module 15

Question 1

varliable costs

Answer 1

Change in total in direct proportion
to changes in activity

Question 2

fixed cost

Answer 2

Do not change in response to a change
in activity volume

Question 3

mixed cost

Answer 3

Contain a fixed and variable cost element;
sometimes called semi-variable costs

Question 4

step costs

Answer 4

Constant within a narrow range of
activity, but shift to a higher level
when activity exceeds the range

Question 5

Total cost function in recent years

Answer 5

Has shifted to more fixed costs and lower variable costs

Question 6

relevent range

Answer 6

A portion of a range of activity associated with the
fixed cost of the current or expected capacity
▪ A normal range of activity in which a company
expects to operate, where the fixed costs remain
linear, i.e., total cost remains the same

Question 7

marginal cost

Answer 7

the varying
increment in total cost of
making one more unit.

Question 8

committed fixed cost or capacity costs

Answer 8

are necessary to maintain
the current service or
production capacity.

Question 9

Discretionary
fixed costs, or
managed
fixed costs,

Answer 9

are set at a
fixed amount
each period by
management.

Question 10

least squares regression

Answer 10

Superior to the high-low and scatter diagram
methods
▪ Because it uses all data points, and
▪ Does not rely on subjective judgment

Question 11

manufacturing overhead

Answer 11

All manufacturing costs
other than direct materials
and direct labor

Question 12

heirarchy of activity costs

Answer 12

Unit-level activities
 Order-level activities
 Customer-level activities
 Facility-level activities