Chapter M5 Accounting

25 Questions

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Accounting Quizzes & Trivia

Questions and Answers
  • 1. 
    Based on the information in Table M5-2, assuming Laramie Tack & Saddle uses the high-low method to separate mixed costs, if the company processes 4,100 packages during July, the total variable cost will be:
    • A. 

      $3,960

    • B. 

      $2,952

    • C. 

      $2,665

    • D. 

      $6,601

  • 2. 
    What is the amount of fixed cost per sales dollar using the high-low method?
    • A. 

      $152,500

    • B. 

      $30,000

    • C. 

      $22,500

    • D. 

      $450,000

  • 3. 
    Using the high-low method, what is the amount of salesperson’s earnings if the sales are $2,750,000?
    • A. 

      $163,750

    • B. 

      $175,00

    • C. 

      $167,500

    • D. 

      $160,000

  • 4. 
    Instead of plotting mixed cost data manually:
    • A. 

      The high-low method can be used to automatically plot the data

    • B. 

      Excel can be used

    • C. 

      Microsoft DataGraph can be used

    • D. 

      None of these answers is correct.

  • 5. 
    Which of the following is an example of a variable cost related to sales activity?
    • A. 

      Direct material

    • B. 

      Sales commissions

    • C. 

      Sales salaries

    • D. 

      Monthly retail store rent

  • 6. 
    The engineering approach to cost identification relies heavily on the use of:
    • A. 

      Technical experts and professionals

    • B. 

      Visual graphs

    • C. 

      Mathematical equations

    • D. 

      Formulas

  • 7. 
    Which of the following is not an example of a fixed cost?
    • A. 

      Depreciation on a factory building

    • B. 

      Factory insurance cost

    • C. 

      Monthly store rent

    • D. 

      All of these answers are examples of fixed costs.

  • 8. 
    The method used to separate mixed costs that uses only two data points (even if more reliable points are available) is called:
    • A. 

      The engineering approach

    • B. 

      Regression analysis

    • C. 

      Scatter graphing

    • D. 

      The high-low method

  • 9. 
    Based on the information in Table M5-4, the total cost of operating the purchasing department if 1,500 purchase orders are processed would be about:
    • A. 

      $60,000

    • B. 

      $110,000

    • C. 

      $100,000

    • D. 

      The cost cannot be determined from the information on the chart.

  • 10. 
    The method used to separate the components of mixed cost which focuses on the mathematical differences between the two extremes of observations is called:
    • A. 

      The high-low method

    • B. 

      The engineering approach

    • C. 

      Scatter graphing

    • D. 

      Regression analysis

  • 11. 
    A drawback to using the high-low method is that this method is based on:
    • A. 

      Costs

    • B. 

      Only two data points at opposite extremes

    • C. 

      Mathematical calculations

    • D. 

      Activity

  • 12. 
    When the scatter graph method is compared with the high-low method, the fixed and variable costs will be:
    • A. 

      Extremely different

    • B. 

      Somewhat different

    • C. 

      Identical

    • D. 

      None of these answers is correct.

  • 13. 
    An accountant would use which formula to find the amount of variable costs?
    • A. 

      Total costs / fixed costs

    • B. 

      Fixed costs / total costs

    • C. 

      Fixed costs – variable costs

    • D. 

      Total costs – fixed costs

  • 14. 
    A cost that does not change as the level of business activity changes is a:
    • A. 

      Variable cost

    • B. 

      Mixed cost

    • C. 

      Fixed cost

    • D. 

      Semi-variable cost

  • 15. 
    The most mathematically complex method used for separating mixed costs is:
    • A. 

      Engineering approach

    • B. 

      Regression analysis

    • C. 

      Scatter graphing

    • D. 

      High-low method

  • 16. 
    In the basic mathematical regression equation, the X represents:
    • A. 

      Unit variable cost

    • B. 

      Activity level

    • C. 

      Fixed cost

    • D. 

      Total cost

  • 17. 
    Fixed costs are costs that  __________ in total, but  __________ as the business activity level changes.
    • A. 

      Remain constant; change per unit

    • B. 

      Change; remain fixed per unit

    • C. 

      Fluctuate; are relatively stable

    • D. 

      None of these answers is correct.

  • 18. 
    Activities that are outside of the relevant range:
    • A. 

      Only affect fixed costs in a business setting

    • B. 

      Can still affect costs in a business setting

    • C. 

      Only impact variable costs in a business setting

    • D. 

      Do not affect costs in a business setting

  • 19. 
    In the basic mathematical regression equation, the Y represents:
    • A. 

      Unit variable cost

    • B. 

      Total cost

    • C. 

      Fixed cost

    • D. 

      Activity level

  • 20. 
    An equation used to determine the components of mixed cost is:
    • A. 

      Mixed cost = total cost – variable cost

    • B. 

      Total mixed cost = fixed cost element – variable cost element

    • C. 

      Total cost = fixed cost + variable cost

    • D. 

      Total mixed cost = fixed cost element + variable cost element

  • 21. 
    The reaction of costs to changes in levels of business activity is called:
    • A. 

      Semi-variable cost tracking

    • B. 

      Marketing mix

    • C. 

      Managerial decision behavior

    • D. 

      Cost behavior

  • 22. 
    The information from Table M5-2 for applying the high-low method should come from the months of:
    • A. 

      April and June

    • B. 

      May and June

    • C. 

      February and April

    • D. 

      February and May

  • 23. 
    Based on the information in Table M5-1, the types of cost that would be considered a mixed cost for Horse & Buggy would be:
    • A. 

      C and E

    • B. 

      E and F

    • C. 

      C, D, and E

    • D. 

      C and F

  • 24. 
    When a cost no longer holds to its cost behavior pattern, the activity may be:
    • A. 

      A mixed cost

    • B. 

      An indeterminable cost

    • C. 

      A fixed cost

    • D. 

      Outside the relevant range

  • 25. 
    __________ costs change in total proportionately with changes in the level of business activity.
    • A. 

      Frozen

    • B. 

      Fixed

    • C. 

      Mixed

    • D. 

      Variable