Chapter 2: Cost concepts, behaviour and estimation True/False questions 47. When estimating cost functions it is important to continuously evaluate uncertainties and quality of information 48. Multiple functions for a cost object. techniques may be required to estimate total cost 74. Cost behaviour is: a. another word for cost object. b. irrelevant for service organisations c, the variation in costs relative to the variation in activities d. an old fashioned term for activity cost analysis. LO 1 75. Cost behaviour can be elassified using a. a fixed and variable framework. b. an activity analysis cost framework e, a direct and indirect cost framework d. both a. and b. 76. Fixed costs per unit a. Will not change over the relevant range b. Are constant regardless of changes in activity e. Vary inversely with changes in activity d. Increase with an increase in activity LO 2 77, Total fixed costs: a. Vary inversely with changes in activity b. Increase with an increase in activity c. Decrease with a decrease in activity d. Are constant regardless of changes in activity LO 2 John Wilky&Sons Australia Lad 2017 2.7 78. Total variable costs: a. Change proportionately with changes in activity levels b. Increase with a decrease in activity c. Have no relevant range. d. Are constant regardless of changes in activity LO 2 79. Mixed costs: a. Have a constant per-unit value b. Are constant in total c. Consist of the variable portion of all costs d. Consist of fixed and variable costs LO 2 80. Mixed costs: a. Vary with production but not in direct proportion to volume b. Vary with production in direct proportion to volume c. Do not vary with production d. Include only different types of fixed costs LO 2 81. The relevant range is defined as: a. A period of time over which total costs do not change b. A span of activity where both total fixed costs and variable cost per unit of activity remain constant c. The volume of production over which step-wise fixed costs increase d. The time period in which the level of production does not change LO 2 82. Which of the follow is not an assumpt range of activity? tion when estimating a cost function over t he relevant a. Mixed costs will change in total b. Variable cost per unit will be constant c. Variable costs will be constant in total d. Fixed costs will be constant in total LO 2 83. Keep Smiling Dental Surgery is located in Christchurch. The company employs three dentists, four dental assistants and two receptionists who book appointments and keep records. The surgery provides a range of services including general dental care, paediatric dental care and teeth whitening. The clinic includes a small retail section that carries specialised products for home treatment The surgery has recently updated its communications plan and negotiated a plan with a new provider which includes a monthly line charge and a usage charge for internet activity. The cost structure for communications is best described as a: a. Fixed cost b. Marginal cost c. Sunk cost d. Mixed cost LO2 84. Keep Smiling Dental Surgery is located in Christchurch. The company employs three dentists, four dental assistants and two receptionists who book appointments and keep records. The surgery provides a range of services including general dental care, paediatric dental care and teeth whitening. The clinic includes a small retail section that carries specialised products for home treatment. The surgery has recently updated its communications plan and negotiated a plan with a new provider which includes a monthly line charge and a usage charge for internet activity. The internet usage change is best described as a: a. Fixed cost b. Variable cost c. Sunk cost d. Mixed cost LO2