Question 1

Complete the following table,identifying the following as fixed,variable or mixed cost.

Accepted Answer

The answer of Complete the following table,identifying the following as...

Question 2

A traditional GAAP income statement does not help managers predict the financial results of their decisions because the format of the statement is based on cost function rather than cost behavior.Which of the following is not classified as a cost behavior?

Accepted Answer

A)  Product
B)  Fixed
C)  Variable
D)  Fixed and Variable A

Question 3

Assume you are planning a spring break ski trip to Colorado.You are preparing a budget of your costs.You are staying at a lodge that has a special where the lodge charges you a flat fee of $25 for up to ten ski lift rides.You believe you will ride the ski lift 40 times during the week,so you budget $100.The ski lift charge is an example of a

Accepted Answer

A)  fixed cost.
B)  variable cost.
C)  mixed cost.
D)  step cost. C

Question 4

If activity level decreases,what happens to the total fixed cost?

Accepted Answer

A)  It remains the same.
B)  It decreases.
C)  It increases.
D)  It depends on how much the activity level increases.

Question 5

Upton,Inc.has collected the following information on its copying costs for the month.
  Required: 
a.Using the high-low-method,compute the variable cost per copy.
b.Compute the total fixed cost per month.
c.Represent the copy cost function in equation form.
d.What is the expected cost if 800 copies are made?

Accepted Answer

The answer of Upton,Inc.has collected the following information on its...

Question 6

Walker Boat Company produces bass boats.The following comments were found in the "Management's Discussion and Analysis" section of the annual report.
"Bass boat production includes a significant amount of robotic manufacturing costs,a portion of which do not vary with production rates."
As industry practice,Walker spreads its robotic costs over the estimated number of boats that are expected to be produced for each type of bass boat.At the end of the previous year,the number of boats produced was 2,400 while the expected number of boats to be produced in the current year is 2,700.
Required:
a.What effect would the change in level of boats produced have on the total robotic costs?
b.What effect would the change in level of boats produced have on the unit costs of the boats?

Accepted Answer

The answer of Walker Boat Company produces bass boats.The following...

Question 7

A 10 percent decrease in sales volume will result in a

Accepted Answer

A)  10 percent decrease in total variable cost.
B)  10 percent decrease in per unit variable cost.
C)  10 percent increase in total variable cost.
D)  10 percent increase in per

Question 8

You and two friends decide to rent an apartment off campus.You have found an apartment for $750 per month.You and your two friends will share the rent equally.This is an example of a

Accepted Answer

A)  fixed cost.
B)  variable cost.
C)  mixed cost.
D)  step cost.

Question 9

A traditional GAAP income statement does not help managers predict the financial results of their decisions because the format of the statement is based on cost function rather than cost behavior.Which of the following is not classified as a cost function?

Accepted Answer

A)  Product
B)  Sales
C)  Administration
D)  Variable

Question 10

What is a mixed cost? What happens to a mixed cost as the level of activity changes?

Accepted Answer

The answer of What is a mixed cost? What happens...

Question 11

When managers talk about cost behavior,they are referring to

Accepted Answer

A)  where a cost is reported on the income statement.
B)  the way in which total costs change in response to changes in the level of activity.
C)  the method used to determine whether a cost is accrued or expensed.
D)  the way cost is reported within inventory on the balance sheet.

Question 12

An example of a discretionary fixed cost for a clothing manufacturer is

Accepted Answer

A)  an annual contract for television advertising cost.
B)  a 10-year lease on an office building.
C)  yards of fabrics used.
D)  thread used.

Question 13

MousePad Computer Company,in addition to its retail sales,conducts night classes in computer technology.MousePad has provided you the following information:
  Required:
Construct a contribution margin format income statement.

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The answer of MousePad Computer Company,in addition to its retail...

Question 14

Three popular methods of identifying variable and fixed components of a cost are the scattergraph method,the high-low method and regression analysis.Compare and contrast these three methods.

Accepted Answer

The answer of Three popular methods of identifying variable and...

Question 15

Pam's Puppy Parlor is a pet grooming parlor and boutique.Pam sells personalized puppy blankets at $20 each.Her contribution margin is $5.If Pam has an additional $100 in blanket sales,how much will her profit increase?

Accepted Answer

A)  $5
B)  $25
C)  $50
D)  $100

Question 16

A committed fixed cost is one that cannot be changed over the short run.

Accepted Answer

A) True 
 B)False

Question 17

King Comics is a wholesaler of popular comic books.The company's records indicate the following financial results:
  Using the high-low method,what is the company's estimated variable and fixed component of operating expenses?

Accepted Answer

The answer of King Comics is a wholesaler of popular...

Question 18

You have been hired by University Bike Shop as the controller.The CEO has been using a traditional GAAP income statement for internal decision making.However the CEO has just completed an MBA program where she covered the contribution format income statement.She has asked you to explain the contribution format income statement to the other managers of the company with emphasis on the differences between the two income statements and how the contribution format income statement can help all the managers.

Accepted Answer

The answer of You have been hired by University Bike...

Question 19

The amount of income presented on a contribution format income statement

Accepted Answer

A)  will always be greater than that shown on a traditional GAAP income statement.
B)  will always be less than that shown on a traditional GAAP income statement.
C)  will always be the same as that shown on a traditional GAAP income statement.
D)  may or may not differ from that shown on a traditional GAAP income statement depending on the level of production and sales.

Question 20

Assume you are planning a spring break ski trip to Colorado.You are preparing a budget of your costs.You are staying at a lodge that has a special where the lodge charges you $80 per week for the ski lift regardless of how many times you ride.You believe you will ride the ski lift 40 times during the week.The ski lift charge is an example of a

Accepted Answer