cost accounting test bank chapter 10.docx
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costaccountingtestbankchapter10
CostAccounting,15e（Horngren/Datar/Rajan）
Chapter10DeterminingHowCostsBehave
Objective10.1
1）Acostfunctionisa________.
A）processofcalculatingpresentvalueofprojectedcashflows
B）processofallocatingcoststocostcentersorcostobjects
C）mathematicaldescriptionofhowacostchangeswithchangesinthelevelofanactivityrelatingtothatcost
D）isaverythoroughanddetailedwaytoidentifyingacostobjectwhenthereisaphysicalrelationshipbetweeninputsandoutputs
Answer:
C
Diff:
2
Objective:
1
AACSB:
Analyticalthinking
2）BennetCompanyemploys20individuals.Eighteenemployeesarepaid$18perhourandtherestaresalariedemployeespaid$3,000amonth.Whichofthefollowingisthetotalcostfunctionofpersonnel?
A）y=a+bX
B）y=b
C）y=bX
D）y=a
Answer:
A
Diff:
2
Objective:
1
AACSB:
Analyticalthinking
3）CrimsonServices,Inc.,employs8individuals.Theyareallpaid$16.50perhour.Howwouldtotalcostsofpersonnelbeclassified?
A）variablecost
B）mixedcost
C）irrelevantcost
D）fixedcost
Answer:
A
Diff:
2
Objective:
1
AACSB:
Analyticalthinking
4）ForFebruary,thecostcomponentsofapictureframeinclude$0.30fortheglass,$0.75forthewoodenframe,and$0.80forassembly.Theassemblydeskandtoolscost$500.Twohundredfiftyframesareexpectedtobeproducedinthecomingyear.Whatcostfunctionbestrepresentsthesecosts?
A）y=1.85+500X
B）y=500+1.85X
C）y=3.85+600X
D）y=1.05+500X
Answer:
B
Diff:
2
Objective:
1
AACSB:
Analyticalthinking
5）Thecostcomponentsofaheaterinclude$30forthecompressor,$10forthesheetmoldedcompoundframe,and$75perunitforassembly.Thefactorymachinesandtoolscostis$60,000.Thecompanyexpectstoproduce1,000heatersinthecomingyear.Whatcostfunctionbestrepresentsthesecosts?
A）y=60,000+115X
B）y=1,000+60,000X
C）y=60,000+1,000X
D）y=1,000+115X
Answer:
A
Diff:
2
Objective:
1
AACSB:
Analyticalthinking
6）Whichofthefollowingstatementsistrueofalinearcostfunction?
A）Itpresentsvariablecostasaslopecoefficient.
B）Itpresentstotalcostasanintercept.
C）Itpresentsvariablecostasanintercept.
D）Itpresentstotalcostasslopecoefficient.
Answer:
A
Diff:
2
Objective:
1
AACSB:
Analyticalthinking
7）Afinancemanagerhastoselectoneofthefourdifferentsuppliersofrawmaterials.Thetotalcostfunctionsunderthefouroptionsaregivenbelow.Assumethequalityoftherawmaterialtobethesame,whichofthefollowingispreferredbythefinancemanager?
A）y=200+5X
B）y=200+5.50X
C）y=200+4.50X
D）y=200+4.70X
Answer:
C
Diff:
3
Objective:
1
AACSB:
Analyticalthinking
8）Ifthetotalcostfunctionisy=5,000+7X,calculatethevariablecostfor4,000units.
A）$33,000
B）$28,000
C）$20,000
D）$5,000
Answer:
B
Explanation:
B）Explanation:
Variablecostfor4,000units=$7×4,000units=$28,000
Diff:
2
Objective:
1
AACSB:
Applicationofknowledge
9）Thecostfunctiony=2,000+6X________.
A）hasaslopecoefficientof2,000
B）hasaninterceptof6
C）isastraightline
D）representsafixedcost
Answer:
C
Diff:
2
Objective:
1
AACSB:
Analyticalthinking
10）Thecostfunctiony=150+10X________.
A）hasaslopecoefficientof150
B）hasaninterceptof150
C）isanonlinear
D）representsafixedcost
Answer:
B
Diff:
2
Objective:
1
AACSB:
Analyticalthinking
11）Thecostfunctiony=10,000+3X________.
A）representsamixedcost
B）willintersectthey-axisat3
C）hasaslopecoefficientof10,000
D）isacurvedline
Answer:
A
Diff:
2
Objective:
1
AACSB:
Analyticalthinking
12）Whichofthefollowingfunctionsrepresentstheleasttotalcostassumingthenumberofunitsisequalineachcase?
A）y=180+7X
B）y=90+6X
C）y=90+7X
D）y=180+6X
Answer:
B
Diff:
3
Objective:
1
AACSB:
Analyticalthinking
13）Whichofthefollowingisanequationofafixedcostfunction?
A）y=（a+b）X
B）y=a+bX
C）y=bX
D）y=a
Answer:
D
Diff:
2
Objective:
1
AACSB:
Analyticalthinking
14）Oneassumptionfrequentlymadeincostbehaviorestimationisthatchangesintotalcostscanbeexplainedbychangesinthelevelofasingleactivity.
Answer:
TRUE
Diff:
1
Objective:
1
AACSB:
Analyticalthinking
15）Acostfunctionisamathematicaldescriptionofhowacostchangeswithchangesinthelevelofanactivityrelatingtothatcost.
Answer:
TRUE
Diff:
1
Objective:
1
AACSB:
Analyticalthinking
16）Allcostfunctionsarelinear.
Answer:
FALSE
Explanation:
Allcostfunctionsarenotlinear,butforcost-behaviorestimationweassumesomearelinearwithinarelevantrange.
