Question 1

When absorption costing is used and management bonuses are related to operating income, managers are more likely to

Accepted Answer

A) decrease inventory levels. 
B) increase inventory levels. 
C) keep inventory levels consistent. 
D) steal from the company. 
A) decrease inventory levels. 
B) increase inventory levels. 
C) keep inventory levels consistent. 
D) steal from the company.

Question 2

The Akron Slugger Company produces various types of wooden baseball bats. It has calculated the average cost per unit of a production level of 7,500 bats to be $10.00. If $22,500 of the total costs are fixed, what is the variable cost of producing each bat?

Accepted Answer

A) $10.00 
B) $52,500 
C) $7.00 
D) $3.00 
A) $10.00 
B) $52,500 
C) $7.00 
D) $3.00

Question 3

What variable represents the volume of activity in the equation: y = vx + f? (Assume v represents the variable cost per unit of activity.)

Accepted Answer

A) v 
B) x 
C) y 
D) vx 
A) v 
B) x 
C) y 
D) vx

Question 4

The contribution margin income statement presents ________ above the contribution margin line.

Accepted Answer

A) only variable expenses relating to selling and administrative activities 
B) only fixed expenses relating to selling and administrative activities 
C) all fixed expenses 
D) all variable expenses 
A) only variable expenses relating to selling and administrative activities 
B) only fixed expenses relating to selling and administrative activities 
C) all fixed expenses 
D) all variable expenses

Question 5

Regression analysis can be used in ABC implementations to help managers select the primary cost driver for an activity cost pool.

Accepted Answer

A) True 
 B)False

Question 6

In the equation y = $7.20x + $790, "x" represents

Accepted Answer

A) number of units produced. 
B) total fixed costs. 
C) total costs. 
D) none of the above. 
A) number of units produced. 
B) total fixed costs. 
C) total costs. 
D) none of the above.

Question 7

Jones Ice Cream Stand is operated by Mr. Jones and experiences different sales patterns throughout the year. To plan for the future, Mr. Jones wants to determine its cost behavior patterns. He has the following information available about the ice cream stand's operating costs and the number of soft serve cones served.   The variable cost per ice cream cone using the high-low method is

Accepted Answer

A) $0.25. 
B) $4.00. 
C) $0.63. 
D) $1.19. 
A) $0.25. 
B) $4.00. 
C) $0.63. 
D) $1.19.

Question 8

Snowy Mountain Company has the following selected data for the past year:
   There were no units in beginning inventory.
Required:
a. Prepare an income statement for last year using absorption costing.
b. Calculate the value of the ending inventory using absorption costing.
c. Prepare an income statement for last year using variable costing.
d. Calculate the value of the ending inventory using variable costing.

Accepted Answer

The answer of Snowy Mountain Company has the following selected...

Question 9

How is operating income affected if the number of units sold exceeds the number of units produced?

Accepted Answer

A) Operating income would be higher under a variable costing income statement. 
B) Operating income would be lower under a variable costing income statement. 
C) Operating income would be higher under an absorption costing income statement. 
D) Operating income would be the same under both a variable costing and absorption costing income statement. 
A) Operating income would be higher under a variable costing income statement. 
B) Operating income would be lower under a variable costing income statement. 
C) Operating income would be higher under an absorption costing income statement. 
D) Operating income would be the same under both a variable costing and absorption costing income statement.

Question 10

When using the high-low method, the "low" point should be chosen as the data point with the lowest volume (not the lowest cost).

Accepted Answer

A) True 
 B)False

Question 11

What are scatter plots useful for?

Accepted Answer

A) Determining the overall strength of the relationship between historical cost and volume 
B) Identifying potential outliers 
C) Both of the above 
D) Neither of the above 
A) Determining the overall strength of the relationship between historical cost and volume 
B) Identifying potential outliers 
C) Both of the above 
D) Neither of the above

Question 12

Under variable costing, fixed manufacturing overhead is expensed immediately as a period cost.

Accepted Answer

A) True 
 B)False

Question 13

Best Birdies produces ornate birdcages. The company's average cost per unit is $18.00 when it produces 2,200 birdcages. If $5,500 of the costs are fixed, and the plant manager uses the cost equation to predict total costs, his forecast for 3,000 birdcages will be

Accepted Answer

A) $52,000. 
B) $54,000. 
C) $39,600. 
D) $14,400. 
A) $52,000. 
B) $54,000. 
C) $39,600. 
D) $14,400.

Question 14

At any given volume, average fixed costs must equal average variable costs.

Accepted Answer

A) True 
 B)False

Question 15

An R-square value over .80 generally indicates that the cost equation is not very reliable for predicting costs at other volumes within the relevant range.

Accepted Answer

A) True 
 B)False

Question 16

On a regression analysis output generated with Excel, a regression equation's "goodness of fit" is represented by the ________.

Accepted Answer

A) intercept coefficient 
B) x variable 1 coefficient 
C) residual 
D) R-square 
A) intercept coefficient 
B) x variable 1 coefficient 
C) residual 
D) R-square

Question 17

At Dwight Incorporated, total fixed and variable costs are $400,000 at a production level of 100,000 units. The company has total fixed costs of $225,000. The fixed cost per unit at a production level of 150,000 units is

Accepted Answer

A) $4.00. 
B) $2.25. 
C) $2.67. 
D) $1.50. 
A) $4.00. 
B) $2.25. 
C) $2.67. 
D) $1.50.

Question 18

Contribution margin income statements organize costs by behavior.

Accepted Answer

A) True 
 B)False

Question 19

When using the high-low method, the "high" point should be chosen as the data point with the highest cost (not the highest volume).

Accepted Answer

A) True 
 B)False

Question 20

It costs Homer's Manufacturing $0.75 to produce baseballs and Homer sells them for $4.00 a piece. Homer pays a sales commission of 5% of sales revenue to his sales staff. Homer also pays $12,000 a month rent for his factory and store, and also pays $75,000 a month to his staff in addition to the commissions. Homer sold 67,500 baseballs in June. If Homer prepares a contribution margin income statement for the month of June, what would be his contribution margin?

Accepted Answer

A) $205,875 
B) $334,125 
C) $64,125 
D) $270,000 
A) $205,875 
B) $334,125 
C) $64,125 
D) $270,000

When absorption costing is used and management bonuses are related to operating income, managers are more likely to

The Akron Slugger Company produces various types of wooden baseball bats. It has calculated the average cost per unit of a production level of 7,500 bats to be $10.00. If $22,500 of the total costs are fixed, what is the variable cost of producing each bat?

What variable represents the volume of activity in the equation: y = vx + f? (Assume v represents the variable cost per unit of activity.)

The contribution margin income statement presents ________ above the contribution margin line.

Regression analysis can be used in ABC implementations to help managers select the primary cost driver for an activity cost pool.

In the equation y = $7.20x + $790, "x" represents

How is operating income affected if the number of units sold exceeds the number of units produced?

When using the high-low method, the "low" point should be chosen as the data point with the lowest volume (not the lowest cost).

What are scatter plots useful for?

Under variable costing, fixed manufacturing overhead is expensed immediately as a period cost.

Best Birdies produces ornate birdcages. The company's average cost per unit is $18.00 when it produces 2,200 birdcages. If $5,500 of the costs are fixed, and the plant manager uses the cost equation to predict total costs, his forecast for 3,000 birdcages will be

At any given volume, average fixed costs must equal average variable costs.

An R-square value over .80 generally indicates that the cost equation is not very reliable for predicting costs at other volumes within the relevant range.

On a regression analysis output generated with Excel, a regression equation's "goodness of fit" is represented by the ________.

At Dwight Incorporated, total fixed and variable costs are $400,000 at a production level of 100,000 units. The company has total fixed costs of $225,000. The fixed cost per unit at a production level of 150,000 units is

Contribution margin income statements organize costs by behavior.

When using the high-low method, the "high" point should be chosen as the data point with the highest cost (not the highest volume).

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, Lean Operations, and the Costs of Quality

Process Costing

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evaluation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters

Exam 6: Cost Behavior

When absorption costing is used and management bonuses are related to operating income, managers are more likely to

The Akron Slugger Company produces various types of wooden baseball bats. It has calculated the average cost per unit of a production level of 7,500 bats to be $10.00. If $22,500 of the total costs are fixed, what is the variable cost of producing each bat?

What variable represents the volume of activity in the equation: y = vx + f? (Assume v represents the variable cost per unit of activity.)

The contribution margin income statement presents ________ above the contribution margin line.

Regression analysis can be used in ABC implementations to help managers select the primary cost driver for an activity cost pool.

In the equation y = $7.20x + $790, "x" represents

How is operating income affected if the number of units sold exceeds the number of units produced?

When using the high-low method, the "low" point should be chosen as the data point with the lowest volume (not the lowest cost).

What are scatter plots useful for?

Under variable costing, fixed manufacturing overhead is expensed immediately as a period cost.

Best Birdies produces ornate birdcages. The company's average cost per unit is $18.00 when it produces 2,200 birdcages. If $5,500 of the costs are fixed, and the plant manager uses the cost equation to predict total costs, his forecast for 3,000 birdcages will be

At any given volume, average fixed costs must equal average variable costs.

An R-square value over .80 generally indicates that the cost equation is not very reliable for predicting costs at other volumes within the relevant range.

On a regression analysis output generated with Excel, a regression equation's "goodness of fit" is represented by the ________.

At Dwight Incorporated, total fixed and variable costs are $400,000 at a production level of 100,000 units. The company has total fixed costs of $225,000. The fixed cost per unit at a production level of 150,000 units is

Contribution margin income statements organize costs by behavior.

When using the high-low method, the "high" point should be chosen as the data point with the highest cost (not the highest volume).

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, Lean Operations, and the Costs of Quality

Process Costing

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evaluation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters