Question 1

The contribution margin income statement presents ________ below 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 2

In a regression output, the "X variable 1 coefficient" represents the variable cost component of a mixed cost equation.

Accepted Answer

A) True 
 B)False

Question 3

If the data points in a scatter plot fall in a fairly straight line, it means that there is a fairly strong relationship between cost and volume.

Accepted Answer

A) True 
 B)False

Question 4

Neon Company manufactures widgets. The following data is related to sales and production of the widgets for last year.   Using variable costing, what is the operating income for last year?

Accepted Answer

A) $143,000 
B) $31,300 
C) $69,300 
D) $107,300 
A) $143,000 
B) $31,300 
C) $69,300 
D) $107,300

Question 5

Absorption costing is required to be used for

Accepted Answer

A) federal income tax reports. 
B) external financial reports, but not income taxes. 
C) neither external financial reports nor income tax reports. 
D) both external financial reports and income tax reports. 
A) federal income tax reports. 
B) external financial reports, but not income taxes. 
C) neither external financial reports nor income tax reports. 
D) both external financial reports and income tax reports.

Question 6

Which step is performed first when using the high-low method?

Accepted Answer

A) Find the vertical intercept 
B) Write the cost equation 
C) Predict total cost 
D) Find the slope 
A) Find the vertical intercept 
B) Write the cost equation 
C) Predict total cost 
D) Find the slope

Question 7

Your client's company wants to determine the relationship between its monthly operating costs and a potential cost driver. The output of regression analysis showed the following information: Intercept Coefficient = 75,828
X Variable 1 Coefficient = 52.61
R-square = 0.9756
Should your client use this information to predict monthly operating costs?

Accepted Answer

A) No, because R-square is so high. 
B) Yes, because R-square is so high. 
C) Yes, because regression analysis can be relied upon. 
D) There is not enough information to make this prediction. 
A) No, because R-square is so high. 
B) Yes, because R-square is so high. 
C) Yes, because regression analysis can be relied upon. 
D) There is not enough information to make this prediction.

Question 8

Total costs for Locke & Company at 120,000 units are $289,000, while total fixed costs are $145,000. The total variable costs at a level of 250,000 units would be

Accepted Answer

A) $300,000. 
B) $602,083. 
C) $138,720. 
D) $302,083. 
A) $300,000. 
B) $602,083. 
C) $138,720. 
D) $302,083.

Question 9

An equation of a line for total costs is

Accepted Answer

A) y = vx - f. 
B) y = fx + v. 
C) y = f. 
D) none of the above. 
A) y = vx - f. 
B) y = fx + v. 
C) y = f. 
D) none of the above.

Question 10

Which of the following would be considered a committed fixed cost?

Accepted Answer

A) Depreciation 
B) Research and Development 
C) Office holiday party 
D) Advertising 
A) Depreciation 
B) Research and Development 
C) Office holiday party 
D) Advertising

Question 11

If inventory has grown, operating income will be higher under absorption costing than it is under variable costing.

Accepted Answer

A) True 
 B)False

Question 12

Match between columns
                        Premises: Costing concept where all manufacturing-related costs , whether fixed or variable, are "absorbed" into the cost of the product.
A cost behavior that is not linear (not a straight line).
Describes how costs change as volume changes.
A method for determining cost behavior that is based on a manager's judgment in classifying each account as to its cost behavior.
A mathematical equation for a straight line that expresses how a cost behaves.
A cost behavior that is fixed over a small range of activity and then jumps to a different fixed level with moderate changes in volume.
Costs that change , but not in direct proportion to changes in volume.
A statistical procedure for determining the line that best fits the data by using all of the historical data points , not just the high and low data points.
Sales revenue minus variable expenses.
Costs that change in total in direct proportion to changes in volume.
Costs that do not change in total despite wide changes in volume.
Abnormal data points; data points that do not fall in the same general pattern as the other data points.

Accepted Answer

The Answer of Variable costs and Cost behavior and Step is...

Question 13

All variable costs are listed ________ on a contribution margin income statement.

Accepted Answer

A) above the gross profit line 
B) above the contribution margin line 
C) below the contribution margin line 
D) below the gross profit line 
A) above the gross profit line 
B) above the contribution margin line 
C) below the contribution margin line 
D) below the gross profit line

Question 14

The cost equation determined by regression analysis is usually more accurate than the line determined by the high-low method.

