29858222-Chapter-05

29858222-Chapter-05 - Chapter 5 Cost Behavior Analysis and...

This preview shows pages 1–3. Sign up to view the full content.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 5 Cost Behavior: Analysis and Use True/False Questions 1. Within the relevant range, a change in activity results in a change in total variable cost and the per unit fixed cost. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Medium 2. The reluctance of managers to lay off employees when activity declines in the short- run leads to an increase in the ratio of variable to fixed costs. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Hard 3. A variable cost fluctuates in total as activity changes but remains constant on a per unit basis over the relevant range. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 4. A cost that is classified as variable with respect to one measure of activity could be classified as fixed with respect to a different measure of activity. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Hard 5. Fixed costs remain constant in total, but vary inversely with changes in activity when expressed on a per unit basis. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 6. Committed fixed costs have a short-term planning horizon--usually one year. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 7. The following costs are all examples of committed fixed costs: depreciation on buildings, advertising, insurance, and management development and training. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Medium Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 5-5 Chapter 5 Cost Behavior: Analysis and Use 8. The time frame in which discretionary fixed costs are controllable is usually much shorter than the time frame for committed fixed costs. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 9. The high-low method is generally more accurate than the least-squares regression method in analyzing cost behavior. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3,5 Level: Easy 10. A major problem with the high-low method of cost estimation is that some data are omitted from the analysis. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Easy 11. The high and low points used in the high-low method tend to be unusual and therefore the cost formula may not accurately represent all of the data....
View Full Document

{[ snackBarMessage ]}

Page1 / 117

29858222-Chapter-05 - Chapter 5 Cost Behavior Analysis and...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online