Question 1

Fixed costs per unit decrease as production levels increase.

Accepted Answer

A) True 
 B)False

Question 2

Total fixed costs for Diamond Enterprises are $800,000. Total costs, including both fixed and variable, are $890,000 if 120,000 units are produced. The fixed cost per unit at 200,000 units would be

Accepted Answer

A) $4.00/unit. 
B) $7.42/unit. 
C) $4.45/unit. 
D) $0.45/unit. 
A) $4.00/unit. 
B) $7.42/unit. 
C) $4.45/unit. 
D) $0.45/unit.

Question 3

Traditional income statements provide managers with little cost behavior information.

Accepted Answer

A) True 
 B)False

Question 4

If the data points were randomly scattered, the R-square value would be closer to 0 than 1.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) $250,250 are the total variable costs. 
B) $250,250 are the total costs. 
C) $250,250 are the total fixed costs. 
D) $250,250 are the total overhead costs. 
A) $250,250 are the total variable costs. 
B) $250,250 are the total costs. 
C) $250,250 are the total fixed costs. 
D) $250,250 are the total overhead costs.

Question 6

Total mixed costs can be expressed as y = vx, where y = total variable cost, v = variable cost per unit of activity, and x = volume of activity.

Accepted Answer

A) True 
 B)False

Question 7

When using the high-low method, fixed costs and variable costs appear in the same cost equation.

Accepted Answer

A) True 
 B)False

Question 8

Tasty Treats is a snow cone stand near the local park. To plan for the future, Tasty Treats wants to determine its cost behavior patterns. It has the following information available about its operating costs and the number of snow cones served.   Using the high-low method, the fixed costs for a month are

Accepted Answer

A) $ 980. 
B) $12,660. 
C) $ 1,500. 
D) $ 5,320. 
A) $ 980. 
B) $12,660. 
C) $ 1,500. 
D) $ 5,320.

Question 9

The Maple Company has total fixed costs of $400,000. It also has $200,000 in total variable costs. These costs exist at a production level of 100,000 units. The fixed cost per unit is

Accepted Answer

A) $2.00. 
B) $6.00. 
C) $1.50. 
D) $4.00. 
A) $2.00. 
B) $6.00. 
C) $1.50. 
D) $4.00.

Question 10

When graphing total fixed costs, the cost line always begins at the origin.

Accepted Answer

A) True 
 B)False

Question 11

The graph of total variable cost will be a horizontal line over all activity levels within the relevant range.

Accepted Answer

A) True 
 B)False

Question 12

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 variable cost per unit at 150,000 units is

Accepted Answer

A) $1.75. 
B) $2.25. 
C) $4.00. 
D) $1.17. 
A) $1.75. 
B) $2.25. 
C) $4.00. 
D) $1.17.

Question 13

In the equation y = $11.75x + $550, "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 14

The HF Corporation manufactures and sells toy gyroscopes. The following data is related to sales and production of the toy gyroscopes for last year.   Using variable costing, what is the operating income for last year?

Accepted Answer

A) $1,200,000 
B) $103,000 
C) $413,000 
D) $258,000 
A) $1,200,000 
B) $103,000 
C) $413,000 
D) $258,000

Question 15

The fixed cost per unit of activity varies with changes in volume.

Accepted Answer

A) True 
 B)False

Question 16

Maintenance costs at Wilmington Manufacturing over the past six months are listed in the following table.   Using the high-low method, what would the variable maintenance cost per machine hour be?

Accepted Answer

A) $1.25 
B) $0.80 
C) $0.87 
D) $0.88 
A) $1.25 
B) $0.80 
C) $0.87 
D) $0.88

Question 17

Joe, Jeff and Jerry Frank own Frank Brothers Farm, a seed company specializing in seed corn. At their weekly meeting they tried to calculate the portion of the farm's overhead expenses that is fixed and the portion that is variable. Over the past twelve months, the number of bushels of seed corn that has been sold reached its peak in May, when the total monthly overhead costs totaled $250,000 for 95,000 bushels of seed corn sold. The lowest number of bushels sold in the last twelve months occurred in December, when total overhead costs were $75,000 for 7,500 bushels sold. What is the fixed portion of the monthly overhead expenses?

Accepted Answer

A) $60,000 
B) $242,500 
C) $190,000 
D) $75,000 
A) $60,000 
B) $242,500 
C) $190,000 
D) $75,000

Question 18

Fixed costs that are the result of previous management decisions that current managers have no control over in the short run are called ________ fixed costs.

