Question 1

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Steel used in production

Accepted Answer

Steel used in production is a type of direct material cost, which is a variable cost because it varies with the level of production. If production increases, the amount of steel used will also increase, resulting in a corresponding increase in the cost.

Question 2

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Real estate taxes

Accepted Answer

Real estate taxes are a fixed cost because they do not vary with changes in production or sales levels. They are a recurring expense that must be paid regardless of the company's level of output.

Question 3

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Salary of Chief Financial Officer

Accepted Answer

The salary of a Chief Financial Officer is a fixed cost as it does not vary with changes in production or sales levels.

Question 4

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Cost of an existing lease

Accepted Answer

The cost of an existing lease is a committed fixed cost because it relates to a long-term contract or agreement that cannot be easily changed or cancelled. It has already been incurred and cannot be avoided in the short-term.

Question 5

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Depreciation on existing equipment

Accepted Answer

Depreciation is a committed fixed cost because it occurs regardless of the level of production or sales. It is a fixed cost because the amount of depreciation is predetermined and does not change with changes in production levels. Discretionary fixed costs, on the other hand, are costs that a company chooses to incur, such as advertising or employee training.

Question 6

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Cost of registering automobiles

Accepted Answer

The cost of registering automobiles is a fixed cost, meaning that it does not change regardless of the number of automobiles registered.

Question 7

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Machine lubricant

Accepted Answer

The cost of machine lubricant would typically be considered a variable cost, meaning it varies depending on the level of machine use. As production levels go up or down, the amount of lubricant consumed would also go up or down accordingly.

Question 8

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Cost of executive training seminars

Accepted Answer

Executive training seminars are considered discretionary fixed costs because they are optional expenses that can be adjusted or eliminated depending on the company's needs and priorities. They are not essential to the ongoing operations of the business and can be considered investments in employee development and growth.

Question 9

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Salary of manager

Accepted Answer

The salary of a manager is a committed fixed cost because it is a long-term investment in a necessary position and cannot be easily adjusted in the short-term. Discretionary fixed costs are costs for activities that management may choose to spend on or not, such as advertising or employee training.

Question 10

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Rent of machinery, under an existing contract

Accepted Answer

Rent of machinery falls under committed fixed cost because the company has already entered into a contract to pay for it and cannot easily change or cancel the cost.

Question 11

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Sales commissions

Accepted Answer

Sales commissions are typically paid based on the level of sales, making them a variable cost. As sales increase, the commission expense also increases.

Question 12

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Cost of lubricating machinery

Accepted Answer

The cost of lubricating machinery is typically considered a variable cost because it can fluctuate with the level of production or usage of the machinery.

Question 13

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Internet advertising

Accepted Answer

Internet advertising is a discretionary fixed cost because it is a cost that can be adjusted or eliminated at management's discretion based on changes in business needs or market conditions. It is not a committed fixed cost, which refers to a cost that cannot be easily changed in the short term, such as rent or mortgage payments.

Question 14

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Depreciation of equipment, using a straight-line basis

Accepted Answer

Depreciation is a fixed cost because it is not affected by changes in output or sales. It represents a consistent and ongoing expense required to maintain the equipment needed for production. Using a straight-line basis means that the same amount of depreciation expense is recognized each period over the useful life of the asset, reinforcing its nature as a fixed cost.

Question 15

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Property taxes

Accepted Answer

Property taxes are committed fixed costs because they are mandatory and cannot be avoided or altered in the short term.

Question 16

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Executive travel costs

Accepted Answer

Executive travel costs are discretionary fixed costs because they are expenses that are not necessary for an organization to operate on a day-to-day basis but are still important for achieving certain goals or objectives. The decision to incur these costs is usually at the discretion of the management.

Question 17

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Direct labour (hourly)

Accepted Answer

Direct labor costs are considered a variable cost because they vary with the level of production. As more units are produced, more labour is needed, resulting in a higher total cost.

Question 18

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Controller's salary

Accepted Answer

A controller's salary is usually a fixed cost, as it is typically a consistent expense regardless of the level of output or sales.

Question 19

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Factory supplies

Accepted Answer

Factory supplies are typically considered a variable cost because their usage tends to fluctuate with the level of production or operational activity.

Question 20

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Factory insurance

Accepted Answer

Factory insurance is a fixed cost, as it remains the same regardless of the level of production or sales.

Quiz 3: Cost Behaviour

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Steel used in production

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Real estate taxes

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Salary of Chief Financial Officer

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Cost of an existing lease

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Depreciation on existing equipment

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Cost of registering automobiles

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Machine lubricant

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Cost of executive training seminars

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Salary of manager

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Rent of machinery, under an existing contract

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Sales commissions

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Cost of lubricating machinery

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Internet advertising

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Depreciation of equipment, using a straight-line basis

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Property taxes

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Executive travel costs

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Direct labour (hourly)

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Controller's salary

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Factory supplies

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Factory insurance