ACCT 002 Lecture Notes - Lecture 27: Scatter Plot, Cost Driver, The Technique

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blackpig616

22 Oct 2020

School

College of The Sequoias

Department

Accounting (ACCT)

Course

ACCT 002

Professor

cooper

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Document Summary

Cost behavior, activity analysis, & cost estimation. The relationship between a given cost item and the quantity of its related cost driver; how costs behave in response to changes in activity/productivity. Four basic cost behavior patterns (how costs behave in relation to a cost driver) Variable costs (as profits increase, so does costs) Proportional increases in unit level cost drivers. E. g. cost to produce an additional product. Do not change in response to changes in unit level cost drivers. They increase, but not in direct proportion to increases in unit level cost drivers. Cellphones, if you go over your plan then additional. Constant over a range of activity for a unit-level cost driver but move to a different amount at different ranges. Total cost function for an organization or segment. Total fixed costs + (variable costs per unit x number of. Relevant range (in this class, always discussing cost behavior in rr)

Related Questions

Why is it important to identify the most appropriate costdrivers for a particular product?

A) so managers can identify the activities necessary tomanufacture a product

B) so managers can control product costs better

C) so managers can predict product costs better and make betterdecisions

D) B and C

Answer:

Cost drivers are ________.

A) the different functions in the value chain

B) different types of functional areas in the firm

C) measures of activities that require the use of resources andthereby cause costs

D) different types of cost calculations

Answer:

Within the relevant range, the total amount of ________ costchanges in direct proportion to changes in the cost driver. Withinthe relevant range, the total amount of ________ cost does notchange in direct proportion to changes in the cost driver.

A) fixed; variable

B) variable; fixed

C) step; mixed

D) mixed; step

Answer:

What happens when the cost-driver level increases within therelevant range?

A) Total fixed costs remain unchanged.

B) Fixed costs per unit of cost driver increase.

C) Total variable costs decrease.

D) Variable costs per unit of cost driver increase.

Answer:

Which of the following costs is a fixed cost?

A) cost of dairy ingredients used to produce ice cream

B) depreciation expense on factory building

C) fuel used by delivery trucks

D) labor wages of workers who mix dairy ingredients to make icecream

goldalligator726

If variable costs per unit increased because of an increase in hourly wage rates, the break-even point would:

a. increase.

b. remain the same.

c. decrease.

d. increase or decrease, depending upon the percentage increase in wage rates.

Zeke Company sells 25,000 units at $21 per unit. Variable costs are $10 per unit, and fixed costs are $75,000. The contribution margin ratio and the unit contribution margin are:

a. 53% and $7 per unit.

b. 47% and $11 per unit.

c. 52% and $11 per unit.

d. 47% and $8 per unit.

If sales are $500,000, variable costs are 75% of sales, and operating income is $40,000, what is the operating leverage?

a. 0

b. 1.3

c. 3.1

d. 1.25

Which of the following describes the behavior of the fixed cost per unit?

a. Increases with increasing production

b. Remains constant with changes in production

c. Decreases with increasing production

d. Decreases with decreasing production

If variable costs per unit decreased because of a decrease in utility rates, the break-even point would:

a. increase.

b. increase or decrease, depending upon the percentage increase in utility rates.

c. decrease.

d. remain the same.

Costs that vary in total in direct proportion to changes in an activity level are called:

a. differential costs.

b. fixed costs.

c. variable costs.

d. sunk costs

Which of the following conditions would cause the break-even point to increase?

a. Total fixed costs decrease

b. Unit variable cost decreases

c. Unit variable cost increases

d. Unit selling price increases

In cost-volume-profit analysis, all costs are classified into the following two categories:

a. discretionary costs and sunk costs

b. variable costs and fixed costs

c. mixed costs and variable costs

d. sunk costs and fixed costs

ochrespider8

Match each of the following terms to the appropriatedefinition.

A type of cost that has two components; one that does not changein relation to the volume produced and one that does change inrelation to the volume produced.

Answer 1

A type of cost that does not change in relation to volumeproduced.	Answer 2
A type of cost that changes in relation to volume produced.	Answer 3
Describes a company's cost structure and the effect of fixedcosts on operating income as volume changes.	Answer 4
A fairly accurate calculation to determine the variable andfixed components of a cost.	Answer 5
The excess of sales over break-even revenue.	Answer 6
A method of examining different scenarios by only examiningitems that have changed.	Answer 7
A production level where certain costs remain the same.	Answer 8
The difference between sales per unit and variable costs perunit.	Answer 9

The answers for each one are one of these, Least squaredregression method, Fixed Costs, Incremental Analysis, RelevantRange, Mixed Costs, Operating Leverage, Margin of Safety, Variablecosts, and Contribution Margin per Unit

azurefish814

ACCT 002 Lecture Notes - Lecture 27: Scatter Plot, Cost Driver, The Technique

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