Finance Final

The following procedure performed by a candy manufacturer is the best example of a product level activity within a manufacturing cost hierarchy:

Developing an advertising campaign for a special Halloween candy

The following procedure performed by a dairy is the best example of a unit level activity within a manufacturing cost hierarchy:

Filling milk into half-gallon cartons

Depreciation of a copy machine in the Human Resource Department would best be classified as what type of cost?

Fixed cost

Discretionary fixed costs are also known as

managed fixed costs.

In cost estimation

old price data of cost elements should be used cautiously, if at all

The range of operations that falls within the capacity of the current level of fixed costs is referred to as the

relevant range.

Super Speedy Delivery Services has the collected the following information about operating expenditures for its delivery truck fleet for the past five years: Year Miles Operating Costs 2016 55,000 $195,000 2017 70,000 $210,000 2018 50,000 $180,000 2019 65,000 $205,000 2020 85,000 $225,150 Using the high-low method, what is the cost estimate for variable costs per mile for 2021?

$1.29

The following information pertains to Mark Company's weekly activity and total costs: Volume of Activity in Units Total Cost 55 $600 60 $750 80 $800 What are Mark's weekly fixed costs?

$160

Facility level activities of an organization would not include

machine set up.

Preparing the engineering design and preparing tools to make a new product added to a company's product line would be a good example of a batch level activity.

False

The cost of raw materials would best be classified as what type of activity?

A unit-level activity

Over the past decade, the composition of total manufacturing costs has resulted in which of the following?

Manufacturing overhead decreasing as a percent of total manufacturing costs

Number of employees is most appropriate as a cost driver for which of the following types of activity costs?

Payroll

The introduction of production technology in a manufacturing process would:

Require the identification of the most appropriate activity that matches costs

The following procedure performed by a food wholesaler is the best example of a unit level activity within a customer cost hierarchy:

Stacking items on the shelf of a retail customer's store

When developing a cost model for a firm or segment of a firm, the cost model is only applicable within the __________ range of capacity of fixed costs.

relevant

Nick Andrewson uses gas to heat his home. He has accumulated the following information regarding his monthly gas bill and monthly heating degree-days. The heating degree-days value for a month is found by first subtracting the average temperature for each day from 65 degrees and then summing these daily amounts together for the month. Month Heating Degree-Days Gas Bill February 850 $129.00 April 300 $52.00 What will be the increase in Nick's monthly gas bill per heating degree-day using the high-low method?

. $0.14

At a sales volume of 25 units the average cost is $205 per unit and the variable cost is $5 per unit. Assuming a linear cost behavior pattern, if sales double to 50 units the average cost will be:

. $105.00

As a consequence of automation and product diversity, in cost estimation

. cost estimation is improved with the inclusion of non-unit cost drivers.

The introduction of production technology to replace labor in a manufacturing process would likely result in which of the following?

A shift in costs from fixed costs to variable costs

Which of the following costs is best classified as fixed costs with respect to volume?

D. Depreciation of a copy machine in the Human Resource Department

Which one of the following statements about difficulties in cost estimation is true?

The shorter the time period, the higher the probability of inappropriately matching activity and cost

Advertising a new health beverage is an example of a product-level activity.

True

The wheels on an automobile are classified as a variable cost with respect to the volume of cars produced in an automobile assembly plant.

True

In the following equation for total cost, Y = a + bX, the slope of the total cost line is an approximation of which of the following?

Variable Cost

Step Costs

are constant within certain ranges of activity but differ outside those ranges of activity.

Committed fixed costs are also known as

capacity costs.

The determination of the mathematical relationship between activity level and cost is known as

cost estimation.

The scatter diagram method of cost estimation

requires the use of judgment

The following procedure performed at the United States mint is not a batch level activity

stamping each individual coin.