# Determining How Costs Behave This question bank verified by Studydeets
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Question 1
Free
Multiple Choice

## A cost function is a ________ .

process of calculating present value of projected cash flows

process of allocating costs to cost centers or cost objects

mathematical description of how a cost changes with changes in the level of an activity relating to that cost

is a very thorough and detailed way to identifying a cost object when there is a physical relationship between inputs and outputs

Question 2
Free
Multiple Choice

y = a + bX

y = b

y = bX

y = a

Question 3
Free
Multiple Choice

variable cost

mixed cost

irrelevant cost

fixed cost

Question 4
Free
Multiple Choice

y = 1.90 + 570X

y = 570 + 1.90X

y = 570 + 1.07X

y = 1.07 + 570X

Question 5
Free
Multiple Choice

## The cost components of a heater include \$35 for the compressor, \$11 for the sheet molded compound frame, and \$74 per unit for assembly. The factory machines and tools cost is \$55,000. The company expects to produce 1,300 heaters in the coming year. What cost function best represents these costs?

y = 55,000 + 120X

y = 1,300 + 55,000X

y = 55,000 + 1,300X

y = 1,300 + 120X

Question 6
Multiple Choice

## Which of the following statements is true of a linear cost function?

It presents variable cost as a slope coefficient.
It presents total cost as an intercept.
It presents variable cost as an intercept.
It presents total cost as slope coefficient.
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Question 7
Multiple Choice

## A finance manager has to select one of the four different suppliers of raw materials. The total cost functions under the four options are given below. Assume the quality of the raw material to be the same, which of the following is preferred by the finance manager?

y = 600 + 4.96X
y = 600 + 5.49X
y = 600 + 4.41X
y = 600 + 4.67X
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Question 8
Multiple Choice

## If the total cost function is y = 6,500 + 9X, calculate the variable cost for 4,400 units.

\$46,100
\$39,600
\$58,500
\$6,500
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Question 9
Multiple Choice

## The cost function y = 2,700 + 8X ________ .

has a slope coefficient of 2,700
has an intercept of 8
is a straight line
represents a fixed cost
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Question 10
Multiple Choice

## The cost function y = 300 + 2X ________ .

has a slope coefficient of 300
has an intercept of 300
is a nonlinear
represents a fixed cost
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Question 11
Multiple Choice

## The cost function y = 13,000 + 9X ________ .

represents a mixed cost
will intersect the y-axis at 9
has a slope coefficient of 13,000
is a curved line
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Question 12
Multiple Choice

## Which of the following functions represents the least total cost assuming the number of units is equal in each case?

y = 180 + 9X
y = 90 + 5X
y = 90 + 9X
y = 180 + 5X
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Question 13
Multiple Choice

## Which of the following is an equation of a fixed cost function?

y = (a + b)?
y = a + bX
y = bX
y = a
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Question 14
True/False

## One assumption frequently made in cost behavior estimation is that changes in total costs can be explained by changes in the level of a single activity.

True
False
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Question 15
True/False

## A cost function is a mathematical description of how a cost changes with changes in the level of an activity relating to that cost.

True
False
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Question 16
True/False

## All cost functions are linear.

True
False
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Question 17
True/False

## In a cost function y = 18,000, the slope coefficient is zero.

True
False
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Question 18
True/False

## When estimating a cost function, cost behavior can be approximated by a linear cost function within the relevant range.

True
False
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Question 19
True/False