Solution manual cost management HMCost3e SM ch03
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Solution manual cost management HMCost3e SM ch03
CHAPTER 3 COST BEHAVIORDISCUSSION QUESTIONS1Knowledge of cost behavior allows a manager to assess changes in costs that result from changes in activit Solution manual cost management HMCost3e SM ch03 ty. This allows a manager to assess the effects of choices that change activity. For example, if excess capacity exists, blds that minimally cover variable costs may be totally appropriate. Knowing what costs are variable and what costs are fixed can help a manager make better blds.2The longer the t Solution manual cost management HMCost3e SM ch03 ime period, the more likely that a cost will be variable. The short run is a period of time for which at least one cost is fixed. In the long run, allSolution manual cost management HMCost3e SM ch03
costs are variable.3Resource spending is the cost of acquiring the capacity to perform an activity, whereas resource usage is the amount of activity CHAPTER 3 COST BEHAVIORDISCUSSION QUESTIONS1Knowledge of cost behavior allows a manager to assess changes in costs that result from changes in activit Solution manual cost management HMCost3e SM ch03 ducts.4Flexible resources are those acquired from outside sources and do not involve any long-term commitment for any given amount of resource. Thus, the cost of these resources increases as the demand for them increases, and they are variable costs (varying in proportion to the associated activity Solution manual cost management HMCost3e SM ch03 driver).5Committed resources are acquired by the use of either explicit or implicit contracts to obtain a given quantity of resources, regardless of wSolution manual cost management HMCost3e SM ch03
hether the quantity of resources available is fully used or not. For multiperiod commitments, the cost of these resources essentially corresponds to cCHAPTER 3 COST BEHAVIORDISCUSSION QUESTIONS1Knowledge of cost behavior allows a manager to assess changes in costs that result from changes in activit Solution manual cost management HMCost3e SM ch03 .6A variable cost increases in direct proportion to changes in activity usage. A one-unit increase in activity usage produces an increase in cost. A stepvariable cost, however, increases only as activity usagechanges in small blocks or chunks. An increase in cost requires an increase in several unit Solution manual cost management HMCost3e SM ch03 s of activity. When a stepvariable cost changes over relatively narrow ranges of activity, it may be more convenient to treat it as a variable cost.7MSolution manual cost management HMCost3e SM ch03
ixed costs are usually reported in total in the accounting records. The amount of the cost that is fixed and the amount that is variable are unknown aCHAPTER 3 COST BEHAVIORDISCUSSION QUESTIONS1Knowledge of cost behavior allows a manager to assess changes in costs that result from changes in activit Solution manual cost management HMCost3e SM ch03 relationship may exist and. if so. whether a linear function can be used to approximate the relationship.9Since the scatterplot method is not restricted to the high and low points, it is possible to select two points that better represent the relationship between activity and costs, producing a bet Solution manual cost management HMCost3e SM ch03 ter estimate of fixed and variable costs. The main advantage of the high-low method is the fact that it removes subjectivity from die choice process.Solution manual cost management HMCost3e SM ch03
The same line will be produced by two different persons.10Assuming that a scattergraph reveals that a linear cost function IS suitable, then the methoCHAPTER 3 COST BEHAVIORDISCUSSION QUESTIONS1Knowledge of cost behavior allows a manager to assess changes in costs that result from changes in activit Solution manual cost management HMCost3e SM ch03 ationship between cost and activity can be assessed.11The best-fitting line is the one that IS "Closest" to the data points. This is usually measured by the line that has the smallest sum of squared deviations. No. the bestfitting line may not explain much of the total cost variability. There must b Solution manual cost management HMCost3e SM ch03 e a strong relationship as well.12If the variation in cost is not well explainedby activityusage (coefficient ofdetermination is low) as measured by aSolution manual cost management HMCost3e SM ch03
single driver, then other explanatory'45352c 2015 Cengage teaming. All Rights Reserved May not be scanned. copied cc duplicated, or posted to a publiCHAPTER 3 COST BEHAVIORDISCUSSION QUESTIONS1Knowledge of cost behavior allows a manager to assess changes in costs that result from changes in activit Solution manual cost management HMCost3e SM ch03 ved. May not be scanned. ccpiedSolution manual cost management HMCost3e SM ch03
ause that would lead to a faster decrease in the cumulative average time ittakes to perform the service. (To see this, rework Cornerstone 3-8 with an CHAPTER 3 COST BEHAVIORDISCUSSION QUESTIONS1Knowledge of cost behavior allows a manager to assess changes in costs that result from changes in activit Solution manual cost management HMCost3e SM ch03 aterial, then the method of decomposition is unimportant. Furthermore. sometimes managerial judgment may bo more useful for assigning costs than the use of formal statistical methodology.45354c 2015 Cengage Lwuning. All Righu Reserved. May t»l be scanned. copied oc duplicated, or posted to 3 publicl Solution manual cost management HMCost3e SM ch03 yaccessible website, in whole or in panCORNERSTONE EXERCISESCornerstone Exercise 3.11Total labor cost Fixed labor cost + (Variable rate X Classes tauSolution manual cost management HMCost3e SM ch03
ght) $600 + $20(Classes taught)CHAPTER 3 COST BEHAVIORDISCUSSION QUESTIONS1Knowledge of cost behavior allows a manager to assess changes in costs that result from changes in activitCHAPTER 3 COST BEHAVIORDISCUSSION QUESTIONS1Knowledge of cost behavior allows a manager to assess changes in costs that result from changes in activitGọi ngay
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