Learning Objective 8-2

1) In a/an ________, the graph of total costs is not a straight line within the relevant range.

A) cost object

B) learning curve

C) experience curve

D) step cost function

E) nonlinear cost function

2) A/an ________ is a function that measures how labor-hours per unit decline as units of production increase because workers are learning and becoming better at their jobs.

A) learning curve

B) experience curve

C) variable-cost function

D) step cost function

E) nonlinear cost function

3) A/an ________ is a function that measures the decline in cost per unit in various business functions of the value chain as the amount of activities increase.

A) learning curve

B) experience curve

C) variable-cost function

D) step cost function

E) nonlinear cost function

4) Direct material costs are not always linear variable costs as a result of quantity discounts on direct material purchases.

5) Step-cost functions are examples of nonlinear cost functions.

6) In a step variable-cost function, the cost remains the same over various ranges of the level of activity in each relevant range.

7) Costs in a step cost function increase by discrete amounts as the level of activity increases from one range to the next.

8) The longer the time horizon, all other things being equal, the more likely that the cost will be variable.

9) Variable and fixed cost behavior patterns are not valid for linear cost functions within a given relevant range.

10) What is the impact of price breaks on direct material costs?

11) Why are learning curves important to managers?

12) What does a managerial accountant do when he or she can’t classify costs into a fixed or variable cost?

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