ACCY 200 Exam 2 ACTUAL Exam
Questions and CORRECT Answers
The scattergram allows cost-volume relationships to be visually scanned for outlier observations
that should be:
a. included in the calculation of the cost formula of a mixed cost.
b. ignored in the calculation of the cost formula of a mixed cost.
c. included in the calculation of the fixed cost component of the mixed cost.
d. included in the calculation of the variable rate component of the mixed cost. - CORRECT
ANSWER - b. ignored in the calculation of the cost formula of a mixed cost.
Each of a company's two product lines has a different contribution margin ratio. If the company's
total sales remain the same but the sales mix shifts toward selling more of the product with the
lower contribution ratio, which of the following is true?
a. operating income will decrease.
b. the average contribution margin ratio will decrease.
c. the breakeven point will increase.
d. all of the answers are true. - CORRECT ANSWER - d. all of the answers are true.
Simplifying assumptions identified for the use of cost behavior pattern data include:
a. fixed range and variability.
b. linearity and relevant range.
c. relevant range and liquidity.
d. fixed activity and linearity. - CORRECT ANSWER - b. linearity and relevant range.
To which function of management is an understanding of Cost-Volume-Profit relationships most
relevant?
a. Directing
b. Managing
c. Planning
,d. Organizing - CORRECT ANSWER - c. Planning
A management decision that would have a long term influence on the operating leverage of a
firm would be:
a. increasing the advertising budget.
b. increasing prices in proportion to raw material cost increases.
c. substituting robots for hourly paid production workers.
d. having a season-end sale of seasonal products. - CORRECT ANSWER - c. substituting
robots for hourly paid production workers.
When the high-low method of estimating a cost behavior pattern is used:
a. the direct result of the high-low calculations is the fixed expense amount.
b. the highest and lowest sales price and volume amounts are used in the calculation.
c. cost and volume data must be reviewed for outliers.
d. the resulting cost formula will explain total cost accurately for every value between the high
and low volumes. - CORRECT ANSWER - c. cost and volume data must be reviewed for
outliers.
Which of the following is another term for mixed costs?
a. Semifixed costs.
b. Semivariable costs.
c. Component costs.
d. None of the answers are correct. - CORRECT ANSWER - b. Semivariable costs.
The term "relevant range" is used to describe:
a. the range of activity where fixed costs change proportionately as activity changes.
b. the range of activity where a particular relationship between fixed and variable costs stays
valid.
c. the range of activity where costs will always fluctuate.
, d. the range of activity where total variable cost remains unchanged as activity changes. -
CORRECT ANSWER - b. the range of activity where a particular relationship between fixed
and variable costs stays valid.
____________ costs are not relevant in a decision to continue or discontinue a segment of the
organization.
a. Differential
b. Unavoidable
c. Avoidable
d. Opportunity - CORRECT ANSWER - b. Unavoidable
_____________ is a cost management technique in which the firm determines the required cost
for a product or service in order to earn a desired profit when the marketplace establishes the
product's selling price.
a. Relevant costing
b. Differential costing
c. Target costing
d. Product costing - CORRECT ANSWER - c. Target costing
Direct costing may be used for:
a. internal reporting purposes.
b. external financial reporting purposes.
c. income tax reporting purposes.
d. all of the answers are correct. - CORRECT ANSWER - a. internal reporting purposes.
The predetermined overhead application rate based on direct labor hours is computed as:
a. actual total overhead costs divided by actual direct labor hours.
b. actual total overhead costs divided by estimated direct labor hours.
c. estimated total overhead costs divided by actual direct labor hours.
Questions and CORRECT Answers
The scattergram allows cost-volume relationships to be visually scanned for outlier observations
that should be:
a. included in the calculation of the cost formula of a mixed cost.
b. ignored in the calculation of the cost formula of a mixed cost.
c. included in the calculation of the fixed cost component of the mixed cost.
d. included in the calculation of the variable rate component of the mixed cost. - CORRECT
ANSWER - b. ignored in the calculation of the cost formula of a mixed cost.
Each of a company's two product lines has a different contribution margin ratio. If the company's
total sales remain the same but the sales mix shifts toward selling more of the product with the
lower contribution ratio, which of the following is true?
a. operating income will decrease.
b. the average contribution margin ratio will decrease.
c. the breakeven point will increase.
d. all of the answers are true. - CORRECT ANSWER - d. all of the answers are true.
Simplifying assumptions identified for the use of cost behavior pattern data include:
a. fixed range and variability.
b. linearity and relevant range.
c. relevant range and liquidity.
d. fixed activity and linearity. - CORRECT ANSWER - b. linearity and relevant range.
To which function of management is an understanding of Cost-Volume-Profit relationships most
relevant?
a. Directing
b. Managing
c. Planning
,d. Organizing - CORRECT ANSWER - c. Planning
A management decision that would have a long term influence on the operating leverage of a
firm would be:
a. increasing the advertising budget.
b. increasing prices in proportion to raw material cost increases.
c. substituting robots for hourly paid production workers.
d. having a season-end sale of seasonal products. - CORRECT ANSWER - c. substituting
robots for hourly paid production workers.
When the high-low method of estimating a cost behavior pattern is used:
a. the direct result of the high-low calculations is the fixed expense amount.
b. the highest and lowest sales price and volume amounts are used in the calculation.
c. cost and volume data must be reviewed for outliers.
d. the resulting cost formula will explain total cost accurately for every value between the high
and low volumes. - CORRECT ANSWER - c. cost and volume data must be reviewed for
outliers.
Which of the following is another term for mixed costs?
a. Semifixed costs.
b. Semivariable costs.
c. Component costs.
d. None of the answers are correct. - CORRECT ANSWER - b. Semivariable costs.
The term "relevant range" is used to describe:
a. the range of activity where fixed costs change proportionately as activity changes.
b. the range of activity where a particular relationship between fixed and variable costs stays
valid.
c. the range of activity where costs will always fluctuate.
, d. the range of activity where total variable cost remains unchanged as activity changes. -
CORRECT ANSWER - b. the range of activity where a particular relationship between fixed
and variable costs stays valid.
____________ costs are not relevant in a decision to continue or discontinue a segment of the
organization.
a. Differential
b. Unavoidable
c. Avoidable
d. Opportunity - CORRECT ANSWER - b. Unavoidable
_____________ is a cost management technique in which the firm determines the required cost
for a product or service in order to earn a desired profit when the marketplace establishes the
product's selling price.
a. Relevant costing
b. Differential costing
c. Target costing
d. Product costing - CORRECT ANSWER - c. Target costing
Direct costing may be used for:
a. internal reporting purposes.
b. external financial reporting purposes.
c. income tax reporting purposes.
d. all of the answers are correct. - CORRECT ANSWER - a. internal reporting purposes.
The predetermined overhead application rate based on direct labor hours is computed as:
a. actual total overhead costs divided by actual direct labor hours.
b. actual total overhead costs divided by estimated direct labor hours.
c. estimated total overhead costs divided by actual direct labor hours.
