Chapter 1: Intro

Question 1

In automobile manufacturing plant, the assembly-line workers are consider to be

Answer 1

Direct labor

Question 2

Within the relevant range of activity, variable costs

Answer 2

Vary in total.

Remain constant per unit.

Question 3

Costs that can be easily traced to a specific product is called

Answer 3

Direct costs

Question 4

What are the following?
Factory insurance.
Factory rent.
Administrative salaries.

Answer 4

Fixed costs.

Question 5

Sales revenue minus variable expenses is

Answer 5

Contribution margin

Question 6

These are:
Customers.
Organizational subunits.
Anything for which cost data is desired.

Answer 6

Cost objects

Question 7

In the equation Y=a+bX, Y is the

Answer 7

Total mixed cost

Question 8

Within the relevant range, ______ costs remain constant on a per unit basis

Answer 8

Variable

Question 9

Direct materials and direct labor are both

Answer 9

Manufacturing costs

Question 10

Fixed costs remain constant in ____ over the _____ relevant range of activity.

Answer 10

Total

Relevant

Question 11

What type of costs is never relevant and should be disregarded when making decisions?

Answer 11

Sunk cost

Question 12

Do mixed costs contain both variable and fixed cost elements?

Answer 12

Yes.

Question 13

What can the equation of the straight-line method be used to express?

Answer 13

The relationship between mixed costs and the level of activity

Question 14

Indirect materials can be easily traced to a specific product.

Answer 14

False

Question 15

Costs incurred to obtain customers’ orders are known as

Answer 15

Selling costs

Question 16

Using the high-low method, the fixed cost is calculated

Answer 16

Using either the high or low level of activity.

After the variable cost is calculated.

Question 17

The difference costs in between two alternatives is called ______ cost.

Answer 17

Differential.

Question 18

Variable costs?

Answer 18

Remain constant per unit and vary in total.

Question 19

The relative proportion of each type of cost in an organization is known as the company’s _________

Answer 19

Cost structure.

Question 20

What are product costs also called?

Answer 20

Inventoriable costs.

Question 21

What do product costs “attach” to?

Answer 21

Units of product as they are purchased for resale or produced.

Question 22

Contribution format income statement?

Answer 22

Organize costs by their behavior instead of by their function on a financial statement

Question 23

Period costs

Answer 23

Are expenses on the income statement when incurred.

Question 24

Inventoriable costs

Answer 24

Become part of inventory on the balance sheet.

Question 25

An active base

Answer 25

Measures whatever causes costs to vary.

Is sometimes called a cost driver.

Question 26

A particular cost may be direct or indirect depending on the cost object

Answer 26

True.

Question 27

Direct materials, direct labor, and manufacturing overhead are all ______ costs.

Answer 27

Product

Question 28

A fixed cost remains fixed ___ within the relevant range of activity

Answer 28

In total

Question 29

The difference in revenues between two alternatives is called?

Answer 29

Differential revenue

Question 30

Manufacturing costs can be divided into three categories:

Answer 30

Direct materials, direct labor, and manufacturing overhead.

Question 31

Marginal cost

Answer 31

Is the cost of producing one more unit

Question 32

The revenue obtained from selling one additional unit of product is called ______

Answer 32

Marginal revenue.

Question 33

High-low method?

Answer 33

It uses two data points.

should be used if scatter graph plot indicates a linear relationship between cost and activity

Question 34

When are period costs expensed?

Answer 34

In the same period in which they are incurred

Question 35

What are non manufacturing costs?

Answer 35

They are period costs

Question 36

Variable costs per unit using the high-low method is calculated by?

Answer 36

Change in cost divided by change in activity.

Question 37

A method that uses all the available data points to divide a mixed cost into its fixed and variable components is called?

Answer 37

Least-squares regression

Question 38

Differential costs are known as

Answer 38

Incremental costs

Question 39

High-low method

Answer 39

Is based on the rise-over-run formula for the slope of a straight line

Question 40

Total salaried employee expense may be step-variable costs

Answer 40

True

Question 41

Step variable costs can be adjusted quickly as conditions change

Answer 41

True

Question 42

In the equation Y=a+bX, b denotes the

Answer 42

Slope of the line.

Variable cost per unit of activity

Question 43

If the high or low cost do not match the high or low levels of activity

Answer 43

Choose the period with the highest and lowest level of activity and their associated costs

Question 44

The level of activity within which variable and fixed cost assumptions are valid is known as the

Answer 44

Relevant Range