Deck 3: Cost Behavior

Question 1

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

Answer 1

True

Question 2

Computing unit fixed costs may result in misleading information.

Answer 2

True

Question 3

Discretionary fixed costs often involve a long-term contract.

Answer 3

False

Question 4

The cost of advertising is usually a discretionary fixed cost.

Question 5

"Outliers" are points that seem to fit the general pattern of behavior.

Question 6

Determining cost behavior is not essential to planning, controlling, and decision making.

Question 7

The high-low method is an objective method to separate the cost behavior of a mixed cost.

Question 8

Mixed costs have both a fixed and a variable component.

Question 9

The slope of a mixed cost line is equal to the fixed element of the cost.

Question 10

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

Question 11

As output increases variable cost per unit will also increase.

Question 12

The relevant range is the range of output which the assumed cost relationship is valid for the normal operations of the firm.

Question 13

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

Question 14

As output decreases fixed costs per unit will increase.

Question 15

Total variable costs = Variable rate * amount of output.

Question 16

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

Question 17

A discretionary fixed cost can be changed relatively easily at management discretion.

Question 18

A cost that changes in total as output changes is a variable cost.

Question 19

Managerial judgment is critically important in determining cost behavior.

Question 20

A variable cost increases in total when output increases but the per-unit costs remains the same.

Question 21

Select the appropriate cost behavior for each of the costs listed below.
a.variable
b.fixed
depreciation

Question 22

Select the appropriate cost behavior for each of the costs listed below.
a.variable
b.fixed
indirect materials

Question 23

Select the appropriate cost behavior for each of the costs listed below.
a.variable
b.fixed
controller's salary

Question 24

Select the appropriate type of fixed cost for each cost listed below.
a.discretionary
b.committed
depreciation

Question 25

Select the appropriate type of fixed cost for each cost listed below.
a.discretionary
b.committed
travel costs

Question 26

Using regression, the value of 'X Variable 1' equals the slope of the line.

Question 27

Select the appropriate type of fixed cost for each cost listed below.
a.discretionary
b.committed
advertising

Question 28

Select the appropriate type of fixed cost for each cost listed below.
a.discretionary
b.committed
property taxes

Question 29

Using a regression program, the term 'X Variable 1' refers to the dependent variable.

Question 30

Select the appropriate type of fixed cost for each cost listed below.
a.discretionary
b.committed
cost of leasing

Question 31

Calculation of the cost line using the high-low method tests the lowest cost period to see if it is an outlier.

Question 32

Select the appropriate cost behavior for each of the costs listed below.
a.variable
b.fixed
factory insurance

Question 33

Select the appropriate cost behavior for each of the costs listed below.
a.variable
b.fixed
factory supplies

Question 34

Using a linear regression program, the term 'Intercept' refers to the variable cost.

Question 35

Select the appropriate cost behavior for each of the costs listed below.
a.variable
b.fixed
factory supervisor's salary

Question 36

Select the appropriate type of fixed cost for each cost listed below.
a.discretionary
b.committed
rent of building

Question 37

Select the appropriate cost behavior for each of the costs listed below.
a.variable
b.fixed
direct materials

Question 38

Select the appropriate cost behavior for each of the costs listed below.
a.variable
b.fixed
direct labor

Question 39

Select the appropriate type of fixed cost for each cost listed below.
a.discretionary
b.committed
cost of executive training seminars

Question 40

Using the high-low method, the calculation of the cost line uses the highest and lowest activity period.

Question 41

Select the appropriate type of fixed cost for each cost listed below.
a.discretionary
b.committed
salary of receptionist

Question 42

Select the appropriate item for each of the definitions listed below.
a.relevant range
b.cost behavior
c.driver
d.variable cost
e.fixed cost
the range of output over which the assumed cost relationship is valid

Question 43

Select the appropriate item for each of the definitions listed below.
a.relevant range
b.cost behavior
c.driver
d.variable cost
e.fixed cost
a factor that causes a change in cost or activity

Question 44

Select the appropriate item for each of the definitions listed below.
a.relevant range
b.cost behavior
c.driver
d.variable cost
e.fixed cost
may be discretionary or committed

Question 45

Select the appropriate cost behavior for the following costs incurred by an automobile manufacturer.
a.variable
b.fixed
depreciation on robotic equipment

Question 46

Select the appropriate cost behavior for the following costs incurred by an automobile manufacturer.
a.variable
b.fixed
cost of assembly line workers

Question 47

Select the appropriate cost behavior for each of the costs listed below.
a.variable
b.fixed
license fees on automobiles

Question 48

Select the appropriate cost behavior for the following costs incurred by an automobile manufacturer.
a.variable
b.fixed
cost of inspections

Question 49

Select the appropriate cost behavior for each of the costs listed below.
a.variable
b.fixed
salary of chief executive officer

