Question 1

Actual maintenance costs for a movie theatre for the months of July and August are as follows:  The manager is checking to see that enough maintenance hours are scheduled for the month of September.The total budget for maintenance costs for September is $26,990 and experience has shown that maintenance cost behaviour is quite consistent from month to month.How many hours should be scheduled for September maintenance?

Accepted Answer

A)   1,765 hours.
B)   1,775 hours.
C)   1,785 hours.
D)   1,795 hours.E) B) and C)
F) None of the above

Question 2

Bell Company has provided the following data for maintenance costs:  Using the high-low method,the cost formula for maintenance cost is?

Accepted Answer

A)   $1.625 per machine hour.
B)   $2.00 per machine hour.
C)   $18,000 plus $0.50 per machine hour.
D)   $24,000 plus $0.50 per machine hour.E) B) and D)
F) B) and C)

Question 3

Using the high-low method of analysis,the estimated monthly fixed component of lubrication cost is closest to?

Accepted Answer

A)   $560.
B)   $565.
C)   $570.
D)   $585.E) All of the above
F) A) and B)

Question 4

Which of the following statements is true?

Accepted Answer

A)   Mixed costs are step costs.
B)   Total variable cost change in direct proportion to changes in the amount of the activity.
C)   In the short run,all cost are variable.
D)   In the long run,all costs are fixed.E) A) and C)
F) C) and D)

Question 5

The contribution margin approach to the income statement classifies costs by behaviour rather than by function.

Accepted Answer

A) True 
 B)False

Question 6

A cost that increases or decreases only in response to more than a unit change in the activity level is known as a step-variable cost.

Accepted Answer

A) True 
 B)False

Question 7

The variable cost for maintenance per machine hour is?

Accepted Answer

A)   $0.75.
B)   $1.30.
C)   $1.35.
D)   $1.44.E) B) and C)
F) C) and D)

Question 8

Which costs will change with a decrease in activity within the relevant range?

Accepted Answer

A)   Total fixed costs and total variable cost.
B)   Unit fixed costs and total variable cost.
C)   Unit variable cost and unit fixed cost.
D)   Unit fixed cost and total fixed cost.E) B) and C)
F) None of the above

Question 9

In preparing contribution margin income statements when will the total cost of goods sold be included as a variable cost?

Accepted Answer

A)   It is always inculded for all businesses selling products.
B)   When the business is a merchandising company.
C)   When the business is a manufacturer.
D)   The total cost of goods sold is never included in variable cost.E) B) and D)
F) C) and D)

Question 10

In a scattergraph,the line fitted to the plotted points is known as a regression line.

Accepted Answer

A) True 
 B)False

Question 11

Average maintenance costs are $1.50 per machine-hour at an activity level of 8,000 machine-hours and $1.20 per machine-hour at an activity level of 13,000 machine-hours.Assuming that this activity is within the relevant range,total expected maintenance cost for a budgeted activity level of 10,000 machine-hours would be closest to?

Accepted Answer

A)   $11,433.
B)   $13,440.
C)   $15,000.
D)   $16,128.E) All of the above
F) C) and D)

Question 12

An advantage of the least-squares regression method is that it provides statistical evidence as to the reliability of the cost estimates generated.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is most correct about step-variable costs?

Accepted Answer

A)   The step-variable costs vary in direct proportion to changes in the level of activity.
B)   Between certain levels of activity,the step-variable costs have the same behaviour as fixed costs.
C)   The step-variable costs remain constant through the same relevant range of activity as related fixed costs.
D)   The step-variable costs are excluded from consideration in budgeting.E) None of the above
F) B) and D)

Question 14

The high-low method is generally less accurate than the least-squares regression method for analyzing the behaviour of mixed costs.

Accepted Answer

A) True 
 B)False

Question 15

The best estimate of the total fixed cost per period for Maxwell Company is?

Accepted Answer

A)   $3,360.
B)   $29,190.
C)   $32,000.
D)   $40,950.E) A) and B)
F) C) and D)

Question 16

The Central Valley Company is a merchandising firm that sells a single product.The company's revenues and expenses for the last three months are given below:  Required:
a.Determine which expenses are mixed and,by use of the high-low method,separate each mixed expense into its variable and fixed components.State the cost formula for each mixed expense.
b.Compute the company's total contribution margin for May.

Accepted Answer

a.The cost of goods sold for this compan...

Question 17

The linear equation Y = a + bX is often used to express cost formulas.In this equation:

Accepted Answer

A)   the b term represents variable cost per unit of activity.
B)   the a term represents variable cost in total.
C)   the X term represents total cost.
D)   the Y term represents total fixed cost.E) A) and C)
F) All of the above

Question 18

The cost formula for operating expenses with "X" equal to the number of books sold is?

