Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

In the equation y = vx + f, the x represents the fixed costs.

Accepted Answer

A) True 
 B)False

Question 3

Sea Side Enterprises is trying to predict the cost associated with producing its anchors. At a production level of 5,000 anchors, Sea Side Enterprises' average cost per anchor is $52.00. What is the total cost of producing 5,000 anchors?

Accepted Answer

A) $260,000. 
B) $5,052. 
C) $52.00. 
D) $96.

Question 4

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

Accepted Answer

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

Question 5

The equation for total fixed costs is

Accepted Answer

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

Question 6

Managers often approximate curvilinear costs and step costs as fixed costs.

Accepted Answer

A) True 
 B)False

Question 7

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.

Question 8

If there is little or no relationship between the cost and the volume, the data points on a scatter plot will appear almost as a straight line.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

The use of either absorption or variable costing will make little difference in companies

Accepted Answer

A) using just-in-time inventory methods. 
B) with large inventories. 
C) with high fixed costs. 
D) with high variable costs.

Question 11

Schrute Farm Sales buys portable generators for $450 and sells them for $720. He pays a sales commission of 5% of sales revenue to his sales staff. Mr. Schrute pays $2,000 a month rent for his store, and also pays $1,700 a month to his staff in addition to the commissions. Mr. Schrute sold 200 generators in June. If Mr. Schrute prepares a traditional income statement for the month of June, what
Would be his operating income?

Accepted Answer

A) $ 43,100 
B) $ 54,00 
C) $ 64,900 
D) $144,000

Question 12

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

The answer of Answer the following questions:
a.	What is a cost...

Question 13

Using account analysis, what type of cost is the monthly cost of a storage locker used for holding old records?

Accepted Answer

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

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 absorption costing, what is operating income for last year?

Accepted Answer

A) $ 749,500 
B) $ 155,500 
C) $1,200,000 
D) $1,650,500

Question 15

The cost of goods sold is a variable cost for merchandise company, but contains a mixture of variable and fixed production costs for manufacturers.

Accepted Answer

A) True 
 B)False

Question 16

The following is information about the units produced and the total manufacturing costs for Rose's Rug Company for the past six months.
  Rose's Rug Company uses the high-low method to estimate its costs.

Accepted Answer

The answer of The following is information about the units...

Question 17

The line on a graph representing total fixed costs will be a horizontal line.

Accepted Answer

A) True 
 B)False

Question 18

Which type of costing system is the only acceptable costing system for external financial reporting?

Accepted Answer

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

Question 19

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 average cost per unit to predict total costs, his forecast for 3,000 birdcages will be

Accepted Answer

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

Question 20

Stanley's Bicycles store buys bicycles on average for $600 and sells them on average for $750. He pays a sales commission of 15% of sales revenue to his sales staff. Stanley pays $1,400 a month rent for his store, and also pays $3,000 a month to his staff in addition to the commissions. Stanley sold 120 bicycles in June. If Stanley prepares a traditional income statement for the month of June, what would be his gross profit?

Accepted Answer

A) $162,000 
B) $18,000 
C) $72,000 
D) $90,000

Exam 6: Cost Behavior

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

In the equation y = vx + f, the x represents the fixed costs.

Sea Side Enterprises is trying to predict the cost associated with producing its anchors. At a production level of 5,000 anchors, Sea Side Enterprises' average cost per anchor is $52.00. What is the total cost of producing 5,000 anchors?

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

The equation for total fixed costs is

Managers often approximate curvilinear costs and step costs as fixed costs.

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

If there is little or no relationship between the cost and the volume, the data points on a scatter plot will appear almost as a straight line.

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

The use of either absorption or variable costing will make little difference in companies

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?

Using account analysis, what type of cost is the monthly cost of a storage locker used for holding old records?

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 absorption costing, what is operating income for last year?

The cost of goods sold is a variable cost for merchandise company, but contains a mixture of variable and fixed production costs for manufacturers.

The following is information about the units produced and the total manufacturing costs for Rose's Rug Company for the past six months. Rose's Rug Company uses the high-low method to estimate its costs.

The line on a graph representing total fixed costs will be a horizontal line.

Which type of costing system is the only acceptable costing system for external financial reporting?

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 average cost per unit to predict total costs, his forecast for 3,000 birdcages will be