Question 1

Which of the following cost behaviors cannot be accurately represented by a single straight line?

Accepted Answer

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

Question 2

Which type of costing system can only be used for internal financial reporting because it is unacceptable by GAAP?

Accepted Answer

A) Prime costing 
B) Out-of-pocket costing 
C) Variable costing 
D) Absorption costing 
A) Prime costing 
B) Out-of-pocket costing 
C) Variable costing 
D) Absorption costing

Question 3

Pablo was reviewing the water bill for his carwash business and determined that the highest bill, $5000, occurred in July when 4000 cars were washed and the lowest bill, $4000, occurred in February when 2000 cars were washed. What was the fixed portion of the water bill?

Accepted Answer

A) $4000 
B) $1000 
C) $2000 
D) $3000 
A) $4000 
B) $1000 
C) $2000 
D) $3000

Question 4

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 5

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 6

A contribution margin income statement allows managers to see which costs will change with changes in volume and which costs will remain fixed.

Accepted Answer

A) True 
 B)False

Question 7

Jeans's Fitness Club provides monthly memberships as well as personal training sessions. The personal trainers earn 50% of the revenue for all personal training sessions. The Fitness Club also sells nutrition products. Jeans's general ledger accounts indicate the following for the year. The front desk staff wages expense remains the same throughout the year.   If a contribution margin income statement is prepared for the year, what is the contribution margin?

Accepted Answer

A) $74,000 
B) $363,000 
C) $289,000 
D) $215,000 
A) $74,000 
B) $363,000 
C) $289,000 
D) $215,000

Question 8

Answer the following questions:
a. What is a cost equation?
b. If a company has fixed costs of $1,000 and variable costs of $4 per unit, what is their cost equation?
c. What would a company use a cost equation for?

Accepted Answer

a. A cost equation takes the form of y =

Question 9

Which type of cost behavior is indicated by the following graphs?

Accepted Answer

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

Question 10

Managers should consider which of the following when predicting costs at different volumes?

Accepted Answer

A) The relevant range of the cost 
B) The type of cost behavior 
C) Both of the above should be considered. 
D) Neither of the above should be considered. 
A) The relevant range of the cost 
B) The type of cost behavior 
C) Both of the above should be considered. 
D) Neither of the above should be considered.

Question 11

The Heartlake 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 contribution margin for last year?

Accepted Answer

A) $1,558,000 
B) $349,600 
C) $362,900 
D) $2,753,100 
A) $1,558,000 
B) $349,600 
C) $362,900 
D) $2,753,100

Question 12

Maintenance costs at Seaside Manufacturing over the past six months are listed in the following table.   Using the high-low method, what would the total maintenance costs be if 17,800 machine hours were used? (Round any intermediary calculations to the nearest cent.)

Accepted Answer

A) $15,880 
B) $10,680 
C) $28,680 
D) $5320 
A) $15,880 
B) $10,680 
C) $28,680 
D) $5320

Question 13

Under variable costing, all nonmanufacturing costs are treated as inventoriable product costs.

Accepted Answer

A) True 
 B)False

Question 14

The variable cost per unit of activity increases as activity increases.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

George Company has a relevant range of 150,000 units to 400,000 units. The company has total fixed costs of $527,000. Total fixed and variable costs are $622,500 at a production level of 176,000 units. The variable cost per unit at 350,000 units is

Accepted Answer

A) $2.99 
B) $0.27 
C) $0.54 
D) $3.54 
A) $2.99 
B) $0.27 
C) $0.54 
D) $3.54

Question 18

The X Variable 1 Coefficient in regression analysis yields the variable cost per unit of activity.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is a fixed cost?

Accepted Answer

A) Direct materials cost 
B) Direct labor cost 
C) Straight-line depreciation expense 
D) Sales commission expense 
A) Direct materials cost 
B) Direct labor cost 
C) Straight-line depreciation expense 
D) Sales commission expense

Question 20

What term represents the fixed cost component in the equation: y = vx + f?

Accepted Answer

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

Which of the following cost behaviors cannot be accurately represented by a single straight line?

Which type of costing system can only be used for internal financial reporting because it is unacceptable by GAAP?

Pablo was reviewing the water bill for his carwash business and determined that the highest bill, $5000, occurred in July when 4000 cars were washed and the lowest bill, $4000, occurred in February when 2000 cars were washed. What was the fixed portion of the water bill?

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

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

A contribution margin income statement allows managers to see which costs will change with changes in volume and which costs will remain fixed.

Answer the following questions: a. What is a cost equation? b. If a company has fixed costs of $1,000 and variable costs of $4 per unit, what is their cost equation? c. What would a company use a cost equation for?

Which type of cost behavior is indicated by the following graphs?

Managers should consider which of the following when predicting costs at different volumes?

The Heartlake 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 contribution margin for last year?

Maintenance costs at Seaside Manufacturing over the past six months are listed in the following table. Using the high-low method, what would the total maintenance costs be if 17,800 machine hours were used? (Round any intermediary calculations to the nearest cent.)

Under variable costing, all nonmanufacturing costs are treated as inventoriable product costs.

The variable cost per unit of activity increases as activity increases.

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

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

George Company has a relevant range of 150,000 units to 400,000 units. The company has total fixed costs of $527,000. Total fixed and variable costs are $622,500 at a production level of 176,000 units. The variable cost per unit at 350,000 units is

The X Variable 1 Coefficient in regression analysis yields the variable cost per unit of activity.

Which of the following is a fixed cost?

What term represents the fixed cost component in the equation: y = vx + f?

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 Evalulation

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

Which of the following cost behaviors cannot be accurately represented by a single straight line?

Which type of costing system can only be used for internal financial reporting because it is unacceptable by GAAP?

Pablo was reviewing the water bill for his carwash business and determined that the highest bill, $5000, occurred in July when 4000 cars were washed and the lowest bill, $4000, occurred in February when 2000 cars were washed. What was the fixed portion of the water bill?

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

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

A contribution margin income statement allows managers to see which costs will change with changes in volume and which costs will remain fixed.

Answer the following questions: a. What is a cost equation? b. If a company has fixed costs of $1,000 and variable costs of $4 per unit, what is their cost equation? c. What would a company use a cost equation for?

Which type of cost behavior is indicated by the following graphs?

Managers should consider which of the following when predicting costs at different volumes?

The Heartlake 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 contribution margin for last year?

Maintenance costs at Seaside Manufacturing over the past six months are listed in the following table. Using the high-low method, what would the total maintenance costs be if 17,800 machine hours were used? (Round any intermediary calculations to the nearest cent.)

Under variable costing, all nonmanufacturing costs are treated as inventoriable product costs.

The variable cost per unit of activity increases as activity increases.

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

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

George Company has a relevant range of 150,000 units to 400,000 units. The company has total fixed costs of $527,000. Total fixed and variable costs are $622,500 at a production level of 176,000 units. The variable cost per unit at 350,000 units is

The X Variable 1 Coefficient in regression analysis yields the variable cost per unit of activity.

Which of the following is a fixed cost?

What term represents the fixed cost component in the equation: y = vx + f?

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 Evalulation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters