Costing - Study Mode

[#271] Description in mathematical form to represent changes in cost, with level of activity related to that cost is classified as
Correct Answer

(A) cost function

Explanation

Solution: Description in mathematical form to represent changes in cost, with level of activity related to that cost is classified as cost function. A cost function is a function of input prices and output quantity whose value is the cost of making that output given those input prices, often applied through the use of the cost curve by companies to minimize cost and maximize production efficiency.

[#272] In step cost functions, cost is increased by
Correct Answer

(A) discrete amounts

Explanation

Solution: In step cost functions, cost is increased by discrete amounts. A discrete quantity can only take on certain values.

[#273] Individual activities such as machine setups, material handling, customer service and distribution of products are a part of
Correct Answer

(A) activity based costing

Explanation

Solution: Individual activities such as machine setups, material handling, customer service and distribution of products are a part of activity based costing. The Activity-Based Costing (ABC) is a costing system which focuses on activities performed to produce products.

[#274] A problem which arises because of presence of systematic pattern in residual value sequence is considered as
Correct Answer

(D) both B and C

Explanation

Solution: A problem which arises because of presence of systematic pattern in residual value sequence is considered as serial correlation and auto correlation.

[#275] If difference between costs linked to highest and lowest observation of cost driver is $8000 and observation of cost driver is 40 machine hours, then slope coefficient will be
Correct Answer

(B) $200

Explanation

Solution: Slope coefficient = Difference between costs linked to highest and lowest observation of cost driver ÷ Observation of cost driver = $8000 ÷ 40 = $200