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ACC 5361 ch 3 test 1

ACC 5361 TXst

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
Fixed costs always stay the same in total as output changes regardless of the relevant range FALSE
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.
In the long run all costs are fixed FALSE
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
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.
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.
An estimate of the total fixed cost is the intercept parameter where Total cost = Fixed cost + (Variable TRUE -
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
Manufacturing overhead is usually a: mixed cost. -Manufacturing overhead is usually a mixed cost
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
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
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
An example of a committed fixed cost is property taxes on factory building - Advertising is a discretionary fixed cost.
Which is the best method for separating mixed costs into fixed and variable components? method of least squares - Scatterplot method is subjective
The Starry Corporation developed a cost function for manufacturing overhead: Manufacturing overhead = $10,000 $10,000 + ($2 x 14,000) = $38,000
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
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
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
Created by: buck56