Managerial Accounting The Cornerstone of Business Decisions International Edition 4th Edition – Test Bank

Managerial Accounting The Cornerstone of Business Decisions International Edition 4th Edition – Test Bank

Chapter 3—Cost Behavior

TRUE/FALSE

1.A cost that changes in total as output changes is a variable cost.

ANS: T PTS: 1 DIF: Easy OBJ: 3-1

NAT:AACSB Analytic | AICPA FN-Measurement | IMA-Cost Management | ACBSP-APC-28-Variable and Fixed Costs

2.The cost of raw materials used is usually a fixed cost.

ANS: F

The cost of raw materials used is usually a variable cost.

PTS:1DIF:EasyOBJ:3-1

NAT:AACSB Analytic | AICPA FN-Measurement | IMA-Cost Management | ACBSP-APC-28-Variable and Fixed Costs

3.Fixed costs are costs that in total remain constant within the relevant range as the level of output increases or decreases.

ANS: T PTS: 1 DIF: Easy OBJ: 3-1

NAT:AACSB Analytic | AICPA FN-Measurement | IMA-Cost Management | ACBSP-APC-28-Variable and Fixed Costs

4.As output decreases fixed costs per unit will increase.

ANS: T PTS: 1 DIF: Easy OBJ: 3-1

NAT:AACSB Analytic | AICPA FN-Measurement | IMA-Cost Management | ACBSP-APC-28-Variable and Fixed Costs

5.As output increases variable cost per unit will also increase.

ANS: F PTS: 1 DIF: Easy OBJ: 3-1

NAT:AACSB Analytic | AICPA FN-Measurement | IMA-Cost Management | ACBSP-APC-28-Variable and Fixed Costs

6. The cost of advertising is usually a discretionary fixed cost.

ANS: T PTS: 1 DIF: Easy OBJ: 3-1

NAT:AACSB Analytic | AICPA FN-Measurement | IMA-Cost Management | ACBSP-APC-28-Variable and Fixed Costs

7. A discretionary fixed cost can be changed relatively easily at management discretion.

ANS: T PTS: 1 DIF: Easy OBJ: 3-1

NAT:AACSB Analytic | AICPA FN-Measurement | IMA-Cost Management | ACBSP-APC-28-Variable and Fixed Costs

8. The relevant range is the range of output in which the assumed cost relationship is valid for the normal operations of the firm.

ANS: T PTS: 1 DIF: Easy OBJ: 3-1