Question 1

Why would cost behaviour change outside of the relevant range?

Accepted Answer

The relevant range is the normal range o

Question 2

Managerial judgment is a factor in determining cost behaviour.

Accepted Answer

A) True 
 B)False

Question 3

Fixed costs are costs that vary in total within the relevant range as the level of output increases or decreases.

Accepted Answer

A) True 
 B)False

Question 4

Explain the differences among variable,fixed,and mixed costs.

Accepted Answer

A variable cost changes in direct propor

Question 5

Why is managerial judgment essential to predicting cost behaviour?

Accepted Answer

Managerial judgment is important because

Question 6

The following six months of data were collected on Kelowna Company's electricity cost and the number of machine hours in a factory.
 $\begin{array}{lrr}& \text { Electricity } & \text { Machine } \\text { Month } & \text { cost } & \text { hours }\
\text { June } & \$ 25,160 & 4,500 \
\text { July } & 26,170 & 4,810 \
\text { August } & 27,250 & 5,120 \
\text { September } & 26,680 & 5,010 \
\text { October } & 27,950 & 5,430 \
\text { November } & 27,500 & 5,190
\end{array}$
-Refer to the Figure.Which of the following is an independent-variable value used to calculate the cost line when using the high-low method?

Accepted Answer

A) $4,000 
B) $5,430 
C) $25,160 
D) $27,950 
A) $4,000 
B) $5,430 
C) $25,160 
D) $27,950

Question 7

Prince Edward Company produces hand-held calculators. The company controller wanted to calculate the fixed and variable costs associated with the maintenance cost incurred by the factory. Data for the past four months were collected.Coefficients shown by a regression program are as follows:
 $\begin{array}{lrr}& \text { Maintenance } & \text { Machine } \
\text { Month } & \text { cost } & \text { hours }\
\text { March } & \$ 4,180 & 328 \
\text { April } & 3,956 & 310 \
\text { May } & 4,686 & 386 \
\text { June } & 4,240 & 352
\end{array}$ $$\begin{array} { l l } 
\text { Intercept } & 985 \
\text { X Variable 1 } & 9.82
\end{array}$$
-Refer to the Figure.Assume that 400 machine hours are budgeted.What would be the budgeted cost for maintenance next month?

Accepted Answer

A) $985 
B) $2,943 
C) $3,928 
D) $4,913 
A) $985 
B) $2,943 
C) $3,928 
D) $4,913

Question 8

Toronto Company makes cell phones. The company controller wanted to calculate the fixed and variable costs associated with electricity use in the factory. Data for the past four months were collected.Coefficients shown by a regression program are:
 $\begin{array}{lrr}& \text { Electricity } & \text { Machine } \
\text { Month } & \text { cost } & \text { hours }\
\text { May } & \$ 7,560 & 570 \
\text { June } & 8,220 & 625 \
\text { July } & 7,480 & 546 \
\text { August } & 7,186 & 518
\end{array}$ $\begin{array}{ll}
\text { Intercept } & 2,225 \
\text { X Variable 1 } & 9.75
\end{array}$
-Refer to the Figure.What is the cost formula for electricity cost when using the results of regression?

Accepted Answer

A) $9.75 × machine hours 
B) $2,225 × machine hours 
C) $2,225 + ($9.75 × machine hours) 
D) $9.75+($2,225 × machine hours) 
A) $9.75 × machine hours 
B) $2,225 × machine hours 
C) $2,225 + ($9.75 × machine hours) 
D) $9.75+($2,225 × machine hours)

Question 9

Select the appropriate item for each of the definitions listed below.
-corresponds to the variable rate

Accepted Answer

A) Dependant variable 
B) Independent variable 
C) Intercept 
D) Slope 
A) Dependant variable 
B) Independent variable 
C) Intercept 
D) Slope

Question 10

The following four months of data were collected on utility cost and the number of labour hours in Edmonton Company's factory.
 $\begin{array}{lrr}& \text { Utility } & \text { Labour } \
\text { Month } & \text { cost } & \text { hours }\
\text { May } & \$ 22,100 & 3,975 \
\text { June } & 24,600 & 5,430 \
\text { July } & 23,500 & 4,400 \
\text { August } & 20,140 & 3,200
\end{array}$
-Refer to the Figure.What is the variable rate for the utility cost when using the high-low method?

