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Test Bank For Managerial Accounting: Creating Value in A Dynamic Business Environment, 12th Edition, Ronald Hilton, David Platt
Test Bank For Managerial Accounting: Creating Value in A Dynamic Business Environment, 12th Edition, Ronald Hilton, David Platt
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Managerial Accounting Creating Value in a Dynamic
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Test Bank for Managerial Accounting: Creating Value in a Dynamic Business Environment, 12th
True
False
References
True / False Difficulty: 1 Easy Learning Objective: 06-01 Explain the relationships
between cost estimation, cost behavior, and cost
prediction.
True
False
References
True / False Difficulty: 1 Easy Learning Objective: 06-01 Explain the relationships
between cost estimation, cost behavior, and cost
prediction.
True
False
References
True / False Difficulty: 1 Easy Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
4. Award: 1.00 point
Cost that are nearly variable, but increase in small steps instead of continuously are called step-variable costs.
True
False
References
True / False Difficulty: 1 Easy Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
The relevant range is that range of activity where a company achieves its maximum efficiency.
True
False
References
True / False Difficulty: 1 Easy Learning Objective: 06-03 Explain the importance of the
relevant range in using a cost behavior pattern for cost
prediction.
If the organization operates at an activity level outside the relevant range, any cost predictions based on data from the relevant range
may not be very accurate.
True
False
References
True / False Difficulty: 1 Easy Learning Objective: 06-03 Explain the importance of the
relevant range in using a cost behavior pattern for cost
prediction.
7. Award: 1.00 point
A committed cost results from a management decision to spend a particular amount of money for some purpose.
True
False
References
True / False Difficulty: 1 Easy Learning Objective: 06-04 Define and give examples of
engineered costs, committed costs, and discretionary
costs.
True
False
References
True / False Difficulty: 1 Easy Learning Objective: 06-04 Define and give examples of
engineered costs, committed costs, and discretionary
costs.
The least-squares regression method of cost estimation relies on only two data points.
True
False
References
True / False Difficulty: 1 Easy Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
10. Award: 1.00 point
In regression analysis, the variable that is being predicted is known as the independent variable.
True
False
References
True / False Difficulty: 1 Easy Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
Multiple regression is a statistical method that estimates a linear (straight-line) relationship between one dependent variable and one
independent variable.
True
False
References
True / False Difficulty: 1 Easy Learning Objective: 06-06 Describe the multiple
regression, engineering, and learning-curve approaches
to cost estimation.
When the engineering method is applied to costs other than labor, it is referred to as the experience method.
True
False
References
True / False Difficulty: 1 Easy Learning Objective: 06-06 Describe the multiple
regression, engineering, and learning-curve approaches
to cost estimation.
13. Award: 1.00 point
Mismatched time periods are not issues in the collection of data for cost estimation.
True
False
References
True / False Difficulty: 2 Medium Learning Objective: 06-07 Describe some problems often
encountered in collecting data for cost estimation.
True
False
References
True / False Difficulty: 2 Medium Learning Objective: 06-07 Describe some problems often
encountered in collecting data for cost estimation.
In the least-squares regression method, the cost line is estimated so as to maximize the sum of the squared deviations between the
cost line and the data points.
True
False
References
True / False Difficulty: 2 Medium Learning Objective: 06-08 Define big data, data analytics,
and data visualization.
16. Award: 1.00 point
The slope of a regression line measures how steeply the cost line rises as activity increases.
True
False
References
True / False Difficulty: 2 Medium Learning Objective: 06-08 Define big data, data analytics,
and data visualization.
cost estimation.
cost prediction.
cost behavior.
cost analysis.
cost approximation.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-01 Explain the relationships
between cost estimation, cost behavior, and cost
prediction.
18. Award: 1.00 point
cost estimation.
cost prediction.
cost behavior.
cost analysis.
cost approximation.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-01 Explain the relationships
between cost estimation, cost behavior, and cost
prediction.
Volcano Hot Wings has budgeted the following costs for a month in which 12,000 wings will be cooked and sold.
$0.70
$0.90
$1.60
$0.80
References
Volcano Hot Wings has budgeted the following costs for a month in which 12,000 wings will be cooked and sold.
Each wing sells for $1.60 each. What is the budgeted total variable cost?
$10,800
$10,400
$9,500
$8,400
($4,900 + $3,500) variable costs / 12,000 units = $0.70 per unit; $0.70 × 12,000 = $8,400
References
Volcano Hot Wings has budgeted the following costs for a month in which 12,000 wings will be cooked and sold.
