ACC 5361 TXst
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| Cost Behavior is the general term for describing whether costs change as output changes | TRUE - cost behavior studies the different ways that costs reacts to output changes
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| Fixed costs always stay the same in total as output changes regardless of the relevant range | FALSE
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| RF company manufactures furniture. if furnitature were the cost object, the nails used to make the furniture would be considered a variable cost | TRUE - the amount of nails used would vary according the amount of furniture manufactured.
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| In the long run all costs are fixed | FALSE
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| The cost of flexible resources is fixed | FALSE - flexible resources are supplied when needed, the costs of flexible resources increases as demand for the resources increases. thus, flexible resources are variable. committed resources are fixed
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| Committed resources may give rise to unused capacity | TRUE - when committed resources are purchased, the resource supplied is greater than the resource usage; this gives rise to unused capacity. flexible resources do not give rise to unused capacity.
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| The relevant range is a wide range of activity where total variable costs remain the same | FALSE - Total fixed costs remain the same within the relevant range of activity.
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| An estimate of the total fixed cost is the intercept parameter where Total cost = Fixed cost + (Variable | TRUE -
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| The high-low method calculates a better estimate of the cost formula than the method of least squares | FALSE - The method of least squares calculates a better cost formula because it considers all the
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| Manufacturing overhead is usually a: | mixed cost. -Manufacturing overhead is usually a mixed cost
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| Within the relevant range of activity, if the level of activity increases, variable cost per unit | remains the same - Variable cost per unit remains the same
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| Within the relevant range of activity, total fixed cost will: | remain constant. - Total fixed cost remains constant and total variable cost increases in proportion with the level of
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| An example of a variable cost is: | commissions paid to salesmen based on units sold - Commissions are variable costs because total commissions paid vary with sales
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| An example of a committed fixed cost is | property taxes on factory building - Advertising is a discretionary fixed cost.
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| Which is the best method for separating mixed costs into fixed and variable components? | method of least squares - Scatterplot method is subjective
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| The Starry Corporation developed a cost function for manufacturing overhead: Manufacturing overhead = $10,000 | $10,000 + ($2 x 14,000) = $38,000
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| Blurry Company shipped 10,000 units for $36,000 in April and 12,000 units for $40,000 in May. The estimated cost | Variable costs = ($40,000 - $36,000)/(12,000 - 10,000) = $2
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| The following cost function to estimate manufacturing overhead was estimated using the method of least squares: | The intercept parameter is $40. . The slope parameter is $2
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| Which method would quickly detect a nonlinear relationship between activity cost and activity output? | The scatterplot method plots all the activity cost observations at various levels of activities. It will
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