Accepted Answer

A) $1.02 
B) $1.07 
C) $2.00 
D) $2.80 
A) $1.02 
B) $1.07 
C) $2.00 
D) $2.80

Question 11

Select the appropriate type of cost for each of the definitions below.
-Will increase in total in direct proportion to an increase in the cost driver

Accepted Answer

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

Question 12

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 materials cost per unit of output?

Accepted Answer

A) $0.10 
B) $0.30 
C) $0.40 
D) $0.60 
A) $0.10 
B) $0.30 
C) $0.40 
D) $0.60

Question 13

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 3,000 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 14

Which of the following processes requires one to know how costs change as output changes?

Accepted Answer

A) Analyzing, reporting, and decision making 
B) examining and interpreting 
C) planning, controlling, and decision making 
D) recalling and summarizing 
A) Analyzing, reporting, and decision making 
B) examining and interpreting 
C) planning, controlling, and decision making 
D) recalling and summarizing

Question 15

When the level of activity increases within the relevant range,what is the effect on the fixed cost per unit?

Accepted Answer

A) It decreases. 
B) It increases at first then decreases. 
C) It remains the same. 
D) It increases. 
A) It decreases. 
B) It increases at first then decreases. 
C) It remains the same. 
D) It increases.

Question 16

Select the best description for the following:
-$10.00 per machine hour

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 17

Select the appropriate cost behaviour for the following costs incurred by a bicycle manufacturer.
-Factory supervisor's salary

Accepted Answer

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

Question 18

Windsor Company incurred the following costs and machine hours during the first three months of the current year.Assume that the driver for all costs is machine hours.
Required:
 $\begin{array} { l r r r } \text { Type of cost } & \text { January } & \text { February } & \text { March } \ \text { Electricity } & \$ 20,000 & \$ 15,000 & \$ 18,000 \ \text { Depreciation } & 15,000 & 15,000 & 15,000 \ \text { Factory supplies } & 9,600 & 5,600 & 7,600 \ \text { Property taxes } & 12,000 & 12,000 & 12,000 \\text { Machine hours }&1,200&700&950\end{array}$
 A. Using the high-low method, construct a cost formula for electricity cost.
B. If Windsor had total costs in April of $\$ 53,000$, how many machine hours did they incur during April?
C. If Windsor expects to incur 1,500 machine hours in May, what would be the estimate of their total costs?

Accepted Answer

The answer of Windsor Company incurred the following costs and...

Question 19

Select the appropriate item for each of the definitions listed below.
-Must be purchased in chunks

Accepted Answer

A) Committed fixed cost 
B) Discretionary fixed cost 
C) Mixed cost 
D) Step cost 
A) Committed fixed cost 
B) Discretionary fixed cost 
C) Mixed cost 
D) Step cost

Question 20

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

Accepted Answer

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

Why would cost behaviour change outside of the relevant range?

Managerial judgment is a factor in determining cost behaviour.

Fixed costs are costs that vary in total within the relevant range as the level of output increases or decreases.

Explain the differences among variable,fixed,and mixed costs.

Why is managerial judgment essential to predicting cost behaviour?

Select the appropriate item for each of the definitions listed below. -corresponds to the variable rate

Select the appropriate type of cost for each of the definitions below. -Will increase in total in direct proportion to an increase in the cost driver

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 materials cost per unit of output?

Which of the following processes requires one to know how costs change as output changes?

When the level of activity increases within the relevant range,what is the effect on the fixed cost per unit?

Select the best description for the following: -$10.00 per machine hour

Select the appropriate cost behaviour for the following costs incurred by a bicycle manufacturer. -Factory supervisor's salary

Select the appropriate item for each of the definitions listed below. -Must be purchased in chunks

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

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

Exam 3: Cost Behaviour

Why would cost behaviour change outside of the relevant range?

Managerial judgment is a factor in determining cost behaviour.

Fixed costs are costs that vary in total within the relevant range as the level of output increases or decreases.

Explain the differences among variable,fixed,and mixed costs.

Why is managerial judgment essential to predicting cost behaviour?

Select the appropriate item for each of the definitions listed below. -corresponds to the variable rate

Select the appropriate type of cost for each of the definitions below. -Will increase in total in direct proportion to an increase in the cost driver

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 materials cost per unit of output?

Which of the following processes requires one to know how costs change as output changes?

When the level of activity increases within the relevant range,what is the effect on the fixed cost per unit?

Select the best description for the following: -$10.00 per machine hour

Select the appropriate cost behaviour for the following costs incurred by a bicycle manufacturer. -Factory supervisor's salary

Select the appropriate item for each of the definitions listed below. -Must be purchased in chunks

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

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