managerial accounting chapter 3 concepts

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

a. can be changed easily at management's discretion.

Per-unit fixed costs a. can be misleading and lead to poor decisions. b. decrease as output decreases. c. stay the same as output changes. d. increase as output increases.

a. can be misleading and lead to poor decisions.

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. property taxes d. depreciation on factory building

a. glue used to put together tables

If output decreases a. total fixed costs will remain the same. b. total variable costs will increase. c. per-unit fixed costs will decrease. d. All of these are correct.

a. total fixed costs will remain the same.

The method of least squares a. uses the results of regression analysis to construct a cost formula. b. analyzes a cost relationship by plotting the data points on a graph. c. can easily be calculated by hand. d. is the least accurate method.

a. uses the results of regression analysis to construct a cost formula.

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

b. advertising costs

Which of the following would probably be a variable cost at a college? a. salary of the head janitor b. cost of registration forms c. salary of the college president d. none of these options

b. cost of registration forms

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.

b. does not change in total as output changes.

Step costs a. remain the same within the relevant range. b. have an increased fixed component at specified intervals. c. increase in direct proportion to increases in output. d. None of these are correct.

b. have an increased fixed component at specified intervals.

A committed fixed cost a. can easily be changed. b. often involves a long-term contract. c. changes when the level of output changes. d. all of these are correct

b. often involves a long-term contract.

Which of the following would probably be a fixed cost in a fast-food restaurant? a. cost of french fries b. shift manager's salary c. cost of hamburger d. utility cost

b. shift manager's salary

The formula for a mixed cost is a. total cost = total variable cost + ( fixed rate × amount of output). b. total cost = total fixed cost + (variable rate × amount of output). c. total cost = variable rate × amount of output. d. None of these are correct.

b. total cost = total fixed cost + (variable rate × amount of output).

if output increases a. per-unit fixed cost will increase. b. total variable costs will increase. c. per-unit variable costs will increase. d. per-unit variable costs will decrease.

b. total variable costs will increase.

a mixed cost a. remains constant when the output level increases. b. cannot be separated. c. contains both a fixed and variable component. d. All of these are correct.

c. contains both a fixed and variable component.

When the volume of activity increases within the relevant range, the fixed cost per unit a. increases at first, then decreases. b. remains the same. c. decreases. d. increase.

c. decreases.

A factor that causes or leads to a change in a cost or activity is a(n) a. step cost. b. mixed cost. c. driver. d. cost formula.

c. driver

The relevant range a. is the normal range of output. b. is the range of output where cost relationships are valid. c. may change from period to period. d. All of these are correct.

d. All of these are correct.

Variable costs within the relevant range a. stay constant on a per unit basis as output changes. b. increase in total as output increases. c. decrease in total as output decreases. d. All of these are correct.

d. All of these are correct.

Which of the following would probably be a committed fixed cost for an accounting firm? a. lease of computers b. rent on the office building c. property taxes on building d. All of these are correct.

d. All of these are correct.

Total variable costs a. increases as output increases. b. decreases as output decreases. c. equal a variable rate × amount of output. d. all of these are correct.

d. all of these are correct.

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

d. depreciation on equipment

When a mixed cost is graphed the Y-intercept corresponds to the a. step cost. b. variable rate. c. price of the units sold. d. fixed cost.

d. fixed cost.

When a mixed cost is graphed the slope of the line equals a. the total variable cost. b. the sales price per unit. c. the total fixed cost. d. the variable cost per unit of the activity driver.

d. the variable cost per unit of the activity driver.

If output increases by 50% and is still within the relevant range a. net income will increase by 50%. b. per-unit fixed cost will remain the same. c. total fixed costs will increase by 50%. d. total variable costs will increase by 50%.

d. total variable costs will increase by 50%.

The method of least squares a. is a way to find the "best fitting" line through a set of data points. b. is a statistical way of separating a mixed cost. c. always produces the same cost formula when used on the same data set. d. all of these are correct

d. all of these are correct

Total cost = Fixed cost + (Variable Rate × Output) Refer to Figure 3-1. In the cost formula above which element would be the dependent variable? a. fixed cost b. variable rate c. output d. total cost

d. total cost

Total cost = Fixed cost + (Variable Rate × Output) Refer to Figure 3-1. In the cost formula above which element would be the slope? a. fixed cost b. total cost c. output d. variable rate

d. variable rate

Outliers" are points that seem to fit the general pattern of behavior. true or false

false

The slope of a mixed cost line is equal to the fixed element of the cost. true or false

false

Using a linear regression program, the term 'Intercept' refers to the variable cost. true or false

false

Using a regression program, the term 'X Variable 1' refers to the dependent variable. true or false

false

Total cost = Fixed cost + (Variable Rate × Output) In the cost formula above which element would be the intercept? a. variable rate b. output c. total cost d. fixed cost

fixed cost