Accepted Answer

A)   Y = $84,000 + $7.00X.
B)   Y = $84,000 + $8.50X.
C)   Y = $98,000 + $7.00X.
D)   Y = $98,000 + $8.50X.E) A) and B)
F) A) and C)

Question 19

The scattergraph method yields cost estimates that are the most precise possible.

Accepted Answer

A) True 
 B)False

Question 20

Of the costs listed below,which would most likely be considered as a discretionary fixed cost?

Accepted Answer

A)   Depreciation of factory building.
B)   Property taxes for factory.
C)   Insurance for the factory building.
D)   Research costs for new manufacturing products.E) None of the above
F) B) and C)

Exam 3: Systems Design: Activity-Based Costing

Correct Answer
verified

In a scattergraph,the line fitted to the plotted points is known as a regression line.

Correct Answer
verified

The linear equation Y = a + bX is often used to express cost formulas.In this equation:

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

The cost formula for operating expenses with "X" equal to the number of books sold is?

Correct Answer
verified

The variable cost for maintenance per machine hour is?

Correct Answer
verified

The contribution margin approach to the income statement classifies costs by behaviour rather than by function.

Correct Answer
verified

An advantage of the least-squares regression method is that it provides statistical evidence as to the reliability of the cost estimates generated.

Correct Answer
verified

Correct Answer
verified

The best estimate of the total fixed cost per period for Maxwell Company is?

Correct Answer
verified

In preparing contribution margin income statements when will the total cost of goods sold be included as a variable cost?

Correct Answer
verified

The high-low method is generally less accurate than the least-squares regression method for analyzing the behaviour of mixed costs.

Correct Answer
verified

Correct Answer
verified
a.The cost of goods sold for this compan...
View Answer

Of the costs listed below,which would most likely be considered as a discretionary fixed cost?

Correct Answer
verified

A cost that increases or decreases only in response to more than a unit change in the activity level is known as a step-variable cost.

Correct Answer
verified

Which of the following statements is most correct about step-variable costs?

Correct Answer
verified

Which costs will change with a decrease in activity within the relevant range?

Correct Answer
verified

The scattergraph method yields cost estimates that are the most precise possible.

Correct Answer
verified

Bell Company has provided the following data for maintenance costs: Using the high-low method,the cost formula for maintenance cost is?

Correct Answer
verified

Using the high-low method of analysis,the estimated monthly fixed component of lubrication cost is closest to?

Correct Answer
verified

Exam 3: Systems Design: Activity-Based Costing

Correct AnswerverifiedShow Answer

In a scattergraph,the line fitted to the plotted points is known as a regression line.

Correct AnswerverifiedShow Answer

The linear equation Y = a + bX is often used to express cost formulas.In this equation:

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

The cost formula for operating expenses with "X" equal to the number of books sold is?

Correct AnswerverifiedShow Answer

The variable cost for maintenance per machine hour is?

Correct AnswerverifiedShow Answer

The contribution margin approach to the income statement classifies costs by behaviour rather than by function.

Correct AnswerverifiedShow Answer

An advantage of the least-squares regression method is that it provides statistical evidence as to the reliability of the cost estimates generated.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The best estimate of the total fixed cost per period for Maxwell Company is?

Correct AnswerverifiedShow Answer

In preparing contribution margin income statements when will the total cost of goods sold be included as a variable cost?

Correct AnswerverifiedShow Answer

The high-low method is generally less accurate than the least-squares regression method for analyzing the behaviour of mixed costs.

Correct AnswerverifiedShow Answer

Correct Answerverifieda.The cost of goods sold for this compan...View AnswerShow Answer

Of the costs listed below,which would most likely be considered as a discretionary fixed cost?

Correct AnswerverifiedShow Answer

A cost that increases or decreases only in response to more than a unit change in the activity level is known as a step-variable cost.

Correct AnswerverifiedShow Answer

Which of the following statements is most correct about step-variable costs?

Correct AnswerverifiedShow Answer

Which costs will change with a decrease in activity within the relevant range?

Correct AnswerverifiedShow Answer

The scattergraph method yields cost estimates that are the most precise possible.

Correct AnswerverifiedShow Answer

Bell Company has provided the following data for maintenance costs: Using the high-low method,the cost formula for maintenance cost is?

Correct AnswerverifiedShow Answer

Using the high-low method of analysis,the estimated monthly fixed component of lubrication cost is closest to?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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a.The cost of goods sold for this compan...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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