Each wing sells for $1.60 each. What is the budgeted total fixed cost?
$7,300
$2,400
$8,400
$10,800
References
Volcano Hot Wings has budgeted the following costs for a month in which 12,000 wings will be cooked and sold.
Each wing sells for $1.60 each. What is the budgeted fixed cost per unit?
$0.70
$1.60
$0.20
$0.34
References
Volcano Hot Wings has budgeted the following costs for a month in which 12,000 wings will be cooked and sold.
Each wing sells for $1.60 each. What is Volcano Hot Wings’ budgeted profit?
$19,200
$13,200
$8,400
$10,800
($4,900 + $3,500) variable costs / 12,000 units = $0.70 per unit; $0.70 × 12,000 units = $8,400
$1,100 + $900 + $400 = $2,400
($1.60 × 12,000) − $8,400 − 2,400 = $19,200 − 10,800 = $8,400
References
Volcano Hot Wings has budgeted the following costs for a month in which 12,000 wings will be cooked and sold.
Each wing sells for $1.60 each. How much would Volcano Hot Wings’ profit increase if 100 more wings were sold?
$160.00
$70.00
$90.00
$168.00
References
Fractured Auto Repair projects variable labor costs of $21,500 in March when 8,600 units are produced. If production is expected to
drop to 8,000 units in April, what is the expected labor cost in April?
$21,500
$20,000
$23,113
$20,900
References
Grimaldi Chocolates projects its factory rent to be $8,000 in July when 4,000 pounds of candy are expected to be produced. If rent is a
fixed cost, and if production is expected to increase to 6,000 units in August, what is the expected cost of rent in August?
$12,000
$8,000
$7,000
$10,667
References
Polka King Gifts had the following costs in March when 400 ceramic statues were produced: materials, $4,200; labor cost, $1,600;
depreciation, $800; rent, $700; and other fixed costs, $500. Which one of the following is the correct cost for Polka King?
References
Polka King Gifts had the following costs in March when 400 ceramic statues were produced: materials, $4,200; labor cost, $1,600;
depreciation, $800; rent, $700; and other fixed costs, $500. If production changes to 500 units and production still remains within the
relevant range, which of the following costs will stay the same?
Variable cost per unit will stay the same even if production changes (within the relevant range).
References
Polka King Gifts had the following costs in March when 400 ceramic statues were produced: materials, $4,200; hourly labor, $1,600;
depreciation, $800; rent, $700; and other fixed costs, $500. If the production level changes to 500 units, how much will the total costs
be?
$9,750
$7,800
$9,250
$1,950
($4,200 + $1,600) ÷ 400 units = $14.50 variable cost per unit; ($14.50 × 500) + $2,000 = $7,250 + $2,000 = $9,250.
References
At Medallion Industries, variable cost per unit is budgeted to be $8.00 and fixed cost per unit is budgeted to be $5.00 in a period when
4,000 units are produced. What is the expected total cost of the units produced at Medallion, if instead, production is actually 5,100
units?
$52,000
$60,800
$66,300
$40,800
References
At Medallion Industries, during 20x5 the anticipated production is 5,000 units, budgeted variable costs are $75,000, and budgeted
fixed costs are $24,000. If 5,600 units are actually produced, what is the expected total cost?
$110,600
$84,000
$108,000
$88,394
($75,000 ÷ 5,000 units = $15.00 variable cost per unit; ($15.00 × 5,600) + $24,000 = $84,000 + $24,000 = $108,000.
References
During 20x5, Medallion Industries anticipates production of 20,000 units, budgeted variable costs of $85,000, and budgeted fixed
costs of $45,000. If 15,000 units are actually produced, what is the expected total cost?
$130,000
$97,500
$108,750
$118,750
($85,000 ÷ 20,000 units = $4.25 variable cost per unit; ($4.25 × 15,000) + $45,000 = $63,750 + $45,000 = $108,750.
References
Command Generators is in the process of preparing a production cost budget for August. Actual costs in July for the production of 60
generators were:
Materials and labor are the only variable costs. If production and sales are budgeted to increase to 70 generators in August, how much
is the expected total cost on the August budget?
$17,850
$16,600
$9,100
$15,300
References
Command Generators is in the process of preparing a production cost budget for August. Actual costs in July for the production of 60
generators were:
Materials and labor are the only variable costs. If production and sales are budgeted to increase to 70 generators in August, how much
is the expected total variable cost on the August budget?
