Question 1

Select the appropriate type of fixed cost for each cost listed below.
-Rent of machinery

Accepted Answer

A) Discretionary 
B) Committed

Question 2

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

Accepted Answer

A) Variable 
B) Fixed

Question 3

What is characteristic of a fixed cost within the relevant range?

Accepted Answer

A) It increases in total as output increases. 
B) It does not change in total as output changes. 
C) It decreases in total as output decreases. 
D) It has both a variable and a fixed component.

Question 4

Suppose the cost formula for monthly depreciation cost in a factory is as follows: Total cost = $20,000
Which type of cost does this formula represent?

Accepted Answer

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

Question 5

Select the appropriate item for each of the definitions listed below.
-A description of how a cost changes when the level of output changes

Accepted Answer

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

Question 6

Select the appropriate cost behaviour for each of the costs listed below.
-Cost of registering automobiles

Accepted Answer

A) Variable 
B) Fixed

Question 7

Computing fixed costs per unit may result in misleading information.

Accepted Answer

A) True 
 B)False

Question 8

An automobile manufacturer changes from using skilled labour to using computer-controlled assembly procedures.What impact will the past data have with respect to costs?

Accepted Answer

A) Past data is useful in predicting future costs. 
B) Past data is of little or no value in predicting future costs. 
C) Past data is should be used without adjustments to predict future costs. 
D) Past data is representative of future costs.

Question 9

Select the best description for the following:
-$12,000

Accepted Answer

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

Question 10

The cost accountant for Vancouver Company used an Excel spreadsheet program to run ordinary least squares on a set of cost data for its utility cost.Vancouver's cost driver for utility cost is machine hours.The following results were produced.
Required:
 $$\begin{array} { l l } 
\text { Intercept } & 3,500 \
\mathrm { X } \text { Variable } & 3.75
\end{array}$$ A. Construct the cost formula for Vancouver's utility cost using the results from the method of least squares.
B. Using the formula computed in (A), what is the estimated cost of utilities for May assuming that Vancouver will incur 150,000 machine hours?

Accepted Answer

The answer of The cost accountant for Vancouver Company used...

Question 11

Select the appropriate item for each of the definitions listed below.
-Relies on the quality of the subjective judgment of the analyst

Accepted Answer

A) High-low method 
B) Scattergraph method 
C) Method of least squares

Question 12

What is a feature of mixed costs?

Accepted Answer

A) They vary in direct proportion to changes in output. 
B) They stay the same regardless of output. 
C) They have the same cost behaviour as a step cost. 
D) They decrease in total when output decreases.

Question 13

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 Nova Scotia Accounting Firm's cost formula.What does $87,100 represent?

Accepted Answer

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

Question 14

Using Microsoft Excel,the function INTERCEPT returns the variable rate of the independent variable.

Accepted Answer

A) True 
 B)False

Question 15

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 Lake Louise Company's estimate of total janitorial cost at a level of 625 machine hours?

Accepted Answer

A) $4,080 
B) $6,120 
C) $7,500 
D) $11,580

Question 16

Select the appropriate cost behaviour for each of the costs listed below.
-Direct labour

Accepted Answer

A) Variable 
B) Fixed

Question 17

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 "total cost" represent?

Accepted Answer

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

Question 18

Select the appropriate type of fixed cost for each cost listed below.
-Internet advertising

Accepted Answer

A) Discretionary 
B) Committed

Question 19

The following cost formula was developed using monthly data for Montreal Clothing Store.Total cost = $75,620 + ($242 × number of customers)
-Refer to the Figure.What does $242 represent?

Accepted Answer

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

Question 20

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

Accepted Answer

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

Exam 3: Cost Behaviour

Select the appropriate type of fixed cost for each cost listed below. -Rent of machinery

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

What is characteristic of a fixed cost within the relevant range?

Suppose the cost formula for monthly depreciation cost in a factory is as follows: Total cost = $20,000 Which type of cost does this formula represent?

Select the appropriate item for each of the definitions listed below. -A description of how a cost changes when the level of output changes

Select the appropriate cost behaviour for each of the costs listed below. -Cost of registering automobiles

Computing fixed costs per unit may result in misleading information.

An automobile manufacturer changes from using skilled labour to using computer-controlled assembly procedures.What impact will the past data have with respect to costs?

Select the best description for the following: -$12,000

Select the appropriate item for each of the definitions listed below. -Relies on the quality of the subjective judgment of the analyst

What is a feature of mixed costs?

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 Nova Scotia Accounting Firm's cost formula.What does $87,100 represent?

Using Microsoft Excel,the function INTERCEPT returns the variable rate of the independent variable.

Select the appropriate cost behaviour for each of the costs listed below. -Direct labour

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 "total cost" represent?

Select the appropriate type of fixed cost for each cost listed below. -Internet advertising

The following cost formula was developed using monthly data for Montreal Clothing Store.Total cost = $75,620 + ($242 × number of customers) -Refer to the Figure.What does $242 represent?

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