Question 1

If output increases,what is the result?

Accepted Answer

A) Per-unit fixed cost will decrease. 
B) Total variable costs will decrease. 
C) Total mixed costs will decrease. 
D) Total mixed costs will stay the same.

Question 2

Select the appropriate item for each of the definitions listed below.
-May be discretionary or committed

Accepted Answer

A) Relevant range 
B) Cost behaviour 
C) Driver 
D) Variable cost 
E) Fixed cost

Question 3

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 intercept (rounded to the nearest penny)?

Accepted Answer

A) $0.99 
B) $195.35 
C) $10,630.80 
D) $190,267.00

Question 4

What is a variable cost in a factory?

Accepted Answer

A) factory supervisor's salary 
B) lubricant for machinery 
C) factory building rent 
D) product advertising costs

Question 5

Hamilton and Hamilton Attorneys at Law recently opened up a law practice.Their goal is to generate a monthly net income of $10,000.They have initially set their billing rate at $150 per hour.Their billable hours in the first month of operations (January)were 150 and in the second month of operations (February),175 billable hours.The costs incurred at these levels for January and February are given below.
Required:
  A. Classify each cost as fixed, variable, or mixed using bill able hours as the driver.
B. Use the high-low method to separate mixed costs into their fixed and variable components.
C. Compute the net income/loss for January and February.
D. If they expect to average 200 billable hours each month, what do they need to set as a
billing rate per hour to achieve their goal of generating $ \$ 10,000 $ of monthly net income?
Show your calculations.

Accepted Answer

The answer of Hamilton and Hamilton Attorneys at Law recently...

Question 6

Select the appropriate type of fixed cost for each cost listed below.
-Executive travel costs

Accepted Answer

A) Discretionary 
B) Committed

Question 7

Prince Edward Company produces hand-held calculators. The company controller wanted to calculate the fixed and variable costs associated with the maintenance cost incurred by the factory. Data for the past four months were collected.Coefficients shown by a regression program are as follows:
 $\begin{array}{lrr}& \text { Maintenance } & \text { Machine } \
\text { Month } & \text { cost } & \text { hours }\
\text { March } & \$ 4,180 & 328 \
\text { April } & 3,956 & 310 \
\text { May } & 4,686 & 386 \
\text { June } & 4,240 & 352
\end{array}$ $$\begin{array} { l l } 
\text { Intercept } & 985 \
\text { X Variable 1 } & 9.82
\end{array}$$
-Refer to the Figure.What is the fixed cost of maintenance when using the result of regression?

Accepted Answer

A) $985.00 
B) $978.37 
C) $982.00 
D) $988.00

Question 8

Select the appropriate type of cost for each of the definitions listed below.
-Remains constant on a per-unit basis within the relevant range

Accepted Answer

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

Question 9

Using Microsoft Excel,the function REGRESSION returns the parameters of a linear regression.

Accepted Answer

A) True 
 B)False

Question 10

The average unit cost at a monthly volume of 9,000 units is $3,and the average unit cost at a monthly volume of 22,500 units is $2.10.
Required:
 A. Devel op an equation for total monthly costs.
B. What are the total monthly costs if 14,000 units are produced?

Accepted Answer

The answer of The average unit cost at a monthly...

Question 11

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 "number of tax returns" represent?

Accepted Answer

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

Question 12

The cost of advertising is usually a discretionary fixed cost.

Accepted Answer

A) True 
 B)False

Question 13

Machine hours and electricity costs for Wells Industries for the year were as follows:
Required:
 $\begin{array}{lrr}& \text { Machine } & \text { Electricity } \
\text { Month } &\text { Hours } & \text { Costs }\\hline
\text { January } & 2,000 & \$ 9,200 \
\text { February } & 2,320 & 10,500 \
\text { March } & 1,520 & 6,750 \
\text { April } & 2,480 & 11,500 \
\text { May } & 3,040 & 14,125 \
\text { June } & 2,640 & 11,000\\text { July } & 3,280 & 12,375 \
\text { August } & 2,800 & 11,375 \
\text { September } & 1,600 & 7,750 \
\text { October } & 2,960 & 13,000 \
\text { November } & 3,760 & 15,500 \
\text { December } & 3,360 & 13,875
\end{array}$ A. Using the high-low method, devel op an estimate of variable electricity costs per machine hour.
B. Using the high-low method, devel op an estimate of fixed electricity costs per month.
C. Using the high-low method, devel op a cost function for monthly electricity costs.
D. Estimate electricity costs for a month in which 5,000 machine hours are worked.

Accepted Answer

The answer of Machine hours and electricity costs for Wells...

Question 14

Select the appropriate cost behaviour for the following costs incurred by a bicycle manufacturer.
-Cost of assembly-line workers

Accepted Answer

A) Variable 
B) Fixed

Question 15

What is characteristic of a committed fixed cost?

Accepted Answer

A) It can be easily changed. 
B) It often involves a long-term contract. 
C) It changes when output changes. 
D) It includes direct materials.

Question 16

As output increases,fixed costs per unit will also increase.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) Variable 
B) Fixed

Question 18

Select the appropriate cost behaviour for the following costs incurred by a bicycle manufacturer.
-Depreciation of robotic equipment

Accepted Answer

A) Variable 
B) Fixed

Question 19

Select the best description for the following:
-Machine hours

Accepted Answer

A) Fixed cost 
B) Variable cost 
C) Dependent variable 
D) Independent variable 
E) Variable rate
F)Cost equation

Question 20

The method of least squares was used to develop a cost equation to predict the cost of monthly equipment maintenance for the Regina Company. The following computer output was received:
The driver used was the number of machine hours.
 $\begin{array}{lr}
\text { Intercept } & 32,000 \
\text { Slope } & 25
\end{array}$
-Refer to the Figure.What is the independent variable of the cost formula for equipment maintenance?

Accepted Answer

A) number of machine hours 
B) the variable rate 
C) the fixed cost 
D) the total cost

Exam 3: Cost Behaviour

If output increases,what is the result?

Select the appropriate item for each of the definitions listed below. -May be discretionary or committed

What is a variable cost in a factory?

Select the appropriate type of fixed cost for each cost listed below. -Executive travel costs

Select the appropriate type of cost for each of the definitions listed below. -Remains constant on a per-unit basis within the relevant range

Using Microsoft Excel,the function REGRESSION returns the parameters of a linear regression.

The average unit cost at a monthly volume of 9,000 units is $3,and the average unit cost at a monthly volume of 22,500 units is $2.10. Required: A. Devel op an equation for total monthly costs. B. What are the total monthly costs if 14,000 units are produced?

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 "number of tax returns" represent?

The cost of advertising is usually a discretionary fixed cost.

Select the appropriate cost behaviour for the following costs incurred by a bicycle manufacturer. -Cost of assembly-line workers

What is characteristic of a committed fixed cost?

As output increases,fixed costs per unit will also increase.

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

Select the appropriate cost behaviour for the following costs incurred by a bicycle manufacturer. -Depreciation of robotic equipment

Select the best description for the following: -Machine hours