Diff:
1
Objective:
1
AACSB:
Analyticalthinking
17）Inacostfunctiony=18,000,theslopecoefficientiszero.
Answer:
TRUE
Diff:
2
Objective:
1
AACSB:
Analyticalthinking
18）Whenestimatingacostfunction,costbehaviorcanbeapproximatedbyalinearcostfunctionwithintherelevantrange.
Answer:
TRUE
Diff:
2
Objective:
1
AACSB:
Analyticalthinking
19）y=a+bX,y=a,andy=bXarethethreebasictypesoflinearcostfunctions.
Answer:
TRUE
Diff:
1
Objective:
1
AACSB:
Analyticalthinking
20）Allotherthingsbeingequal,thelongerthetimehorizonthemorelikelyacostwillbefixed.
Answer:
FALSE
Explanation:
Allotherthingsbeingequal,thelongerthetimehorizon,themorelikelythecostwillbevariable.
Diff:
1
Objective:
1
AACSB:
Analyticalthinking
21）Outsideoftherelevantrange,variableandfixedcost-behaviorpatternsremainconstant.
Answer:
FALSE
Explanation:
Outsideoftherelevantrange,variableandfixedcost-behaviorpatternsmaychange.
Diff:
2
Objective:
1
AACSB:
Analyticalthinking
22）Aparticularcostitemcouldbevariableforonecostobjectandfixedforanothercostobject.
Answer:
TRUE
Diff:
1
Objective:
1
AACSB:
Analyticalthinking
23）Writealinearcostfunctionequationforeachofthefollowingconditions.UseyforestimatedcostsandXforactivityofthecostdriver.
a.Directmanufacturinglaboris$10perhour.
b.Directmaterialscost$15.60percubicyard.
c.Utilitieshaveaminimumchargeof$5,000,plusachargeof$0.30perkilowatt-hour.
d.Machineoperatingcostsinclude$300,000ofmachinedepreciationperyear,plus$100ofutilitycostsforeachdaythemachineryisinoperation.
Answer:
a.y=$10X
b.y=$15.60X
c.y=$5,000+$0.30X
d.y=$300,000+$100X
Diff:
2
Objective:
1
AACSB:
Analyticalthinking
24）Writealinearcostfunctionequationforeachofthefollowingconditions.UseyforestimatedcostsandXforactivityofthecostdriver.
a.Directmaterialscostis$1.70perpound
b.Totalcostisfixedat$8,000permonthregardlessofthenumberofunitsproduced.
c.Autorentalhasafixedfeeof$80.00perdayplus$2.00permiledriven.
d.Machineoperatingcostsinclude$1,000ofmaintenancepermonth,and$12.00ofcoolantusagecostsforeachdaythemachineryisinoperation.
Answer:
a.y=$1.70X
b.y=$8,000
c.y=$80+$2.00X
d.y=$1,000+$12X
Diff:
2
Objective:
1
AACSB:
Analyticalthinking
Objective10.2
1）Alinearcostfunctioncanonlyrepresentfixedcostbehavior.
Answer:
FALSE
Explanation:
Alinearcostfunctioncanrepresentfixed,mixed,orvariablecostbehavior.
Diff:
1
Objective:
2
AACSB:
Analyticalthinking
2）Inagraphicaldisplayofacostfunction,thesteepnessofalinerepresentsthetotalamountoffixedcosts.
Answer:
FALSE
Explanation:
Inagraphicaldisplayofacostfunction,theconstantorthey-interceptrepresentstheamountoffixedcostswhereasthesteepnessofalinerepresentsthevariablecost.
Diff:
2
Objective:
2
AACSB:
Analyticalthinking
3）Itcanbeinferredthatwhenthereisahighcorrelationbetweentwovariables,oneisthecauseoftheother.
Answer:
FALSE
Explanation:
Itcannotbeinferredthatahighcorrelationbetweentwovariablesindicatesthatoneisthecauseoftheother.Ahighcorrelationsimplyindicatesthatthevariablesmovetogether.
Diff:
2
Objective:
2
AACSB:
Analyticalthinking
4）Anexampleofaphysicalcause-and-effectrelationshipiswhenadditionalunitsofproductionincreasetotaldirectmaterialcosts.
Answer:
TRUE
Diff:
2
Objective:
2
AACSB:
Analyticalthinking
5）Managersshouldusepastdatatocreateacostfunctionandthenusetheexactinformationprovidedbythatcostfunctiontocreatethebudgetaryforecastforthenextyear.
Answer:
FALSE
Explanation:
Managersareinterestedinestimatingpastcost-behaviorfunctionsbecausetheestimatescanhelpthemmakemoreaccuratecostpredictions,orforecasts,aboutfuturecosts.Butbettermanagementdecisions,costpredictions,andestimationofcostfunctionscanbeachievedonlyifmanagerscorrectlyidentifythefactorsthataffectcosts.
Diff:
2
Objective:
2
AACSB:
Analyticalthinking
6）Whatarethetwoassumptionsbehindasimplelinearcostfunction?
Brieflyexplainthethreewaysthatalinearcostfunctionmaybehave?
Answer:
Thetwousualassumptionsbehindasimplelinearcostfunctionare:
1）Variationsinthelevelofasingleactivity（thecostdriver）explainthevariationsintherelatedtotalcosts;and
2）Costbehaviorisapproximatedbyalinearcostfunctionwithintherelevantrange.Thismeansthattotalcostversusthelevelofasingleactivitythatisrelatedtothatcostisastraightlinewithintherelevantrange.
Oncelinearityisestablished,therearethreepossibletypesoflinearity:
1）AstrictlyvariablecostoftheformY=bX,wherebistheslopeofthestraightlineandisthevariablecostperunitofthecostdriver;
2）Astrictlyconstantcostofthef
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