Question 1

When the level of activity increases within the relevant range, what is the effect on the fixed cost per unit?

Accepted Answer

A)  It increases. 
B)  It decreases. 
C)  It remains the same. 
D)  It increases at first then decreases.

Question 2

Refer to Banff Company. What is the variable rate for the lease cost when using the high-low method?

Accepted Answer

A)  $37.25 
B)  $38.18 
C)  $38.20 
D)  $61.50

Question 3

Match each following terms with their correct description from the items listed below.
-Will increase in total in direct proportion to an increase in the cost driver

Accepted Answer

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

Question 4

Match each following terms with their correct description from the items listed below.
-A description of how a cost changes when the level of output changes

Accepted Answer

A) Relevant range 
B) Cost behaviour 
C) Driver 
D) Variable cost 
E) Fixed cost

Question 5

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Internet advertising

Accepted Answer

A) Discretionary fixed cost 
B) Committed fixed cost

Question 6

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Real estate taxes

Accepted Answer

A) Variable cost 
B) Fixed cost

Question 7

Refer to Montreal Clothing Store. What does $75,620 represent?

Accepted Answer

A)  the intercept 
B)  the variable rate 
C)  the dependent variable 
D)  the independent variable

Question 8

Match each following terms with their correct description from the items listed below.
-Remains constant on a per-unit basis within the relevant range

Accepted Answer

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

Question 9

Which statement best describes the high-low method?

Accepted Answer

A)  It is the most accurate method. 
B)  It has the disadvantage of objectivity. 
C)  It is mathematically easy to calculate. 
D)  It cannot be affected by the presence of outliers.

Question 10

Match each following terms with their correct description from the items listed below.
-Total cost = fixed cost + variable cost

Accepted Answer

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

Question 11

Match each following terms with their correct description from the items listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-May reveal the presence of outliers

Accepted Answer

A) High-low method 
B) Scattergraph method 
C) Least squares (regression) method

Question 12

Using the least squares (regression) method, the term X Variable 1 refers to the dependent variable.

Accepted Answer

A) True 
 B)False

Question 13

Match each following terms with their correct description from the items listed below.
-Must be purchased in chunks

Accepted Answer

A) Committed fixed cost 
B) Discretionary fixed cost 
C) Mixed cost 
D) Step cost

Question 14

Refer to St. John's Company. Assume that output was 5,000 units in March and 10,000 units in April, utility cost is a mixed cost, and the fixed cost of utilities was $3,000. What was the variable rate per unit of output for utilities cost?

Accepted Answer

A)  $0.20 
B)  $0.30 
C)  $0.40 
D)  $0.60

Question 15

Using the least squares (regression) method, the value of X Variable 2 equals the slope of the line.

Accepted Answer

A) True 
 B)False

Question 16

Suppose that at a given volume, total costs and fixed costs are known. How are the variable costs per unit calculated?

Accepted Answer

A)  (total costs - fixed costs)/unit volume 
B)  (total costs/unit volume) - fixed costs 
C)  total costs - (fixed costs/unit volume) 
D)  (total costs × unit volume) - (fixed costs/unit volume)

Question 17

Match each following terms with their correct description from the items listed below.
-May involve a long-term contract

Accepted Answer

A) Committed fixed cost 
B) Discretionary fixed cost 
C) Mixed cost 
D) Step cost

Question 18

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Factory supplies

Accepted Answer

A) Variable cost 
B) Fixed cost

Question 19

Refer to Banff Company. What would be the estimate of Banff Company's total lease cost at a level of 500 machine hours?

Accepted Answer

A)  $16,464 
B)  $18,546 
C)  $19,556 
D)  $19,606

Question 20

Match each following terms with their correct description from the items listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Allows a cost analyst to inspect the data visually

Accepted Answer

A) High-low method 
B) Scattergraph method 
C) Least squares (regression) method

Exam 3: Cost Behaviour

When the level of activity increases within the relevant range, what is the effect on the fixed cost per unit?

Refer to Banff Company. What is the variable rate for the lease cost when using the high-low method?

Match each following terms with their correct description from the items listed below. -Will increase in total in direct proportion to an increase in the cost driver

Match each following terms with their correct description from the items listed below. -A description of how a cost changes when the level of output changes

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Internet advertising

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Real estate taxes

Refer to Montreal Clothing Store. What does $75,620 represent?

Match each following terms with their correct description from the items listed below. -Remains constant on a per-unit basis within the relevant range

Which statement best describes the high-low method?

Match each following terms with their correct description from the items listed below. -Total cost = fixed cost + variable cost

Match each following terms with their correct description from the items listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -May reveal the presence of outliers

Using the least squares (regression) method, the term X Variable 1 refers to the dependent variable.

Match each following terms with their correct description from the items listed below. -Must be purchased in chunks

Refer to St. John's Company. Assume that output was 5,000 units in March and 10,000 units in April, utility cost is a mixed cost, and the fixed cost of utilities was $3,000. What was the variable rate per unit of output for utilities cost?

Using the least squares (regression) method, the value of X Variable 2 equals the slope of the line.

Suppose that at a given volume, total costs and fixed costs are known. How are the variable costs per unit calculated?

Match each following terms with their correct description from the items listed below. -May involve a long-term contract

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Factory supplies

Refer to Banff Company. What would be the estimate of Banff Company's total lease cost at a level of 500 machine hours?

Match each following terms with their correct description from the items listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Allows a cost analyst to inspect the data visually