Question 50

Select the appropriate cost behavior for each of the costs listed below.
a.variable
b.fixed
real estate taxes

Question 51

Select the appropriate cost behavior for each of the costs listed below.
a.variable
b.fixed
sales commissions

Question 52

Select the appropriate cost behavior for each of the costs listed below.
a.variable
b.fixed
factory supplies

Question 53

Select the appropriate cost behavior for the following costs incurred by an automobile manufacturer.
a.variable
b.fixed
cost of car stereos

Question 54

Select the appropriate cost behavior for the following costs incurred by an automobile manufacturer.
a.variable
b.fixed
cost of transporting cars to dealerships

Question 55

Select the appropriate cost behavior for the following costs incurred by an automobile manufacturer.
a.variable
b.fixed
cost of rework

Question 56

Select the appropriate item for each of the definitions listed below.
a.relevant range
b.cost behavior
c.driver
d.variable cost
e.fixed cost
a description of how a cost changes when the level of output changes

Question 57

Select the appropriate cost behavior for each of the costs listed below.
a.variable
b.fixed
cost of lubricating machinery

Question 58

Select the appropriate cost behavior for the following costs incurred by an automobile manufacturer.
a.variable
b.fixed
cost of windshields

Question 59

Select the appropriate cost behavior for the following costs incurred by an automobile manufacturer.
a.variable
b.fixed
factory supervisor's salary

Question 60

Select the appropriate item for each of the definitions listed below.
a.relevant range
b.cost behavior
c.driver
d.variable cost
e.fixed cost
total cost depends on the level of output

Question 61

Select the appropriate item for each of the definitions listed below.
a.dependant variable
b.independent variable
c.intercept
d.slope
its value depends on the value of another variable

Question 62

Select the appropriate type of cost for each of the definitions listed below.
a.variable
b.fixed
c.mixed
d.step
will decrease on a per-unit basis as output increases

Question 63

Select the appropriate item for each of the definitions listed below.
a.high-low method
b.scatter-graph method
c.method of least squares
may reveal the presence of outliers

Question 64

Select the appropriate type of cost for each of the definitions listed below.
a.variable
b.fixed
c.mixed
d.step
has a discontinuous cost function

Question 65

Select the appropriate type of cost for each of the definitions listed below.
a.variable
b.fixed
c.mixed
d.step
remains constant on a per-unit basis within the relevant range

Question 66

Select the appropriate item for each of the definitions listed below.
a.committed fixed cost
b.discretionary fixed cost
c.mixed cost
d.step cost
must be purchased in chunks

Question 67

Select the appropriate type of cost for each of the definitions below.
a.variable
b.fixed
c.mixed
d.step
has an increased fixed component at specific intervals

Question 68

Select the appropriate item for each of the definitions listed below.
a.dependant variable
b.independent variable
c.intercept
d.slope
it corresponds to the variable rate

Question 69

Select the appropriate cost behavior for each of the costs listed below.
a.variable
b.fixed
raw materials

Question 70

Select the appropriate item for each of the definitions listed below.
a.committed fixed cost
b.discretionary fixed cost
c.mixed cost
d.step cost
may involve a long-term contract

Question 71

Select the appropriate type of cost for each of the definitions below.
a.variable
b.fixed
c.mixed
d.step
remains the same in total within the relevant range

Question 72

Select the appropriate item for each of the definitions listed below.
a.committed fixed cost
b.discretionary fixed cost
c.mixed cost
d.step cost
can be changed by management

Question 73

Select the appropriate type of cost for each of the definitions listed below.
a.variable
b.fixed
c.mixed
d.step
total cost = total fixed cost + total variable cost

Question 74

Select the appropriate item for each of the definitions listed below.
a.dependant variable
b.independent variable
c.intercept
d.slope
it corresponds to the fixed cost

Question 75

Select the appropriate type of cost for each of the definitions below.
a.variable
b.fixed
c.mixed
d.step
has both a variable and a fixed component

Question 76

Select the appropriate type of cost for each of the definitions below.
a.variable
b.fixed
c.mixed
d.step
will increase in total in direct proportion to an increase in the cost driver

Question 77

Select the appropriate cost behavior for each of the costs listed below.
a.variable
b.fixed
rental cost of warehouse

Question 78

Select the appropriate item for each of the definitions listed below.
a.dependant variable
b.independent variable
c.intercept
d.slope
it measures output and explains changes in cost

Question 79

Select the appropriate item for each of the definitions listed below.
a.committed fixed cost
b.discretionary fixed cost
c.mixed cost
d.step cost
the y-intercept corresponds to the fixed cost

Question 80

Select the appropriate item for each of the definitions listed below.
a.high-low method
b.scatter-graph method
c.method of least squares
results in the best-fitting line through a set of data points