ACC210 Ch3 Set 1 REVERSED

Question 1

the relationship between a cost and the level of activity or cost driver

Answer 1

Cost behaviour

Question 2

the process of determining the cost behaviour of a particular cost item

Answer 2

Cost estimation

Question 3

using knowledge of cost behaviour to forecast the level of cost at a particular level of activity

Answer 3

Cost prediction

Question 4

a cost driver that assumes that costs are driven, or caused, by the volume of production (or sales)

Answer 4

Volume-based cost driver

Question 5

a cost driver not directly related to production volume

Answer 5

Non-volume-based cost driver

Question 6

1) unit 2) batch 3) product 4) facility

Answer 6

Four distinct levels of costs & cost drivers?

Question 7

a unit of work performed within the organisation

Answer 7

Activity

Question 8

costs relating to activities that are performed for each unit produced

Answer 8

Unit level costs

Question 9

costs relating to activities that are performed for a group of product units, such as a production batch or a delivery load

Answer 9

Batch level costs

Question 10

costs relating to activities that are performed for specific products or product families

Answer 10

Product level costs (product-sustaining)

Question 11

the costs incurred to support the business as a whole; not caused by any particular product

Answer 11

facility level costs (facility-sustaining)

Question 12

the underlying factors that cause activities to be performed and their costs to be incurred

Answer 12

Root cause cost drivers

Question 13

• reasons for analysing cost behaviour: to provide estimates of cost behaviour for cost prediction - timeframe for analysing the cost behaviour: short term, as costs will be predicted for the budget period (i.e. the coming year) - availability of data on cost drivers - any other uses for the information on cost behaviour

Answer 13

Assessing the costs & benefits of each driver?

Question 14

• variable costs - fixed costs - step-fixed costs - semivariable costs - curvilinear costs

Answer 14

Cost behaviour patterns

Question 15

Y = a + bX Y= total cost a= fixed cost component (the intercept on the vertical axis) b= variable cost per unit of activity (the slope of the line) X= the level of activity

Answer 15

Linear cost functions - Total cost =

Question 16

an equation used to describe a cost behaviour

Answer 16

Cost function

Question 17

pg89

Answer 17

Variable cost: direct material cost for product - graph?

Question 18

pg90

Answer 18

Fixed cost: premises cost - graph?

Question 19

a cost that remains unchanged in total despite changes in the level of activity

Answer 19

Fixed cost

Question 20

a cost that remains fixed over a wide range of activity levels, but jumps to a different amount for levels outside that range

Answer 20

Step-fixed cost