Ch03_Guan CM_AISE TB - Chapter 3Cost Behavior MULTIPLE...

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Chapter 3—Cost Behavior MULTIPLE CHOICE 1. Cost behavior analysis focuses on a. how costs react to changes in profit. b. how costs change over time. c. how costs react to changes in activity level. d. both a and c. ANS: C PTS: 1 OBJ: 3-1 2. _______________ explain changes in costs as units produced change. a. Non-unit-level drivers b. Activity based cost drivers c. Unit-level drivers d. All of the above ANS: C PTS: 1 OBJ: 3-1 3. The range of activity within which a linear cost function is valid is called the: a. normal range b. relevant range c. activity range d. none of the above ANS: B PTS: 1 OBJ: 3-1 4. Given the following graphs, which graph represents fixed costs? 1 2 x 1 2 3 y 1 2 x 1 2 y 1 2 3 x 1 2 3 y I II III a. II b. I c. III d. none of the above ANS: A PTS: 1 OBJ: 3-1 5. A supervisor's salary of $2,000 per month is an example of a a. fixed cost. b. variable cost. c. step cost. d. mixed cost. ANS: A PTS: 1 OBJ: 3-1 This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold, copied, or distributed without the prior consent of the publisher.
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6. When the volume of activity increases within the relevant range, the fixed cost per unit a. decreases. b. decreases at first, then increases. c. remains the same. d. increases. ANS: A PTS: 1 OBJ: 3-1 7. Fixed cost per unit is $9 when 20,000 units are produced and $6 when 30,000 units are produced. What is the total fixed cost when nothing is produced? a. $120,000 b. $270,000 c. $15 d. $180,000 ANS: D SUPPORTING CALCULATIONS: $9 × 20,000 = $180,000 PTS: 1 OBJ: 3-1 8. Assuming costs are represented on the vertical axis and volume of activity on the horizontal axis, which of the following costs would be represented by a line that is parallel to the horizontal axis? a. total direct material costs b. a consultant paid $75 per hour with a maximum fee of $1,200 c. employees who are paid $10 per hour and guaranteed a minimum weekly wage of $200 d. rent on exhibit space at a convention ANS: D PTS: 1 OBJ: 3-1 9. As the volume of activity increases within the relevant range, the variable cost per unit a. decreases. b. decreases at first, then increases. c. remains the same. d. increases. ANS: C PTS: 1 OBJ: 3-1 10. A manufacturing company pays an assembly line worker $10 per hour. What is the proper classifica- tion of this labor cost? a. fixed cost b. semivariable cost c. variable cost d. mixed cost ANS: C PTS: 1 OBJ: 3-1 11. The direct material cost is $10,000 when 2,000 units are produced. What is the direct material cost for 2,500 units produced? a. $10,000 b. $8,000 c. $15,000 d. $12,500 This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold, copied, or distributed without the prior consent of the publisher.
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ANS: D SUPPORTING CALCULATIONS: $10,000/2,000 × 2,500 = $12,500 PTS: 1 OBJ: 3-1 12. Holly Corporation has the following costs for 1,000 units:
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This note was uploaded on 01/19/2012 for the course ACC 3302 taught by Professor Pence during the Fall '10 term at University of Houston - Downtown.

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Ch03_Guan CM_AISE TB - Chapter 3Cost Behavior MULTIPLE...

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