ACCT 526 Final Exam Questions and Correct Answers

Cost Driver a causal factor that measures the output of the activity that leads (or causes) costs to change Relevant Range the range of output over which the assumed cost relationship is valid for the normal operations of a firm Discretionary Fixed Costs fixed costs that can be changed or avoided relatively easily in the short run at management discretion Committed Fixed Costs fixed costs that cannot be easily changed Total Variable Cost Variable Rate x Units of Output Discretionary Variable Costs variable costs that can be changed or avoided relatively easily in the short run at management discretion. Total Cost Total Fixed Cost + Total Variable Cost The High-Low Method a method of separating mixed costs into fixed and variable components by using just the high and low data points Variable Rate (High Point Cost - Low Point Cost) / (High Point Output - Low Point Output) Fixed Cost Total Cost at High Point - (Variable Rate x Output at High Point) *can do the same for Low Point Absorption Costing assigns ALL manufacturing costs to the product (DM, DL, VOH, FOH) Variable Costing assigns ONLY variable manufacturing costs to the product; these costs include DM, DL and VOH Absorption-Costing Product Cost DM + DL + VOH + FOH Variable-Costing Product Cost DM + DL + VOH