Management Accounting 6th Canadian Edition Test Bank

Management Accounting 6th Canadian Edition Test Bank

Management Accounting, Cdn. 6e (Horngren/Sundem/Stratton/Beaulieu)

Chapter 3   Measurement of Cost Behaviour

1) Measuring cost behaviour involves understanding and quantifying how activities of an organization affect levels of costs.

Answer:  TRUE

Diff: 1      Type: TF      Page Ref: 80

Objective:  1

2) Cost behaviour can be graphed with a straight line when a cost changes proportionately with changes in a cost driver.

Answer:  TRUE

Diff: 1      Type: TF      Page Ref: 80

Objective:  1

3) The rental of a car, which includes a fixed daily rate plus an extra fee for each mile driven, is an example of a step cost.

Answer:  FALSE

Diff: 1      Type: TF      Page Ref: 80

Objective:  1

4) Capacity costs are large, indivisible chunks of cost that the organization is obligated to incur or usually would not consider avoiding.

Answer:  FALSE

Diff: 1      Type: TF      Page Ref: 80

Objective:  1

5) Committed fixed costs can be altered by management if management decides that different levels of spending are desirable.

Answer:  FALSE

Diff: 1      Type: TF      Page Ref: 80

Objective:  1

6) Cost measurement is the first step in estimating or predicting costs as a function of appropriate cost drivers.

Answer:  TRUE

Diff: 1      Type: TF      Page Ref: 80

Objective:  1

7) A cost driver, sometimes referred to as the independent variable, is part of the cost function relationship.

Answer:  TRUE

Diff: 1      Type: TF      Page Ref: 80

Objective:  1