ACCT 2302 (Ch. 4 Answers) - Accounting 2302 - Chapter 4...

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Accounting 2302 - Chapter 4 Review 1. Cost behavior refers to the manner in which: A) a cost changes as the related activity changes B) a cost is allocated to products C) a cost is used in setting selling prices D) a cost is estimated 2. The three most common cost behavior classifications are: A) variable costs, product costs, and sunk costs B) fixed costs, variable costs, and mixed costs C) variable costs, period costs, and differential costs D) variable costs, sunk costs, and opportunity costs 3. Costs that remain constant in total dollar amount as the level of activity changes are called: A) fixed costs B) mixed costs C) opportunity costs D) variable costs 4. Which of the following costs is an example of a cost that remains the same in total as the number of units produced changes? A) Direct labor B) Salary of a factory supervisor C) Units of production depreciation on factory equipment D) Direct materials 5. Which of the following describes the behavior of the fixed cost per unit? A) Decreases with increasing production B) Decreases with decreasing production C) Remains constant with changes in production D) Increases with increasing production 6. Most operating decisions of management focus on a narrow range of activity called the: A) relevant range of production B) strategic level of production C) optimal level of production D) tactical operating level of production 7. Costs that vary in total in direct proportion to changes in an activity level are called: A) fixed costs B) sunk costs C) variable costs D) differential costs 8. Marcye Co. manufactures office furniture. During the most productive month of the year, 3,500 desks were manufactured at a total cost of $84,400. In its slowest month, the company made 1,100 desks at a cost of $46,000. Using the high-low method of cost estimation, total fixed costs are: A) $56,000 B) $28,400 C) $17,600 D) cannot be determined from the data given 9. Given the following cost and activity observations for Bounty Company’s utilities, use the high-low method to calculate Bounty’ variable utilities costs per machine hour. Cost Machine Hours March $3,100 15,000 April 2,700 10,000 May 2,900 12,000 June 3,600 18,000 A) $10.00 B) $.67
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Accounting 2302 - Chapter 4 Review C) $.63 D) $.11 10. Which of the following statements is true regarding fixed and variable costs? A) Both costs are constant when considered on a per unit basis. B) Both costs are constant when considered on a total basis. C) Fixed costs are constant in total, and variable costs are constant per unit. D) Variable costs are constant in total, and fixed costs vary in total. 11. Knowing how costs behave is useful to management for all the following reasons except for A) predicting customer demand.
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This note was uploaded on 10/01/2011 for the course ACCT 2302 taught by Professor Dr. during the Spring '11 term at University of Houston-Victoria.

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ACCT 2302 (Ch. 4 Answers) - Accounting 2302 - Chapter 4...

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