Free Practice Quiz Question List

1 Cost Behavior and Estimation Online Quiz Questions

Use this free practice quiz with 20 questions to review 1 Cost Behavior and Estimation, test your knowledge, and prepare for your next test or exam.

20 questions

True or false

1 point

Within a relevant range, a fixed cost remains constant in total when activity changes.

A
True
B
False

Choose one

1 point

A cost increases in total as production rises, but its cost per unit stays the same within the relevant range. How should this cost be classified by behavior?

A
Total cost stays constant while cost per unit falls as activity rises.
B
Total cost changes with activity while cost per unit stays constant within the relevant range.
C
Total cost jumps only when activity exceeds a capacity threshold.
D
Total cost contains a fixed component and a variable component.

Fill in the blank

1 point

When choosing the two observations for the high-low method, select those with the highest and lowest .

Written response

1 point

A business pays monthly rent of $8,000. At 2,000 units of activity, what is the rent cost per unit? Enter the value in dollars per unit.

True or false

1 point

Direct-versus-indirect classification concerns traceability to a cost object, while fixed-versus-variable classification concerns how cost behaves as activity changes. True or false?

A
True
B
False

Choose one

1 point

A department manager oversees several products, and the salary can be traced to the department but not economically to any one product. How is the salary classified by traceability?

A
The salary is direct to every product and indirect to the department.
B
The salary is indirect to the department and direct to each product.
C
The salary is direct to the department and indirect to each individual product.
D
The salary is variable to the department and fixed to each individual product.

Fill in the blank

1 point

In the mixed-cost model $Y = a + bX$ , where $X$ is activity, $b$ represents the .

Choose all

1 point

Which statements correctly describe the high-low method? Select all that apply.

A
Choose observations with the highest and lowest activity.
B
Choose observations with the highest and lowest total cost, regardless of activity.
C
Use the costs associated with the selected activity observations.
D
Recognize that unusual periods can distort an estimate based on only two observations.

Choose one

1 point

One supervisor can cover up to 20 employees. When staffing increases to 21, the business hires another supervisor, raising total supervisory cost. What cost behavior does this illustrate?

A
The total cost rises by the same amount for every additional employee.
B
The total cost stays constant up to a staffing limit, then rises when another supervisor is hired.
C
The total cost stays constant, but its cost per employee falls as staffing grows.
D
The total cost combines a monthly base fee with a charge for each employee.

Written response

1 point

Maintenance cost is $24,000 at 8,000 machine-hours and $36,000 at 14,000 machine-hours. Using the high-low method, what is the estimated variable cost per machine-hour? Enter the value in dollars per machine-hour.

Choose all

1 point

Before using a cost estimate to forecast costs at a planned activity level, which considerations are appropriate? Select all that apply.

A
Whether the planned activity is within the relevant range.
B
Whether the cost-activity relationship is reasonably linear in that range.
C
Whether the estimate guarantees the exact future cost.
D
Whether unusual observations or the business context could affect the estimate.

Open ended

1 point

A manager has many past cost and activity observations. Explain how regression analysis differs from the high-low method and identify one limitation or caution that applies when using cost estimates.

Choose one

1 point

Materials cost $3 per unit within the relevant range. If production increases from 1,000 units to 2,000 units, which outcome should the manager expect?

A
Total materials cost doubles while cost per unit stays at $3.
B
Total materials cost stays constant while cost per unit is cut in half.
C
Both total materials cost and cost per unit stay constant.
D
Total materials cost rises only when production passes a capacity threshold.

Written response

1 point

A delivery service charges a monthly base fee of $125 plus $4 per delivery. What is the total cost for a month with 80 deliveries? Enter the value in dollars.

Written response

1 point

A delivery service tracks the number of deliveries to explain changes in its delivery costs. What is the term for this measure of activity?

Choose one

1 point

A business produces more units while staying within the relevant range. Its monthly rent is fixed. How does the rent behave?

A
Both total rent and rent per unit remain constant.
B
Total rent remains constant, while rent per unit decreases.
C
Total rent increases, while rent per unit remains constant.
D
Total rent decreases, while rent per unit increases.

Choose one

1 point

A department manager oversees several products. How should the manager's salary be classified by traceability when the cost object is first the department and then an individual product?

A
The salary is direct to each product and indirect to the department.
B
The salary is indirect to both the department and each product.
C
The salary is direct to the department and indirect to each individual product.
D
The salary is direct to both the department and each individual product.

True or false

1 point

A dedicated equipment lease can be direct to a particular product and fixed in total within the relevant range.

A
True
B
False

Choose one

1 point

One supervisor can cover up to 20 employees. Which cost pattern is most likely if a second supervisor must be hired when staffing exceeds that level?

A
The total supervisory cost may jump when staffing exceeds the number one supervisor can cover.
B
The total supervisory cost must rise by the same amount for every additional employee.
C
The supervisory cost per employee must remain constant at every staffing level.
D
The total supervisory cost must remain unchanged at every staffing level.

Choose one

1 point

A cost has behaved as fixed within the business's usual activity range. The business plans a major increase in activity that may require another facility. What is the best approach to estimating this cost?

A
The original cost estimate must remain valid because fixed costs never change.
B
The business should treat the cost as variable at every activity level.
C
The cost estimate is reliable as long as the original activity base is used.
D
The business should reassess the estimate because higher activity may require additional capacity.