Question 1

Suppose a cost's step-cost behaviour follows very narrow steps.What assumptions can be used to approximate the costs?

Accepted Answer

A) variable cost assumptions 
B) fixed cost assumptions 
C) step-fixed cost assumptions 
D) mixed cost assumptions 
A) variable cost assumptions 
B) fixed cost assumptions 
C) step-fixed cost assumptions 
D) mixed cost assumptions

Question 2

Which of the following is an advantage of using the scattergraph method over the high-low method to estimate costs?

Accepted Answer

A) It utilizes statistics to determine the "best fit." 
B) A cost analyst can review the data visually and eliminate outliers. 
C) It provides a superior quality cost formulae because it relies on the objective judgement of the analysts. 
D) The cost formula can be determined simply by looking at two points of data. 
A) It utilizes statistics to determine the "best fit." 
B) A cost analyst can review the data visually and eliminate outliers. 
C) It provides a superior quality cost formulae because it relies on the objective judgement of the analysts. 
D) The cost formula can be determined simply by looking at two points of data.

Question 3

What is relevant range?

Accepted Answer

A) the normal range of inputs 
B) the range of output where cost relationships are valid 
C) the range that does not change from period to period 
D) the costs that do not change 
A) the normal range of inputs 
B) the range of output where cost relationships are valid 
C) the range that does not change from period to period 
D) the costs that do not change

Question 4

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 value of the X Variable 1 (rounded to the nearest penny)?

Accepted Answer

A) $0.99 
B) $8.83 
C) $195.35 
D) $11,594.00 
A) $0.99 
B) $8.83 
C) $195.35 
D) $11,594.00

Question 5

Select the appropriate cost behaviour for each of the costs listed below.
-Salary of Chief Financial Officer

Accepted Answer

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

Question 6

Why is it necessary to separate a mixed cost into its variable and fixed components?

Accepted Answer

For management to effectively plan,contr

Question 7

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 yearly utility cost equation (with all variables to the nearest penny)?

Accepted Answer

A) total utility cost = $127,569.60 + ($8.83 × machine hours) 
B) total utility cost = $10,630.80 + ($8.83 × machine hours) 
C) total utility cost = $8.83 + ($10,630.80 × machine hours) 
D) total utility cost = $10,630.80 ? ($8.83 × machine hours) 
A) total utility cost = $127,569.60 + ($8.83 × machine hours) 
B) total utility cost = $10,630.80 + ($8.83 × machine hours) 
C) total utility cost = $8.83 + ($10,630.80 × machine hours) 
D) total utility cost = $10,630.80 ? ($8.83 × machine hours)

Question 8

Select the appropriate cost behaviour for each of the costs listed below.
-Real estate taxes

Accepted Answer

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

Question 9

The cost of raw materials used is usually a variable cost.

Accepted Answer

A) True 
 B)False

Question 10

The following cost formula was developed using the monthly data for Nova Scotia Accounting Firm.
Total cost = $87,100 + ($210 × number of tax returns)
-Refer to the Figure.What does $210 represent?

Accepted Answer

A) the independent variable 
B) the dependant variable 
C) the intercept 
D) the variable rate 
A) the independent variable 
B) the dependant variable 
C) the intercept 
D) the variable rate

Question 11

What is a variable cost for a medical lab?

Accepted Answer

A) advertising on local radio station 
B) leasing lab equipment 
C) needles used to draw blood 
D) salary of receptionist 
A) advertising on local radio station 
B) leasing lab equipment 
C) needles used to draw blood 
D) salary of receptionist

Question 12

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 a dependent-variable value used to calculate the cost line when using the high-low method?

Accepted Answer

A) $4,500 
B) $5,430 
C) $25,160 
D) $27,900 
A) $4,500 
B) $5,430 
C) $25,160 
D) $27,900

Question 13

Cost relationships may change at output levels outside of the relevant range.

Accepted Answer

A) True 
 B)False

Question 14

What is a discretionary fixed cost for a doctor's office?

Accepted Answer

A) the salary of receptionist 
B) the cost of newspaper advertising 
C) the depreciation on furniture and equipment 
D) the cost of forms 
A) the salary of receptionist 
B) the cost of newspaper advertising 
C) the depreciation on furniture and equipment 
D) the cost of forms

Question 15

When a mixed cost is graphed,what does the Y-intercept correspond to?

Accepted Answer

A) the fixed cost 
B) the variable rate 
C) total fixed cost + total variable cost 
D) the number of units sold 
A) the fixed cost 
B) the variable rate 
C) total fixed cost + total variable cost 
D) the number of units sold

Question 16

What is the formula to calculate the variable rate of a mixed cost when using the high-low method?

Accepted Answer

A) total cost at high point ? (variable rate × output at high point) 
B) total cost at high point ? (variable rate × output at low point) 
C)  $\frac{\text {high point output - low point output }}{\text { high point cost - low point cost}}$ 
D)  $\frac{\text { high point cost }- \text { low point cost }}{\text { high point output - low point output }}$ 
A) total cost at high point ? (variable rate × output at high point) 
B) total cost at high point ? (variable rate × output at low point) 
C)  $\frac{\text {high point output - low point output }}{\text { high point cost - low point cost}}$ 
D)  $\frac{\text { high point cost }- \text { low point cost }}{\text { high point output - low point output }}$

Question 17

The following cost formula was developed using monthly data for Montreal Clothing Store.Total cost = $75,620 + ($242 × number of customers)
-Refer to the Figure.What does $75,620 represent?

Accepted Answer

A) the independent variable 
B) the dependant variable 
C) the intercept 
D) the variable rate 
A) the independent variable 
B) the dependant variable 
C) the intercept 
D) the variable rate

Question 18

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 total materials cost at a production level of 220,000 toys?

Accepted Answer

A) $22,000 
B) $66,000 
C) $88,000 
D) $132,000 
A) $22,000 
B) $66,000 
C) $88,000 
D) $132,000

Question 19

Lethbridge Company constructed the following formula for monthly utility cost.
Total utility cost = $1,400 + ($10.10 × labour hours)
Assume that 800 labour hours are budgeted for the month of May.
-Refer to the Figure.What is the total variable utility cost for the month of May?

Accepted Answer

A) $1,400 
B) $5,440 
C) $8,080 
D) $9,480 
A) $1,400 
B) $5,440 
C) $8,080 
D) $9,480

Question 20

Select the appropriate cost behaviour for each of the costs listed below.
-Cost of lubricating machinery

Accepted Answer

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

Suppose a cost's step-cost behaviour follows very narrow steps.What assumptions can be used to approximate the costs?

Which of the following is an advantage of using the scattergraph method over the high-low method to estimate costs?

What is relevant range?

Select the appropriate cost behaviour for each of the costs listed below. -Salary of Chief Financial Officer

Why is it necessary to separate a mixed cost into its variable and fixed components?

Select the appropriate cost behaviour for each of the costs listed below. -Real estate taxes

The cost of raw materials used is usually a variable cost.

The following cost formula was developed using the monthly data for Nova Scotia Accounting Firm. Total cost = $87,100 + ($210 × number of tax returns) -Refer to the Figure.What does $210 represent?

What is a variable cost for a medical lab?

Cost relationships may change at output levels outside of the relevant range.

What is a discretionary fixed cost for a doctor's office?

When a mixed cost is graphed,what does the Y-intercept correspond to?

What is the formula to calculate the variable rate of a mixed cost when using the high-low method?

The following cost formula was developed using monthly data for Montreal Clothing Store.Total cost = $75,620 + ($242 × number of customers) -Refer to the Figure.What does $75,620 represent?

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 total materials cost at a production level of 220,000 toys?

Lethbridge Company constructed the following formula for monthly utility cost. Total utility cost = $1,400 + ($10.10 × labour hours) Assume that 800 labour hours are budgeted for the month of May. -Refer to the Figure.What is the total variable utility cost for the month of May?

Select the appropriate cost behaviour for each of the costs listed below. -Cost of lubricating machinery

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

Suppose a cost's step-cost behaviour follows very narrow steps.What assumptions can be used to approximate the costs?

Which of the following is an advantage of using the scattergraph method over the high-low method to estimate costs?

What is relevant range?

Select the appropriate cost behaviour for each of the costs listed below. -Salary of Chief Financial Officer

Why is it necessary to separate a mixed cost into its variable and fixed components?

Select the appropriate cost behaviour for each of the costs listed below. -Real estate taxes

The cost of raw materials used is usually a variable cost.

The following cost formula was developed using the monthly data for Nova Scotia Accounting Firm. Total cost = $87,100 + ($210 × number of tax returns) -Refer to the Figure.What does $210 represent?

What is a variable cost for a medical lab?

Cost relationships may change at output levels outside of the relevant range.

What is a discretionary fixed cost for a doctor's office?

When a mixed cost is graphed,what does the Y-intercept correspond to?

What is the formula to calculate the variable rate of a mixed cost when using the high-low method?

The following cost formula was developed using monthly data for Montreal Clothing Store.Total cost = $75,620 + ($242 × number of customers) -Refer to the Figure.What does $75,620 represent?

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 total materials cost at a production level of 220,000 toys?

Lethbridge Company constructed the following formula for monthly utility cost. Total utility cost = $1,400 + ($10.10 × labour hours) Assume that 800 labour hours are budgeted for the month of May. -Refer to the Figure.What is the total variable utility cost for the month of May?

Select the appropriate cost behaviour for each of the costs listed below. -Cost of lubricating machinery

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