ACCT 526 EXAM QUESTIONS WITH
COMPLETE SOLUTIONS
Cost Behavior - CORRECT ANSWER✔✔-The foundation upon which managerial
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accounting is built and the general term for describing whether a cost changes
| | | | | | | | | | | | |
when the level of output
| | | |
changes.
The provision of accounting information for internal users is known as
| | | | | | | | | |
a. financial accounting.
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b. managerial accounting.
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c. accounting.
|
d. accounting for planning and control.
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e. information provision. - CORRECT ANSWER✔✔-b. managerial accounting
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Three Characteristics of Cost Behavior - CORRECT ANSWER✔✔-Costs can be
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variable, fixed or mixed.
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Variable Cost - CORRECT ANSWER✔✔-a cost that varies with changes in the level
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of output
|
,What is the variable cost associated with producing 100 units if materials cost
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$1/unit, labor costs $2/unit, and variable fixed costs are $0.50/unit?
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a. $100
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b. $200
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c. $350
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d. $400 - CORRECT ANSWER✔✔-c. $350
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VC per unit = Material Costs per unit + Labor Costs per unit + Variable Fixed Costs
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per unit |
VC per unit= $1/unit + $2/unit + $0.50/unit = $3.50/unit
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Total VC = $3.50 * 100 = $350
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Fixed Cost - CORRECT ANSWER✔✔-a cost that does not change as output is
| | | | | | | | | | | | |
increased or decreased | |
If fixed cost is $20,000 when a firm produces 100 units, what is the fixed cost if
| | | | | | | | | | | | | | | | |
they produce 200 units
| | |
a. $10,000
|
b. $20,000
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c. $30,000
|
d. $40,000 - CORRECT ANSWER✔✔-b. $20,000
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,fixed cost does not change as output increases or decreases.
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Cost Driver - CORRECT ANSWER✔✔-A factor, that measures the output of the
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activity that leads or causes cost to change.
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Ex. machine-hours, beds occupied, computer time, or flight-hours.
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Relevant range - CORRECT ANSWER✔✔-The range of activity within which
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assumptions about variable and fixed cost behavior are valid.
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Discretionary Fixed Costs - CORRECT ANSWER✔✔-can be changed easily at
| | | | | | | | | |
management's discretion |
ex. Advertising
|
Committed Fixed Costs - CORRECT ANSWER✔✔-Cannot be changed over the
| | | | | | | | | |
short run |
ex. Lease (long-term)
| |
Mixed Costs - CORRECT ANSWER✔✔-Costs that contain both a variable- and a
| | | | | | | | | | | |
fixed-cost element and change in total but not proportionately with changes in
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the activity level.
| |
, Step Costs (Semi-Fixed Costs) - CORRECT ANSWER✔✔-display a constant level of
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total cost for a range of output and then jump to a higher level of total cost at
| | | | | | | | | | | | | | | | | |
some point, where they remain for a similar range of output
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i.e. graphed with narrow steps
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Which of the following is true of step costs?
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a. Step costs show constant levels of cost for a range of output and then jump to
| | | | | | | | | | | | | | | | |
a higher level of cost at some point, where they remain for a similar range of
| | | | | | | | | | | | | | | |
output.
b. Step costs are costs that have only a fixed cost component.
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c. Step costs with wide steps are more characteristic of variable costs.
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d. Step costs increase in direct proportion to increases in output. - CORRECT
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ANSWER✔✔-a. Step costs show constant levels of cost for a range of output and
| | | | | | | | | | | | | |
then jump to a higher level of cost at some point, where they remain for a similar
| | | | | | | | | | | | | | | |
range of output.
| | |
High-low method - CORRECT ANSWER✔✔-A mathematical method that uses the
| | | | | | | | | |
total costs incurred at the high and low levels of activity to classify mixed costs
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into fixed and variable components.
| | | |
COMPLETE SOLUTIONS
Cost Behavior - CORRECT ANSWER✔✔-The foundation upon which managerial
| | | | | | | | |
accounting is built and the general term for describing whether a cost changes
| | | | | | | | | | | | |
when the level of output
| | | |
changes.
