Exam 3: Cost Behavior

Activity-based use of resources can improve both managerial control and decision making because it encourages managers to pay more attention to controlling resource usage and spending.

A $4,000 per month salary paid to a supervisor is an example of a:

Figure 3-3 The Sandoval Company has four process engineers that are each able to process 1,500 design changes. Last year 5,250 design changes were produced by the four engineers. Each engineer is paid $60,000 per year -Refer to Figure 3-3. Calculate the activity rate per change order.

The analysis method is a method of determining cost behavior.

The high-low method preselects the two points that are used to compute the parameters F and X in the expression Y = F + VX

Which of the following statements is TRUE about fixed and variable costs?

As the volume of activity increases within the relevant range, the variable cost per unit

Managers agree that the ideas behind the learning curve can extend to the service industry only.

Which of the following would be an example of a unit-based cost driver?

Marlowe Company currently leases a delivery truck from Burton Enterprises for a fee of $250 per month plus $0.40 per mile. Management is evaluating the desirability of switching to a modern, fuel-efficient truck, which can be leased from Goliath, Inc., for a fee of $600 per month plus $0.05 per mile. All operating costs and fuel are included in the rental fees. In general, a lease from

Figure 3-7 The following computer printout estimated overhead costs using regression: Please find the following statistical table During the last accounting period 10,000 DLH were worked . -Refer to Figure 3-7. What is the model?

When Multiple regression is used, the user has a choice of using manual computation or using regression programs.

The type of resources that are acquired from outside sources, where the terms of acquisition do NOT require any long-term commitment for any given amount of the resource are called:

The scatterplot method of cost estimation

In the formula Y = F + VX, X refers to the

Wonder Company is planning to introduce a new product with an 80 percent incremental unit-time learning curve for production for batches of 1,000 units. The variable labor costs are $30 per unit for the first 1,000-unit batch. Each batch requires 100 hours. There are $10,000 in fixed costs not subject to learning. What is the cumulative total time (labor hours) to produce 2,000 units?

The cost behavior method that may use time and motion studies to determine the activities and amounts for cost behavior analysis is

The method of least squares requires a in order to be utilized.

are costs incurred that provide long-term activity capacity.

When the volume of activity increases within the relevant range, the fixed cost per unit