Accepted Answer

A) True 
 B)False

Question 15

Manufacturing overhead (consisting of costs like factory rent, factory utilities, factory maintenance, and other similar costs)is usually what type of cost?

Accepted Answer

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

Question 16

Neon Company manufactures widgets. The following data is related to sales and production of the widgets for last year.   Using absorption costing, what is operating income for last year?

Accepted Answer

A) $ 39,300 
B) $ 66,300 
C) $219,700 
D) $143,000 
A) $ 39,300 
B) $ 66,300 
C) $219,700 
D) $143,000

Question 17

Lily's Pastries produces cupcakes, which sell for $5 each. During the current month, Lily produced 2,800 cupcakes, but only sold 2,700 cupcakes. The variable cost per cupcake was $3 and the sales commission per cupcake was $0.50. Total fixed manufacturing costs were $1,400 and total fixed marketing and administrative costs were $1,200. What is the product cost per cupcake under absorption costing?

Accepted Answer

A) $3.50 
B) $5.50 
C) $5.00 
D) $3.00 
A) $3.50 
B) $5.50 
C) $5.00 
D) $3.00

Question 18

Total mixed costs can be expressed as a combination of the fixed and sunk cost equations.

Accepted Answer

A) True 
 B)False

Question 19

Using account analysis, what type of cost is the rental of a space at $6,000 per month?

Accepted Answer

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

Question 20

Johnson Trucking Company wants to determine a fuel surcharge to add to its customers' bills based on the number of miles driven to each area. It wants to separate the fixed and variable portion of the truck's operating costs so it has a better idea of how distance affects these costs. Johnson Trucking Company has the following data available.   Using the high-low method, the monthly operating costs if Johnson Trucking Company drives 20,000 miles in a month will be

Accepted Answer

A) $28,650. 
B) $10,500. 
C) $25,500. 
D) $15,000. 
A) $28,650. 
B) $10,500. 
C) $25,500. 
D) $15,000.

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

In a regression output, the "X variable 1 coefficient" represents the variable cost component of a mixed cost equation.

If the data points in a scatter plot fall in a fairly straight line, it means that there is a fairly strong relationship between cost and volume.

Neon Company manufactures widgets. The following data is related to sales and production of the widgets for last year. Using variable costing, what is the operating income for last year?

Absorption costing is required to be used for

Which step is performed first when using the high-low method?

Total costs for Locke & Company at 120,000 units are $289,000, while total fixed costs are $145,000. The total variable costs at a level of 250,000 units would be

An equation of a line for total costs is

Which of the following would be considered a committed fixed cost?

If inventory has grown, operating income will be higher under absorption costing than it is under variable costing.

All variable costs are listed ________ on a contribution margin income statement.

The cost equation determined by regression analysis is usually more accurate than the line determined by the high-low method.

Manufacturing overhead (consisting of costs like factory rent, factory utilities, factory maintenance, and other similar costs)is usually what type of cost?

Neon Company manufactures widgets. The following data is related to sales and production of the widgets for last year. Using absorption costing, what is operating income for last year?

Total mixed costs can be expressed as a combination of the fixed and sunk cost equations.

Using account analysis, what type of cost is the rental of a space at $6,000 per month?

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

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

In a regression output, the "X variable 1 coefficient" represents the variable cost component of a mixed cost equation.

If the data points in a scatter plot fall in a fairly straight line, it means that there is a fairly strong relationship between cost and volume.

Neon Company manufactures widgets. The following data is related to sales and production of the widgets for last year. Using variable costing, what is the operating income for last year?

Absorption costing is required to be used for

Which step is performed first when using the high-low method?

Total costs for Locke & Company at 120,000 units are $289,000, while total fixed costs are $145,000. The total variable costs at a level of 250,000 units would be

An equation of a line for total costs is

Which of the following would be considered a committed fixed cost?

If inventory has grown, operating income will be higher under absorption costing than it is under variable costing.

All variable costs are listed ________ on a contribution margin income statement.

The cost equation determined by regression analysis is usually more accurate than the line determined by the high-low method.

Manufacturing overhead (consisting of costs like factory rent, factory utilities, factory maintenance, and other similar costs)is usually what type of cost?

Neon Company manufactures widgets. The following data is related to sales and production of the widgets for last year. Using absorption costing, what is operating income for last year?

Total mixed costs can be expressed as a combination of the fixed and sunk cost equations.

Using account analysis, what type of cost is the rental of a space at $6,000 per month?

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