ACCT 302 : Cost Accounting Test! True And False Questions Quiz

Explanation
The statement is true because a cost driver is a factor or activity that causes costs to be incurred. It is a variable that affects the cost of a particular activity or process. The amount of cost incurred is directly influenced by the cost driver. For example, in manufacturing, the number of units produced may be a cost driver for direct materials cost. Therefore, there is a cause-and-effect relationship between the cost driver and the amount of cost.

Explanation
A cost driver is a variable that has a direct impact on the costs incurred by a company. It can be a measure of the level of activity or volume, such as the number of units produced or the number of customers served. By understanding the relationship between cost drivers and costs, companies can better allocate resources and manage their expenses. Therefore, the statement that a cost driver is a variable that causally affects costs over a given time span is true.

Explanation
As production volume increases, the fixed costs are spread over a larger number of units, resulting in a reduction in fixed cost per unit. This is because fixed costs, such as rent, machinery, and salaries, remain constant regardless of the level of production. Therefore, as more units are produced, the fixed costs are divided among a greater number of units, leading to a decrease in the fixed cost per unit.

Explanation
Variable costs per unit are constant with the level of production or sales volume.

Explanation
Wood used to manufacture chairs is considered a direct variable cost because it directly varies with the production of chairs. The more chairs that are produced, the more wood will be required. Additionally, the cost of wood can be easily traced and directly allocated to the chairs being produced. This makes it a direct cost as it is specifically and exclusively incurred for the production of chairs and can be directly attributed to the cost of manufacturing each chair.

Explanation
Variable costs do not depend on the resources used. Variable costs are expenses that fluctuate in direct proportion to the level of production or sales. These costs may include raw materials, direct labor, and other costs that vary with the quantity of output. However, the resources used do not determine variable costs. Instead, variable costs are determined by the level of activity or production. Therefore, the statement that variable costs depend on the resources used is false.

Explanation
A fixed cost is a cost that does not vary with changes in the level of activity or volume of output produced. It remains constant over a given time period regardless of the fluctuations in production. This means that even if the total activity or output increases or decreases, the fixed cost remains the same. Therefore, the statement is true.

Explanation
The number of units shipped is a suitable cost driver for shipping costs because the more units that are shipped, the higher the shipping costs will be. This is because shipping costs are typically based on factors such as weight, size, and distance, and shipping more units would likely increase these factors. Therefore, the number of units shipped directly affects the amount of money spent on shipping, making it an appropriate cost driver for shipping costs.