Question 1

A driver is a factor that causes or leads to a change in a cost.

Accepted Answer

A) True 
 B)False

Question 2

Select the appropriate item for each of the definitions listed below.
-The range of output over which the assumed cost relationship is valid

Accepted Answer

A) Relevant range 
B) Cost behaviour 
C) Driver 
D) Variable cost 
E) Fixed cost 
A) Relevant range 
B) Cost behaviour 
C) Driver 
D) Variable cost 
E) Fixed cost

Question 3

Mixed costs have both a fixed and a discretionary component.

Accepted Answer

A) True 
 B)False

Question 4

Sydney Company makes weather balloons.The company controller wanted to calculate the fixed and variable costs associated with the maintenance costs incurred by the factory.Data for the past six months were collected.
Required:
 $\begin{array}{lrr}& \text { Maintenance } & \text { Machine } \
\text { Month } & \text { cost } & \text { hours }\
\text { January } & \$ 10, \overline{120} & 526 \
\text { February } & 9,560 & 389 \
\text { March } & 9,712 & 412 \
\text { April } & 10,460 & 569 \
\text { May } & 10,226 & 541 \
\text { June } & 9,686 & 399
\end{array}$ A. Using the high low method, calcul ate the fixed cost of maintenance and the variable rate
per machine hour.
B. Using the high low method, construct the cost formul a for the total maintenance cost.
C. Calculate the budgeted cost for maintenance assuming that 700 hours are worked next month.

Accepted Answer

The answer of Sydney Company makes weather balloons.The company controller...

Question 5

Select the appropriate type of fixed cost for each cost listed below.
-Depreciation on equipment

Accepted Answer

A) Discretionary 
B) Committed 
A) Discretionary 
B) Committed

Question 6

Select the best description for the following:
-$10.00 × 3,000

Accepted Answer

A) Fixed cost 
B) Variable cost 
C) Dependent variable 
D) Independent variable 
E) Variable rate
F)Cost equation 
A) Fixed cost 
B) Variable cost 
C) Dependent variable 
D) Independent variable 
E) Variable rate
F)Cost equation

Question 7

Inuvik Company manufactures drill presses.Based on past experience,Inuvik has found that its total overhead cost can be represented by the following formula: total overhead cost = $40,000 + $1.25x,where x = number of machine hours.Last year,Inuvik incurred 150,000 machine hours.
Required:
 A. What was the total overhead cost incurred by Inuvik last year?
B. What was the total variable overhead cost incurred by Inuvik last year?
C. What was the total overhead cost per machine hour last year?
D. What was the fixed overhead cost per machine hour last year?
E. If Inuvik incurs 180,000 machine hours next year, what will be the total overhead cost per machine hour?

Accepted Answer

A.$227,500 = $40,000 + ($1.25

Question 8

Select the appropriate item for each of the definitions listed below.
-A factor that causes a change in cost or activity

Accepted Answer

A) Relevant range 
B) Cost behaviour 
C) Driver 
D) Variable cost 
E) Fixed cost 
A) Relevant range 
B) Cost behaviour 
C) Driver 
D) Variable cost 
E) Fixed cost

Question 9

Select the appropriate type of cost for each of the definitions listed below.
-Will decrease on a per-unit basis as output increases

Accepted Answer

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

Question 10

The Saskatoon Company manufactures motorcycles. The company's management accountant wants to calculate the fixed and variable costs associated with utility cost incurred by the factory. Data for the past five months were collected. $\begin{array}{lrr}& \text { Utility } & \text { Machine } \\text { Month } &\text { cost }&\text { hours }\
\text { March } & \$ 30,255 & 2,200 \
\text { April } & 32,750 & 2,525 \
\text { May } & 34,712 & 2,710 \
\text { June } & 31,850 & 2,410 \
\text { July } & 30,720 & 2,290
\end{array}$
-Refer to the Figure.When using a linear regression program,what is the forecasted utility cost at 4,000 machine hours (rounded to the nearest dollar)?

Accepted Answer

A) $10,631 
B) $28,288 
C) $37,116 
D) $45,945 
A) $10,631 
B) $28,288 
C) $37,116 
D) $45,945

Question 11

Red Deer Company manufactures motorcycles.The company's management accountant wants to calculate the fixed and variable costs associated with utility cost incurred by the factory.Data for the past six months were collected.
Required:
 $\begin{array}{lrr}& \text { Utility } & \text { Machine } \
\text { Month } & \text { cost } & \text { hours }\
\text { March } & \$ 30,255 & 2,200 \
\text { April } & 32,750 & 2,525 \
\text { May } & 34,712 & 2,710 \
\text { June } & 31,850 & 2,410 \
\text { July } & 30,720 & 2,290 \
\text { August } & 29,980 & 2,150
\end{array}$ A. Using the high-low method, calculate the variable rate per machine hour for the utility cost.
B. Using the high-low method, calculate the fixed cost of utilities.
C. Construct a cost formula for total utility cost.
D. Estimate the cost of utilities if 2,425 machine hours are used.

Accepted Answer

The answer of Red Deer Company manufactures motorcycles.The company's management...

Question 12

Select the best description for the following:

-Cost = intercept + X variable 1 × driver

Accepted Answer

A) Variable rate 
B) Fixed cost 
C) Variable cost 
D) Cost equation 
E) Coefficient of determination
F)Significance F 
A) Variable rate 
B) Fixed cost 
C) Variable cost 
D) Cost equation 
E) Coefficient of determination
F)Significance F

Question 13

Brandon Company constructed the following cost formula for its monthly janitorial cost.
Total monthly janitorial cost = $5,000 + ($.48 × units of output)
Required:
 A. Identify the independent variable.
B. Identify the dependant variable.
C. Identify the intercept.
D. Identify the slope.
E. Compute the total janitorial cost if Brandon produces 10,000 units of output next year.

