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
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
Related questions
8) Morgana Avionics makes three types of radios for smallaircraft: Model A, Model B, and Model C. The manufacturingoperations are mechanized and there is no direct labor.Manufacturing overhead costs are significant, and Morgana hasadopted an activity-based costing system. Direct materials costsper unit for each model are as follows:
Model A | $28 |
Model B | $32 |
Model C | $40 |
Morgana has three activities: assembly, materials management,and testing. The cost driver for assembly is machine hours. Thecost driver for materials management is number of parts, and thecost driver for testing is the number of units of product. Totalcosts and production volumes for the year 2015 were estimated asfollows:
Total cost | Total units | Cost Driver | |
Assembly | $780,000 | 120,000 | Machine hours |
Materials management | $120,000 | 80,000 | Parts |
Testing | $22,500 | 5,000 | Units |
The Model A radio requires 12 parts to construct, and requires16 machine hours of processing. What is the manufacturing cost tomake one unit of Model A?
A) $150.00
B) $132.00
C) $126.50
D) $154.50
Note: Supporting computations are required for thisproblem. Failure to do so will result in loss ofpoints.