The provision of accounting information for internal users is known as
| | | | | | | | | |
a. financial accounting.
| |
b. managerial accounting.
| |
c. accounting.
|
d. accounting for planning and control.
| | | | |
e. information provision. - CORRECT ANSWER✔✔-b. managerial accounting
| | | | | | |
Three Characteristics of Cost Behavior - CORRECT ANSWER✔✔-Costs can be
| | | | | | | | | |
variable, fixed or mixed.
| | |
Variable Cost - CORRECT ANSWER✔✔-a cost that varies with changes in the level
| | | | | | | | | | | | |
of output
|
,What is the variable cost associated with producing 100 units if materials cost
| | | | | | | | | | | | |
$1/unit, labor costs $2/unit, and variable fixed costs are $0.50/unit?
| | | | | | | | |
a. $100
|
b. $200
|
c. $350
|
d. $400 - CORRECT ANSWER✔✔-c. $350
| | | | |
VC per unit = Material Costs per unit + Labor Costs per unit + Variable Fixed Costs
| | | | | | | | | | | | | | | | |
per unit |
VC per unit= $1/unit + $2/unit + $0.50/unit = $3.50/unit
| | | | | | | | |
Total VC = $3.50 * 100 = $350
| | | | | | |
Fixed Cost - CORRECT ANSWER✔✔-a cost that does not change as output is
| | | | | | | | | | | | |
increased or decreased | |
If fixed cost is $20,000 when a firm produces 100 units, what is the fixed cost if
| | | | | | | | | | | | | | | | |
they produce 200 units
| | |
a. $10,000
|
b. $20,000
|
c. $30,000
|
d. $40,000 - CORRECT ANSWER✔✔-b. $20,000
| | | | |
,fixed cost does not change as output increases or decreases.
| | | | | | | | |
Cost Driver - CORRECT ANSWER✔✔-A factor, that measures the output of the
| | | | | | | | | | | |
activity that leads or causes cost to change.
| | | | | | |
Ex. machine-hours, beds occupied, computer time, or flight-hours.
| | | | | | |
Relevant range - CORRECT ANSWER✔✔-The range of activity within which
| | | | | | | | | |
assumptions about variable and fixed cost behavior are valid.
| | | | | | | |
Discretionary Fixed Costs - CORRECT ANSWER✔✔-can be changed easily at
| | | | | | | | | |
management's discretion |
ex. Advertising
|
Committed Fixed Costs - CORRECT ANSWER✔✔-Cannot be changed over the
| | | | | | | | | |
short run |
ex. Lease (long-term)
| |
Mixed Costs - CORRECT ANSWER✔✔-Costs that contain both a variable- and a
| | | | | | | | | | | |
fixed-cost element and change in total but not proportionately with changes in
| | | | | | | | | | | |
the activity level.
| |
, Step Costs (Semi-Fixed Costs) - CORRECT ANSWER✔✔-display a constant level of
| | | | | | | | | | |
total cost for a range of output and then jump to a higher level of total cost at
| | | | | | | | | | | | | | | | | |
some point, where they remain for a similar range of output
| | | | | | | | | |
i.e. graphed with narrow steps
| | | |
Which of the following is true of step costs?
| | | | | | | |
a. Step costs show constant levels of cost for a range of output and then jump to
| | | | | | | | | | | | | | | | |
a higher level of cost at some point, where they remain for a similar range of
| | | | | | | | | | | | | | | |
output.
b. Step costs are costs that have only a fixed cost component.
| | | | | | | | | | |
c. Step costs with wide steps are more characteristic of variable costs.
| | | | | | | | | | |
d. Step costs increase in direct proportion to increases in output. - CORRECT
| | | | | | | | | | | | |
ANSWER✔✔-a. Step costs show constant levels of cost for a range of output and
| | | | | | | | | | | | | |
then jump to a higher level of cost at some point, where they remain for a similar
| | | | | | | | | | | | | | | |
range of output.
| | |
High-low method - CORRECT ANSWER✔✔-A mathematical method that uses the
| | | | | | | | | |
total costs incurred at the high and low levels of activity to classify mixed costs
| | | | | | | | | | | | | | |
into fixed and variable components.
| | | |
