Questions and Answers
What happens to total variable costs when the level of activity increases?
Which of the following is an example of discretionary fixed costs?
How do committed fixed costs behave regardless of activity levels?
Which statement best describes the relationship between fixed costs and activity levels?
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Which of the following cost types is influenced most by a company’s operational activity level?
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What is the primary characteristic of fixed costs?
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Which of the following accurately describes variable costs?
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Which of the following is an example of a direct cost?
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What type of costs are typically within the control of management?
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What does cost behavior analysis primarily focus on?
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Study Notes
Cost Behavior
- Variable Cost: Changes in total are directly proportional to activity level.
- Example: 15% increase in activity yields 15% increase in total variable costs.
- Fixed Cost: Total amount remains constant regardless of activity level; per-unit cost varies inversely with activity changes.
- Committed Fixed Costs: Costs tied to organization structure, such as property taxes and management salaries.
- Discretionary Fixed Costs: Costs based on management decisions for specific purposes, like advertising and research funding.
Costs in Decision Making
- Differential Cost: Also known as incremental cost; difference in cost between two alternative actions.
- Relevant Cost: Costs incurred in one alternative but not in another; irrelevant if incurred in both alternatives.
- Standard Cost: Predetermined cost based on past experiences and industry standards; reflects actual capacity.
Period Cost
- Matched with revenue for the period in which incurred, impacting financial statements and decision-making processes.
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Description
This quiz focuses on student feedback analysis and reflections within the STI academic setting. It emphasizes the importance of collecting and understanding student responses to improve educational outcomes. Test your grasp on the themes and insights from the feedback.