Question

1. The ________________________ is a variable whose value depends on the value of another variable.

2. Graphically, the ______________ is the point at which the cost line intercepts the cost (vertical) axis.

3. An advantage of the high-low method is that it ___________.

4. The percentage of variability in the dependent variable explained by an independent variable is called the ____________________________________.

5. The spreadsheet regression program supplies more than the estimates of the coefficients; it also provides information that can be used to see how ________ the cost equation is which is a feature not available for the high-low method.

6. Knowing how costs change as output changes is essential to a. planning and controlling. b. controlling and decision making. c. planning, controlling and decision making. d. None of these are correct.

7. A fixed cost within the relevant range a. increases in total as output decreases. b. does not change in total as output changes. c. decreases in total as output increases. d. All of these are correct.

8. Which of the following would be an example of a fixed cost? a. wages for an assembly line worker b. electric bill c. depreciation on equipment d. materials used

9. Which of the following would not be an example of a fixed cost? a. glue used to put together tables b. insurance on factory building c. depreciation on factory building d. property taxes

10. Discretionary fixed costs a. cannot be easily changed. b. often involve a long-term contract. c. can be changed easily at management's discretion. d. increase as output increases.

11. Which of the following is an example of a discretionary fixed cost? a. depreciation of equipment b. advertising costs c. rental of machinery d. insurance on automobiles

Figure 3-2. Lassiter Toys, Inc. Cost of Materials No. of toys produced Total cost of materials 100,000 $20,000 200,000 40,000 300,000 60,000

12. Refer to Figure 3-2. The cost behavior of the materials cost is a. fixed b. variable c. committed d. discretionary

13. Refer to Figure 3-2. What is the materials cost per unit of output? a. $0.10 b. $0.20 c. $0.60 d. $0.40

14. Refer to Figure 3-2. What should the total materials cost be at a production level of 220,000 toys? a. $44,000 b. $88,000 c. $22,000 d. $132,000

Figure 3-6. Taran Company incurred the following costs for the months of January and February. Type of Cost January February Insurance $ 5,000 $ 5,000 Utilities 4,000 5,000 Depreciation 3,500 3,500 Materials 10,000 20,000

15. Refer to Figure 3-6. From the information above we can assume that a. insurance and depreciation are fixed costs. b. output decreased from January to February. c. output stayed the same from January to February. d. insurance is a mixed cost.

Answer 1

Answers

1. The Dependent variable is a variable whose value depends on the value of another variable.
2. Graphically, the intercept is the point at which the cost line intercepts the cost (vertical) axis.
3. An advantage of the high-low method is that it is objective, quick overview and ease of use.
4. The percentage of variability in the dependent variable explained by an independent variable is called the coefficient of determination.
5. The spreadsheet regression program supplies more than the estimates of the coefficients; it also provides information that can be used to see how reliable the cost equation is which is a feature not available for the high-low method.
6. Knowing how costs change as output changes is essential to (C) planning, controlling and decision making.
7. A fixed cost within the relevant range (B) does not change in total as output changes.
8. Which of the following would be an example of a fixed cost?( C ) depreciation on equipment
9. Which of the following would not be an example of a fixed cost?( A ) glue used to put together tables
10. Discretionary fixed costs ( C ) can be changed easily at management's discretion.
11. Which of the following is an example of a discretionary fixed cost?( B ) advertising costs
12. Refer to Figure 3-2. The cost behavior of the materials cost is ( B ) variable
13. Refer to Figure 3-2. What is the materials cost per unit of output?( B ) $0.20 (20000 / 100000 = 0.2 )
14. Refer to Figure 3-2. What should the total materials cost be at a production level of 220,000 toys?( A ) $44,000 (220000*0.2)
15. Refer to Figure 3-6. From the information above we can assume that ( a ) insurance and depreciation are fixed costs.