Chapter 5: Cost Behaviour: Analysis and Use 5-1. The relative proportion of variable, fixed, and mixed costs in a firm is known as the firm's:
a. contribution margin.
b. cost structure.
c. product mix.
d. relevant range.
5-2. The cost of goods sold in a merchandising firm typically would be classified as a:
a. fixed cost.
b. variable cost.
c. step-variable cost.
d. mixed cost.
5-3. Simple regression involves:
a. two or more independent variables to explain changes in a dependent variable.
b. one independent variable to explain changes in a dependent variable.
c. two or more independent variables to explain changes in one or more dependent variables
d. the visual fitting of a regression line to plotted data points of observed levels of cost and activity.
5-4. The classification of costs as fixed, variable, or mixed is made:
a. only in manufacturing firms.
b. for external as well as internal purposes.
c. within a specified range of activity called the relevant range.
d. across all levels of activity without regard to levels of activity.
5-5. Factory overhead taken as a whole would be a perfect example of:
a. mixed costs.
b. fixed costs.
c. variable costs.
d. irrelevant costs.
5-6. The trend in most companies today is toward:
a. greater fixed costs relative to variable costs.
b. greater variable costs relative to fixed costs.
c. ignoring cost structure and concentrating on cost drivers.
d. treating all fixed costs as being discretionary.
5-7. Discretionary fixed costs:
a. have a planning horizon that covers many years.
b. may be reduced for short periods of time with minimal damage to the long-run goals of the organization.
c. cannot be reduced for even short periods of time without resulting in significant damage to the long-run goals of the organization.
d. are most effectively controlled through the effective utilization of plant and organization.
5-8. The traditional income statement required for external reporting:
a. organizes costs by behaviour rather than by function.
b. organizes costs by function rather than by behaviour.
c. emphasizes the concept of contribution margin.
d. is equally useful for internal as well as external decisions.
5-9. Barton, Inc. had the following data for maintenance cost:
2001 2000
Machine hours incurred 12,000 16,000
Maintenance cost incurred $23,000 $29,000
The cost formula for maintenance within the relevant range shown above would be:
a. $5,000 plus $.67 per machine hour.
b. $23,000 plus $1.50 per machine hour.
c. $5,000 plus $1.50 per machine hour.
d. $18,280 plus $.67 per machine hour.
5-10. Eton Minerals shipped 8,000 tons of coal for $400,000 in February and 10,000 tons for $499,000 in March. Shipping costs for 11,000 tons expected to be shipped in April would be:
a. $544,500
b. $548,500
c. $422,222
d. $554,000
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