Accepted Answer

The answer of Brandon Company constructed the following cost formula...

Question 14

Banff Company manufactures snowboards. The management accountant wants to calculate the fixed and variable costs associated with the leasing of machinery. Data for the past four months were collected. $\begin{array}{lrr}& & \text { Machine } \
\text { Month } &\text { Lease cost } & \text { hours }\
\text { April } & \$ 21,000 & 550 \
\text { May } & 16,500 & 420 \
\text { June } & 19,000 & 510 \
\text { July } & 22,230 & 570
\end{array}$
-Refer to the Figure.What would be the estimate of Banff Company's total lease cost at a level of 500 machine hours?

Accepted Answer

A) $16,464 
B) $18,546 
C) $19,556 
D) $19,606 
A) $16,464 
B) $18,546 
C) $19,556 
D) $19,606

Question 15

Select the appropriate cost behaviour for the following costs incurred by a bicycle manufacturer.
-Cost of inspections

Accepted Answer

A) Variable 
B) Fixed 
A) Variable 
B) Fixed

Question 16

Which relationship is characteristic of per-unit variable costs?

Accepted Answer

A) increase as output decreases 
B) increase as output increases 
C) decrease as output decreases 
D) remain constant within the relevant range 
A) increase as output decreases 
B) increase as output increases 
C) decrease as output decreases 
D) remain constant within the relevant range

Question 17

Using linear regression,the value of X Variable 2 equals the slope of the line.

Accepted Answer

A) True 
 B)False

Question 18

Select the appropriate type of fixed cost for each cost listed below.
-Cost of leasing

Accepted Answer

A) Discretionary 
B) Committed 
A) Discretionary 
B) Committed

Question 19

What is the relationship between per-unit fixed costs and output?

Accepted Answer

A) Per-unit fixed costs stay the same as output changes. 
B) Per-unit fixed costs decrease as output increases. 
C) Per-unit fixed costs decrease as output decreases. 
D) Per-unit fixed costs increase as output increases. 
A) Per-unit fixed costs stay the same as output changes. 
B) Per-unit fixed costs decrease as output increases. 
C) Per-unit fixed costs decrease as output decreases. 
D) Per-unit fixed costs increase as output increases.

Question 20

Crazy Toys, Inc. 
Cost of Materials
$\begin{array}{lr}
\text { No. of toys produced } & \text { Total cost of materials } \
100,000 & \$ 30,000 \
200,000 & \$ 60,000 \
300,000 & \$ 90,000
\end{array}$
-Refer to the Figure.What is the cost behaviour of the materials cost?

Accepted Answer

A) fixed 
B) mixed 
C) step 
D) variable 
A) fixed 
B) mixed 
C) step 
D) variable

A driver is a factor that causes or leads to a change in a cost.

Select the appropriate item for each of the definitions listed below. -The range of output over which the assumed cost relationship is valid

Mixed costs have both a fixed and a discretionary component.

Select the appropriate type of fixed cost for each cost listed below. -Depreciation on equipment

Select the best description for the following: -$10.00 × 3,000

Select the appropriate item for each of the definitions listed below. -A factor that causes a change in cost or activity

Select the appropriate type of cost for each of the definitions listed below. -Will decrease on a per-unit basis as output increases

Select the best description for the following: -Cost = intercept + X variable 1 × driver

Select the appropriate cost behaviour for the following costs incurred by a bicycle manufacturer. -Cost of inspections

Which relationship is characteristic of per-unit variable costs?

Using linear regression,the value of X Variable 2 equals the slope of the line.

Select the appropriate type of fixed cost for each cost listed below. -Cost of leasing

What is the relationship between per-unit fixed costs and output?

Crazy Toys, Inc. Cost of Materials No. of toys produced Total cost of materials 100,000 \ 30,000 200,000 \ 60,000 300,000 \ 90,000 -Refer to the Figure.What is the cost behaviour of the materials cost?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Costvolumeprofit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Budgeting, production, cash, and Master Budget

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

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Exam 3: Cost Behaviour

A driver is a factor that causes or leads to a change in a cost.

Select the appropriate item for each of the definitions listed below. -The range of output over which the assumed cost relationship is valid

Mixed costs have both a fixed and a discretionary component.

Select the appropriate type of fixed cost for each cost listed below. -Depreciation on equipment

Select the best description for the following: -$10.00 × 3,000

Select the appropriate item for each of the definitions listed below. -A factor that causes a change in cost or activity

Select the appropriate type of cost for each of the definitions listed below. -Will decrease on a per-unit basis as output increases

Select the best description for the following: -Cost = intercept + X variable 1 × driver

Select the appropriate cost behaviour for the following costs incurred by a bicycle manufacturer. -Cost of inspections

Which relationship is characteristic of per-unit variable costs?

Using linear regression,the value of X Variable 2 equals the slope of the line.

Select the appropriate type of fixed cost for each cost listed below. -Cost of leasing

What is the relationship between per-unit fixed costs and output?

Crazy Toys, Inc. Cost of Materials No. of toys produced Total cost of materials 100,000 \ 30,000 200,000 \ 60,000 300,000 \ 90,000 -Refer to the Figure.What is the cost behaviour of the materials cost?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Costvolumeprofit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Budgeting, production, cash, and Master Budget

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters