Question 1

What is the formula to calculate a mixed cost?

Accepted Answer

A) total cost = variable rate × amount of output 
B) total cost = total fixed cost + (variable rate × amount of output) 
C) total cost = fixed rate × amount of output 
D) total cost = total fixed cost - (variable rate × amount of output) 
A) total cost = variable rate × amount of output 
B) total cost = total fixed cost + (variable rate × amount of output) 
C) total cost = fixed rate × amount of output 
D) total cost = total fixed cost - (variable rate × amount of output)

Question 2

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.If Lethbridge Company incurs 9,600 labour hours for the year,what would be the estimate of total utility cost?

Accepted Answer

A) $96,960 
B) $98,360 
C) $113,760 
D) $120,960 
A) $96,960 
B) $98,360 
C) $113,760 
D) $120,960

Question 3

Select the appropriate type of cost for each of the definitions below.
-Has an increased fixed component at specific intervals

Accepted Answer

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

Question 4

Select the appropriate item for each of the definitions listed below.
-value depends on the value of another variable

Accepted Answer

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

Question 5

Select the appropriate cost behaviour for each of the costs listed below.
-Steel used in production

Accepted Answer

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

Question 6

Consider each of the following independent situations.
Required: For each situation,describe the cost as one of the following: fixed cost,variable cost,mixed cost,or step cost.
 A. The sal ary of a legal secretary in a law firm
B. A lease contract for a truck that requires a monthly payment of $\$ 200$ plus $\$ 0.07$ per
kilometre
C. The cost of lumber for a homebuilder
D. The cost of internet service that is calculated based on hours of usage
E. The cost of cell phone contract that includes a fixed monthly charge of $\$ 90$ plus $\$ .05$ a minute for long-distance calls
F. The sal ary cost of seasonal tax preparers for a CPA firm. One tax preparer can prepare 100 tax returns per month
G. A factory supervisor's salary
H. The cost of sugar in the production of soft drinks

Accepted Answer

The answer of Consider each of the following independent situations.
Required:...

Question 7

What does cost behaviour analysis focus on?

Accepted Answer

A) the reaction of costs to changes in profit 
B) the reaction of costs to change over time 
C) the reaction of costs to changes in activity level. 
D) the reaction of costs to changes in benefit 
A) the reaction of costs to changes in profit 
B) the reaction of costs to change over time 
C) the reaction of costs to changes in activity level. 
D) the reaction of costs to changes in benefit

Question 8

Which of the following is a characteristic of the high-low method?

Accepted Answer

A) It is the most accurate method. 
B) It cannot be affected by the presence of outliers. 
C) It has the disadvantage of objectivity. 
D) It is mathematically easy to calculate. 
A) It is the most accurate method. 
B) It cannot be affected by the presence of outliers. 
C) It has the disadvantage of objectivity. 
D) It is mathematically easy to calculate.

Question 9

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 variable rate of the electricity cost when using the results of regression?

Accepted Answer

A) $9.67 per machine hour 
B) $9.75 per machine hour 
C) $10.25 per machine hour 
D) $13.87 per machine hour 
A) $9.67 per machine hour 
B) $9.75 per machine hour 
C) $10.25 per machine hour 
D) $13.87 per machine hour

Question 10

What is a mixed cost?

Accepted Answer

A) rent on machinery 
B) sugar at a bakery 
C) repairs and maintenance on vehicle fleet 
D) depreciation on production equipment 
A) rent on machinery 
B) sugar at a bakery 
C) repairs and maintenance on vehicle fleet 
D) depreciation on production equipment

Question 11

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 Banff Company's cost formula to estimate the cost of leasing within the relevant range?

Accepted Answer

A) total lease cost = $456 + ($38.20 × machine hours) 
B) total lease cost = $516 + ($38.18 × machine hours) 
C) total lease cost = $420 + ($37.25 × machine hours) 
D) total lease cost=$482+($61.50× machine hours) 
A) total lease cost = $456 + ($38.20 × machine hours) 
B) total lease cost = $516 + ($38.18 × machine hours) 
C) total lease cost = $420 + ($37.25 × machine hours) 
D) total lease cost=$482+($61.50× machine hours)

Question 12

Fredericton Company incurred the following costs and machine hours for the months of January and February.
Required:
 $\begin{array}{lrr}
\text { Type of cost } & \text { January } & \text { February } \
\text { Insurance } & \$ 10,000 & \$ 10,000 \
\text { Factory supplies } & 3,000 & 4,500 \
\text { Direct labour } & 20,000 & 30,000 \
\text { Maintenance } & 5,500 & 5,750\\text { Machine hours }&1,000&1,500
\end{array}$ A. Assuming that the driver for all costs is machine hours, determine the cost behaviour of each of the four types of costs above (fixed, variable, or mixed).
B. Assume that the following is the cost formula for maintenance cost.
Total maintenance cost $= \$ 5,000 + ( \$ .50 \times$ no. of machine hours $)$
Construct a cost formula to be used to estimate total monthly costs within the relevant range.

C. Estimate the total monthly costs to be incurred by Fredericton Company at a level of 1,800 machine hours.

Accepted Answer

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

Question 13

A variable cost decreases in total and per-unit when output decreases.

Accepted Answer

A) True 
 B)False

Question 14

St. John's Company incurred the following costs for the months of March and April.
 $\begin{array}{lrr}\text { Type of Cost } &\text { March }&\text { April }\
\text { Insurance } & \$ 5,000 & \$ 5,000 \
\text { Utilities } & 4,000 & 5,000 \
\text { Depreciation } & 3,500 & 3,500 \
\text { Materials } & 10,000 & 20,000
\end{array}$
-Refer to the Figure.If output was 5,000 units in March and 10,000 units in April,which of the following can be assumed?

Accepted Answer

A) Utilities and materials are variable costs. 
B) Utilities, insurance, and depreciation are fixed costs. 
C) Insurance and depreciation are mixed costs. 
D) Materials are the only variable cost. 
A) Utilities and materials are variable costs. 
B) Utilities, insurance, and depreciation are fixed costs. 
C) Insurance and depreciation are mixed costs. 
D) Materials are the only variable cost.

Question 15

Nunavut Company operates a chain of cozy coffee shops.The company's chief executive officer is interested in accumulating some information on the overhead costs incurred by the company.You have been asked to analyze the following six months' worth of data.
Required:
   A. Using the high low method, construct a cost formul a for the total overhead cost. The CEO would like to limit total overhead cost in future months to $20 \%$ of total
B. revenues. Will that be possible if total revenues are expected to average $\$ 300,000$ per month and total labour hours per month are expected to average 1,000? Show all of your calculations.
C. Compute the total cost of overhead assuming 1,000 labour hours are incurred in a given month.

Accepted Answer

The answer of Nunavut Company operates a chain of cozy...

Question 16

What is an example of a discretionary fixed cost?

Accepted Answer

A) insurance 
B) advertising 
C) factory rent 
D) direct materials 
A) insurance 
B) advertising 
C) factory rent 
D) direct materials

Question 17

Select the appropriate item for each of the definitions listed below.
-May involve a long-term contract

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 18

Lake Louise Company makes treadmills. The company controller wants to calculate the fixed and variable costs associated with the janitorial costs incurred in the factory. Data for the past four months were collected. $\begin{array}{lrr}& \text { Janitorial } & \text { Machine } \
\text { Month } &\text { costs } & \text { hours }\
\text { September } & \$ 11,000 & 575 \
\text { October } & 11,400 & 610 \
\text { November } & 10,200 & 510 \
\text { December } & 10,725 & 550
\end{array}$
-Refer to the Figure.What would be the fixed cost of the janitorial services when using the high-low method?

Accepted Answer

A) $4,080 
B) $7,320 
C) $6,120 
D) $11,000 
A) $4,080 
B) $7,320 
C) $6,120 
D) $11,000

Question 19

Drumheller Company's Total cost = Fixed cost + Variable Rate × Output
-Refer to the Figure.Which element is the intercept?

Accepted Answer

A) fixed cost 
B) total cost 
C) output 
D) variable rate 
A) fixed cost 
B) total cost 
C) output 
D) variable rate

Question 20

Select the appropriate cost behaviour for each of the costs listed below.
-Factory supplies

Accepted Answer

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

What is the formula to calculate a mixed cost?

Select the appropriate type of cost for each of the definitions below. -Has an increased fixed component at specific intervals

Select the appropriate item for each of the definitions listed below. -value depends on the value of another variable

Select the appropriate cost behaviour for each of the costs listed below. -Steel used in production

What does cost behaviour analysis focus on?

Which of the following is a characteristic of the high-low method?

What is a mixed cost?

A variable cost decreases in total and per-unit when output decreases.

What is an example of a discretionary fixed cost?

Select the appropriate item for each of the definitions listed below. -May involve a long-term contract

Drumheller Company's Total cost = Fixed cost + Variable Rate × Output -Refer to the Figure.Which element is the intercept?

Select the appropriate cost behaviour for each of the costs listed below. -Factory supplies

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

What is the formula to calculate a mixed cost?

Select the appropriate type of cost for each of the definitions below. -Has an increased fixed component at specific intervals

Select the appropriate item for each of the definitions listed below. -value depends on the value of another variable

Select the appropriate cost behaviour for each of the costs listed below. -Steel used in production

What does cost behaviour analysis focus on?

Which of the following is a characteristic of the high-low method?

What is a mixed cost?

A variable cost decreases in total and per-unit when output decreases.

What is an example of a discretionary fixed cost?

Select the appropriate item for each of the definitions listed below. -May involve a long-term contract

Drumheller Company's Total cost = Fixed cost + Variable Rate × Output -Refer to the Figure.Which element is the intercept?

Select the appropriate cost behaviour for each of the costs listed below. -Factory supplies

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