Multiple choice question

1. A cost that changes abruptly at intervals of activity because the resources and the costs come in indivisible chunks is called a(n):
a. Step cost
b. Activity cost
c. Allocated cost
d. Apportioned cost

2. The _________ portion of a mixed cost varies proportionately with activity within the relevant range.
a. Variable
b. Indivisible
c. Fixed
d. Semi-fixed

3. Managers influence cost behavior through their:
a. Technology decisions
b. Product and service decisions
c. Capacity decisions
d. All of above

4. In the cost function equation Y=F + VX, Y represents the:
a. Total cost at the X level of activity
b. Fixed cost at the Y level of activity
c. Variable cost per unit of activity X
d. Variable cost at the F level of activity

5. _______ is the formal method of analysis used by managers to identify appropriate cost drivers and their effects on the costs of making a product or providing a service.
a. Activity Analysis
b. Cost analysis
c. Crystal grazing
d. Life costing

6. The food & beverage section of ABC Ltd incurred the following costs for March 20XX:
Monthly Cost March 20XX ($)
Supervisor’s salary $ 2,000
Hourly workers’ wages & benefits $10,903
Food $ 11,357
Equipment depreciation & rental $ 9,100
Supplies $ 2,750
Total F & B costs $36,110
The F & B section served 10,505 meals during the month. Using an account analysis to classify costs, the cost function for ABC Ltd’s Food & beverage section is :
a. $11,100+$2.381 per meal
b. $4,000 + $3.222 per meal
c. $6,105 +$3.039 per meal
d. $11,100+$2.381 per meal

Answers:
1 a; 2 a; 3 d; 4 a; 5 a; 6 a