis.
a.Explain the term cost behavior.
b.List the four common cost behavior patterns that serve as the foundation for cost-volume-profit analysis and give an example of each type of cost classified by behavior.
c.Explain the relationship between level of activity and each of the four types of cost behavior.

Accepted Answer

a.Cost behavior refers to the way in whi

Question 12

A statistical technique that identifies the line of best fit for the points plotted in a scattergraph is called

Accepted Answer

A) Regression analysis 
B) Break-even analysis 
C) High-low method 
D) ERP 
A) Regression analysis 
B) Break-even analysis 
C) High-low method 
D) ERP

Question 13

Dana owns her own real estate agency.She has been working hard to increase her client base.She offers the most comprehensive advertising campaign in the city and it has been paying off by the steady increase in the number of listings over the last several months.However,Dana is concerned that her extensive cost for advertising is eating into her profits.It is difficult to determine how much she spends on advertising for each listing because some of her advertising sources are fixed amounts each month and others are more variable in nature.She would like to analyze the following information to determine how her advertising costs behave based on the number of listings.   Using the high-low method,what is Dana's variable cost per listing for advertising?

Accepted Answer

A) $610 
B) $593 
C) $612 
D) $598 
A) $610 
B) $593 
C) $612 
D) $598

Question 14

Restate the following income statement in contribution format.

Accepted Answer

The answer of Restate the following income statement in contribution...

Question 15

An advantage of using regression analysis over the high-low and scattergraph methods is that

Accepted Answer

A) Regression analysis is less costly to implement than high-low or scattergraph methods. 
B) Regression analysis is a more precise approach than the high-low or scattergraph methods. 
C) Both A and B are advantages of using regression analysis. 
D) Neither A nor B are advantages of using regression analysis. 
A) Regression analysis is less costly to implement than high-low or scattergraph methods. 
B) Regression analysis is a more precise approach than the high-low or scattergraph methods. 
C) Both A and B are advantages of using regression analysis. 
D) Neither A nor B are advantages of using regression analysis.

Question 16

Complete each of the following contribution format income statements by supplying the missing numbers.

Accepted Answer

The answer of Complete each of the following contribution format...

Question 17

King Comics is a wholesaler of popular comic books.The company's records indicate the following financial results:
   Using the high-low method,what is the company's estimated variable and fixed component of operating expenses?

Accepted Answer

$23,500 - $20,000 ÷ 50,000 – 4

Question 18

An example of a discretionary fixed cost is

Accepted Answer

A) Research and development costs. 
B) Lease on warehouse space. 
C) Sales commissions. 
D) All of these ans choices are correct. 
A) Research and development costs. 
B) Lease on warehouse space. 
C) Sales commissions. 
D) All of these ans choices are correct.

Question 19

On a scattergraph,you must "fit" a line to the plotted points.Once the line is drawn,

Accepted Answer

A) Calculate the fixed and variable costs using basic algebra. 
B) You must use a statistical technique to identify the fixed and variable costs. 
C) You must choose more than one point to calculate the fixed and variable costs. 
D) Use regression analysis to calculate the fixed and variable components of the total cost. 
A) Calculate the fixed and variable costs using basic algebra. 
B) You must use a statistical technique to identify the fixed and variable costs. 
C) You must choose more than one point to calculate the fixed and variable costs. 
D) Use regression analysis to calculate the fixed and variable components of the total cost.

Question 20

If activity level decreases, what happens to the unit fixed cost?

Accepted Answer

A) It decreases. 
B) It increases. 
C) It remains the same. 
D) It depends on how much the activity level increases. 
A) It decreases. 
B) It increases. 
C) It remains the same. 
D) It depends on how much the activity level increases.

A scattergraph is a simple graph that shows

To estimate total cost using the high-low method,identify the highest and lowest level of activity and compute the slope of the line.

The contribution margin ratio can be used to

If activity level decreases, what happens to the unit variable cost?

Which of the following is not an example of a variable cost for a manufacturer of bicycles?

A discretionary fixed cost

On a scattergraph,once the individual points have been plotted,

A committed fixed cost is one that cannot be changed over the short run.

Companies should reduce fixed costs whenever possible during times of falling profits.

Discretionary fixed costs are fixed costs that cannot be changed over the short run.

A statistical technique that identifies the line of best fit for the points plotted in a scattergraph is called

Restate the following income statement in contribution format.

An advantage of using regression analysis over the high-low and scattergraph methods is that

Complete each of the following contribution format income statements by supplying the missing numbers.

King Comics is a wholesaler of popular comic books.The company's records indicate the following financial results: Using the high-low method,what is the company's estimated variable and fixed component of operating expenses?

An example of a discretionary fixed cost is

On a scattergraph,you must "fit" a line to the plotted points.Once the line is drawn,

If activity level decreases, what happens to the unit fixed cost?

Accounting As a Tool for Management

Cost-Volume-Profit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting

Performance Evaluation: Variance Analysis

Activity-Based Costing and Activity Based Management

Using Accounting Information to Make Managerial Decisions

Capital Budgeting

Decentralizing and Performance Evaluation

Performance Evaluation Revisited: a Balanced Approach

Financial Statement Analysis

Statement of Cash Flows

Topic Focus: Process Costing

Topic Focus Variable and Absorption Costing

Topic Focus Standard Costing Systems

Topic Focus Customer Profitability

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Exam 2: Cost Behavior and Cost Estimation Summary of Questions by Objectives and Blooms Taxonomy

A scattergraph is a simple graph that shows

To estimate total cost using the high-low method,identify the highest and lowest level of activity and compute the slope of the line.

The contribution margin ratio can be used to

If activity level decreases, what happens to the unit variable cost?

Which of the following is not an example of a variable cost for a manufacturer of bicycles?

A discretionary fixed cost

On a scattergraph,once the individual points have been plotted,

A committed fixed cost is one that cannot be changed over the short run.

Companies should reduce fixed costs whenever possible during times of falling profits.

Discretionary fixed costs are fixed costs that cannot be changed over the short run.

A statistical technique that identifies the line of best fit for the points plotted in a scattergraph is called

Restate the following income statement in contribution format.

An advantage of using regression analysis over the high-low and scattergraph methods is that

Complete each of the following contribution format income statements by supplying the missing numbers.

King Comics is a wholesaler of popular comic books.The company's records indicate the following financial results: Using the high-low method,what is the company's estimated variable and fixed component of operating expenses?

An example of a discretionary fixed cost is

On a scattergraph,you must "fit" a line to the plotted points.Once the line is drawn,

If activity level decreases, what happens to the unit fixed cost?

Accounting As a Tool for Management

Cost-Volume-Profit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting

Performance Evaluation: Variance Analysis

Activity-Based Costing and Activity Based Management

Using Accounting Information to Make Managerial Decisions

Capital Budgeting

Decentralizing and Performance Evaluation

Performance Evaluation Revisited: a Balanced Approach

Financial Statement Analysis

Statement of Cash Flows

Topic Focus: Process Costing

Topic Focus Variable and Absorption Costing

Topic Focus Standard Costing Systems

Topic Focus Customer Profitability

Filters