Accepted Answer

A) discretionary 
B) committed 
C) standard 
D) past 
A) discretionary 
B) committed 
C) standard 
D) past

Question 19

Maintenance costs at Wilmington Manufacturing over the past six months are listed in the following table.   Using the high-low method, what would the monthly fixed maintenance cost be?

Accepted Answer

A) $ 1,200 
B) $ 2,320 
C) $13,680 
D) $27,440 
A) $ 1,200 
B) $ 2,320 
C) $13,680 
D) $27,440

Question 20

Scranton Printer Company would like to estimate its total manufacturing costs using regression analysis but is unsure whether machine hours or units produced would be a better predictor of total manufacturing costs.
Output from regression analysis using machine hours as the volume (cost driver)follows. Note: the results are excerpts so not all of the regression analysis results are presented.   Output from a regression analysis using units produced as the volume (cost driver)follows. Again, the results are excerpts so not all of the regression analysis results are presented.   Required:
a. What is the cost equation if machine hours is used as the volume (cost driver)?
b. Predict total manufacturing costs using machine hours as the volume (cost driver)if Scranton Paper Company uses 18,000 hours.
c. What is the cost equation if units produced is used as the volume (cost driver)?
d. Predict total manufacturing costs using units produced as the volume (cost driver)if Scranton Paper Company produces 65,000 units.
e. Which volume (cost driver)is a better predictor of total manufacturing costs? Why?

Accepted Answer

a.
y = $314,842.08 + $8.96x
b.
 @#IMG-DLM& c.
y =

Fixed costs per unit decrease as production levels increase.

Total fixed costs for Diamond Enterprises are $800,000. Total costs, including both fixed and variable, are $890,000 if 120,000 units are produced. The fixed cost per unit at 200,000 units would be

Traditional income statements provide managers with little cost behavior information.

If the data points were randomly scattered, the R-square value would be closer to 0 than 1.

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

Total mixed costs can be expressed as y = vx, where y = total variable cost, v = variable cost per unit of activity, and x = volume of activity.

When using the high-low method, fixed costs and variable costs appear in the same cost equation.

The Maple Company has total fixed costs of $400,000. It also has $200,000 in total variable costs. These costs exist at a production level of 100,000 units. The fixed cost per unit is

When graphing total fixed costs, the cost line always begins at the origin.

The graph of total variable cost will be a horizontal line over all activity levels within the relevant range.

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 variable cost per unit at 150,000 units is

In the equation y = $11.75x + $550, "x" represents

The HF Corporation manufactures and sells toy gyroscopes. The following data is related to sales and production of the toy gyroscopes for last year. Using variable costing, what is the operating income for last year?

The fixed cost per unit of activity varies with changes in volume.

Maintenance costs at Wilmington Manufacturing over the past six months are listed in the following table. Using the high-low method, what would the variable maintenance cost per machine hour be?

Fixed costs that are the result of previous management decisions that current managers have no control over in the short run are called ________ fixed costs.

Maintenance costs at Wilmington Manufacturing over the past six months are listed in the following table. Using the high-low method, what would the monthly fixed maintenance cost be?

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

Fixed costs per unit decrease as production levels increase.

Total fixed costs for Diamond Enterprises are $800,000. Total costs, including both fixed and variable, are $890,000 if 120,000 units are produced. The fixed cost per unit at 200,000 units would be

Traditional income statements provide managers with little cost behavior information.

If the data points were randomly scattered, the R-square value would be closer to 0 than 1.

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

Total mixed costs can be expressed as y = vx, where y = total variable cost, v = variable cost per unit of activity, and x = volume of activity.

When using the high-low method, fixed costs and variable costs appear in the same cost equation.

The Maple Company has total fixed costs of $400,000. It also has $200,000 in total variable costs. These costs exist at a production level of 100,000 units. The fixed cost per unit is

When graphing total fixed costs, the cost line always begins at the origin.

The graph of total variable cost will be a horizontal line over all activity levels within the relevant range.

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 variable cost per unit at 150,000 units is

In the equation y = $11.75x + $550, "x" represents

The HF Corporation manufactures and sells toy gyroscopes. The following data is related to sales and production of the toy gyroscopes for last year. Using variable costing, what is the operating income for last year?

The fixed cost per unit of activity varies with changes in volume.

Maintenance costs at Wilmington Manufacturing over the past six months are listed in the following table. Using the high-low method, what would the variable maintenance cost per machine hour be?

Fixed costs that are the result of previous management decisions that current managers have no control over in the short run are called ________ fixed costs.

Maintenance costs at Wilmington Manufacturing over the past six months are listed in the following table. Using the high-low method, what would the monthly fixed maintenance cost be?

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