Cost Accounting

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Cost Accounting

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Chapter 2—Cost Terminology and Cost Behaviors

MULTIPLE CHOICE

1. The term "relevant range" as used in cost accounting means the range over which a. | costs may fluctuate. | b. | cost relationships are valid. | c. | production may vary. | d. | relevant costs are incurred. |

ANS: B PTS: 1 DIF: Easy OBJ: 2-2 NAT: AACSB: Reflective Thinking LOC: AICPA Functional Competencies: Measurement, Reporting

2. Which of the following defines variable cost behavior?

Total cost reactionto increase in activity | Cost per unit reactionto increase in activity |

a. | remains constant remains constant | b. | remains constant increases | c. | increases increases | d. | increases remains constant |

ANS: D PTS: 1 DIF: Easy OBJ: 2-2 NAT: AACSB: Reflective Thinking LOC: AICPA Functional Competencies: Measurement, Reporting

3. When cost relationships are linear, total variable prime costs will vary in proportion to changes in a. | direct labor hours. | b. | total material cost. | c. | total overhead cost. | d. | production volume. |

ANS: D PTS: 1 DIF: Easy OBJ: 2-2 NAT: AACSB: Reflective Thinking LOC: AICPA Functional Competencies: Measurement, Reporting

4. Which of the following would generally be considered a fixed factory overhead cost?

Straight-line | Factory | Units-of-production | depreciation | insurance | depreciation |

a. | no no no | b. | yes no yes | c. | yes yes no | d. | no yes no |

ANS: C PTS: 1 DIF: Easy OBJ: 2-2 NAT: AACSB: Reflective Thinking LOC: AICPA Functional Competencies: Measurement, Reporting

5. An example of a fixed cost

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