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Exam 3: Measurement of Cost Behavior

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Question 1

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Variable cost per unit is the slope of a total cost line.

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B) False

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Question 2

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The application of cost measures to expected future activity levels to forecast future costs

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Question 3

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In the mixed?cost function, Y = $72,000 + $7.70X, the $72,000 stands for _____.

Insomniac Hotel's cost function based on guest-days of occupancy for custodial cost is given as: Y = $60,000 + $10.00X.Insomniac Hotel expects an occupancy level of 15,000 guest days.Insomniac Hotel's expected total cost is _____.

Snead Inc.currently produces 120,000 units at a cost of $400,000.Next year Snead Inc.expects to produce 145,000 units.Snead's relevant range is 100,000 to 150,000 units.If the cost is fixed and 145,000 units are produced, the fixed cost _____.

Which statement regarding committed and discretionary fixed costs is true?

Costs that may be essential to the long-run achievement of the organization's goals, but that managers can almost reduce to zero in the short-run, are called _____.

A lump sum amount of research and development planned for Senko Corporation would most likely be identified as a_____.

It may be difficult to trace cost to products and services if the costs are ?____.

Least-squares regression is a reliable method of cost estimation.

_____ is the first step in estimating or predicting costs as a function of appropriate cost drivers.

______ is the application of cost measures to expected future activity levels to forecast future costs.

Presented below is the production data for the first six months of the year showing the mixed costs incurred by Andrew Company. $\begin{array} { l c c } \text { Month } & \underline { \text { Cost } } & \underline { \text { Units } } \\\text { July } & \$ 5,890 & 4,100 \\\text { August } & 4,024 & 3,200 \\\text { September } & 7,480 & 6,300 \\\text { October } & 8,840 & 7,500 \\\text { November } & 5,800 & 5,800 \\\text { December } & 7,336 & 6,600\end{array}$ Andrew Company uses the high?low method to analyze mixed costs.The cost function is stated as _____.

One of the simplest methods to measure a linear cost function from past data is the _____.

Merkey Motel's cost function based on guest-days of occupancy for custodial cost is given as: Y = $50,000 + $7.50X.Merkey Motel expects an occupancy level of 10,000 guest days.Merkey Motel's expected total fixed cost is _____.

_____ have no obvious relationship to levels of output activity, but are determined as part of the periodic planning process.

Committed fixed costs can be altered by management if management decides that different levels of spending are desirable.

Bush Motel's cost function based on guest-days of occupancy for custodial cost is given as: Y = $60,000 + $4.50X.Bush Motel expects an occupancy level of 8,000 guest days.Bush Motel's expected total variable cost is:

A cost function _____.

Activity analysis is used to identify appropriate cost drivers and their effects on the costs of making a product or providing a service.