Question 1

Ruskin Company had utilities cost of $95,000 at an output level of 30,000 units.The utilities cost was a mixed cost and the fixed portion was $50,000.What would the estimate of total utilities cost be at an output level of 40,000 units?

Accepted Answer

A) $65,000 
B) $95,000 
C) $110,000 
D) $125,000

Question 2

__________________________ is critically important in determining cost behavior and is by far the most widely used method in practice.

Accepted Answer

The answer of __________________________ is critically important in determining cost...

Question 3

Figure 3-10. The following cost formula was developed using the monthly data for an accounting firm.
Total cost = $87,100 + ($210 ´ number of tax returns)
Refer to Figure 3-10.The term $87,100

Accepted Answer

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

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Figure 3-14. Blacken 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.
 Refer to Figure 3-14.Using a regression program,the forecasted utility cost at 2,600 machine hours (rounded to the nearest dollar)is

Accepted Answer

A) $28,288. 
B) $35,589. 
C) $45,945. 
D) $10,631.

Question 6

A mixed cost

Accepted Answer

A) remains constant when the output level increases. 
B) cannot be separated. 
C) contains both a fixed and variable component. 
D) all of these are correct

Question 7

Figure 3-11. The following four months of data were collected on utility cost and the number of labor hours in a factory.
 Refer to Figure 3-11.Select the correct set of high and low months.
High Low

Accepted Answer

A) February April 
B) February March 
C) January March 
D) January April

Question 8

Figure 3-3. Okafor Company manufactures skis.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.
 Refer to Figure 3-3.What would the estimate of Okafor Company's total lease cost be at a level of 500 machine hours?

Accepted Answer

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

Question 9

When a mixed cost is graphed the slope of the line equals

Accepted Answer

A) the variable cost per unit of the activity driver. 
B) the total variable cost. 
C) the sales price per unit. 
D) the total fixed cost.

Question 10

Which of the following is not an example of a discretionary fixed cost?

Accepted Answer

A) research and development 
B) training costs 
C) lease on office space 
D) direct materials

Question 11

Margolo Company makes cross-country skis.The company controller wants to calculate the fixed and variable costs associated with janitorial services incurred by the factory.Data for the past six months were collected.
  Required:

Accepted Answer

The answer of Margolo Company makes cross-country skis.The company controller...

Question 12

Figure 3-6. Taran Company incurred the following costs for the months of January and February.
 Refer to Figure 3-6.If output was 5,000 units in January and 10,000 units in February we can assume that

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 is the only variable cost.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Figure 3-5. Maxwell 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.
 Refer to Figure 3-5.Using the high-low method calculate the fixed cost of the janitorial services

Accepted Answer

A) $4,080 
B) $7,320 
C) $6,120 
D) none of these are correct

Question 15

Harnock Company constructed the following cost formula for its monthly janitorial cost.
Total monthly janitorial cost = $5,000 + ($.48 ´ units of output)
Required:

Accepted Answer

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

Question 16

Variable costs within the relevant range

Accepted Answer

A) stay constant on a per unit basis as output changes. 
B) increase in total as output increases. 
C) decrease in total as output decreases. 
D) all of these are correct

Exam 3: Cost Behavior

Ruskin Company had utilities cost of $95,000 at an output level of 30,000 units.The utilities cost was a mixed cost and the fixed portion was $50,000.What would the estimate of total utilities cost be at an output level of 40,000 units?

__________________________ is critically important in determining cost behavior and is by far the most widely used method in practice.

Figure 3-10. The following cost formula was developed using the monthly data for an accounting firm. Total cost = $87,100 + ($210 ´ number of tax returns) Refer to Figure 3-10.The term $87,100

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

A mixed cost

Figure 3-11. The following four months of data were collected on utility cost and the number of labor hours in a factory. Refer to Figure 3-11.Select the correct set of high and low months. High Low

When a mixed cost is graphed the slope of the line equals

Which of the following is not an example of a discretionary fixed cost?

Margolo Company makes cross-country skis.The company controller wants to calculate the fixed and variable costs associated with janitorial services incurred by the factory.Data for the past six months were collected. Required:

Figure 3-6. Taran Company incurred the following costs for the months of January and February. Refer to Figure 3-6.If output was 5,000 units in January and 10,000 units in February we can assume that

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

Harnock Company constructed the following cost formula for its monthly janitorial cost. Total monthly janitorial cost = $5,000 + ($.48 ´ units of output) Required:

Variable costs within the relevant range