$17,850
$16,600
$9,100
$15,300
References
Brawny Generators is in the process of preparing a production cost budget for August. Actual costs in July for the production of 60
generators were:
Materials and labor are the only variable costs. If production and sales are budgeted to increase to 70 generators in August, how much
is the fixed cost per unit on the August budget?
$107.14
$125.00
$218.57
$130.00
References
Brawny Generators is in the process of preparing a production cost budget for August. Actual costs in July for the production of 60
generators were:
Materials and labor are the only variable costs. If production and sales are budgeted to increase to 70 generators in August, how much
is the expected total fixed cost on the August budget?
$8,750
$7,800
$7,500
$15,300
References
Which of the following costs changes in direct proportion to a change in the activity level?
Variable cost.
Fixed cost.
Semivariable cost.
Step-variable cost.
Step-fixed cost.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
Macon Company has a variable selling cost. If sales volume increases, how will the total variable cost and the variable cost per unit
behave?
Choice A
Choice B
Choice C
Choice D
Choice E
If sales volume increases, total variable cost will increase and variable cost per unit will remain constant.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
39. Award: 1.00 point
Manufacturing Volume
(Units) Cost Per Unit
50,000 $1.95
70,000 1.95
Variable cost.
Fixed cost.
Semivariable cost.
Step-fixed cost.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
Paige Corporation observed that when 25,000 units were sold, a particular cost amounted to $75,000, or $3.00 per unit. When volume
increased by 10%, the cost totaled $82,500 (i.e., $3.00 per unit). The cost that Paige is studying can best be described as a:
variable cost.
fixed cost.
semivariable cost.
step-fixed cost.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
41. Award: 1.00 point
a horizontal line.
a vertical line.
a u-shaped line.
A typical variable cost appears as a diagonal line that slopes upward to the right.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
Norman Company pays a sales commission of 4% on each unit sold. If a graph is prepared, with the vertical axis representing per-unit
cost and the horizontal axis representing units sold, how would a line that depicts sales commissions be drawn?
As a horizontal line.
As a vertical line.
As a curvilinear line.
The line that depicts sales commissions would be drawn as a horizontal line.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
43. Award: 1.00 point
A company observed a decrease in the cost per unit. All other things being equal, which of the following is most likely true?
The company is studying a variable cost, and total volume has increased.
The company is studying a variable cost, and total volume has decreased.
The company is studying a fixed cost, and total volume has increased.
The company is studying a fixed cost, and total volume has decreased.
The company is studying a fixed cost, and total volume has remained constant.
The company is studying a fixed cost, and total volume has increased.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
Ralston has the following budgeted costs at its anticipated production level (expressed in hours): variable overhead, $165,000; fixed
overhead, $250,000. If Ralston now revises its anticipated production slightly upward, it would expect:
total fixed overhead of $250,000 and a lower hourly rate for variable overhead.
total fixed overhead of $250,000 and the same hourly rate for variable overhead.
total fixed overhead of $250,000 and a higher hourly rate for variable overhead.
total variable overhead of less than $165,000 and a lower hourly rate for variable overhead.
total variable overhead of less than $165,000 and a higher hourly rate for variable overhead.
If Ralston revises its anticipated production slightly upward, it would expect total fixed overhead of $250,000 and the same hourly rate
for variable overhead.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
45. Award: 1.00 point
Manufacturing Volume
(Units) Total Cost Cost Per Unit
50,000 $150,000 $3.00
80,000 150,000 1.88
Variable cost.
Fixed cost.
Semivariable cost.
Step-variable cost.
Mixed cost.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
a horizontal line.
a vertical line.
a u-shaped line.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
47. Award: 1.00 point
variable cost.
step-variable cost.
fixed cost.
mixed cost.
curvilinear cost.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
Which of the following choices denotes the typical cost behavior of advertising and sales commissions?
Choice A
Choice B
Choice C
Choice D
Choice E
The typical cost behavior of advertising is fixed and sales commissions are variable.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
49. Award: 1.00 point
If the Malabar Yacht Club expense includes a rent of $2,000 plus a charge of $40 per member and the club has 80 members,
cannot be determined.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
Costs that remain the same over a wide range of activity, but jump to a different amount outside that range, are known as:
step-fixed costs.
step-variable costs.
semivariable costs.
curvilinear costs.
mixed costs.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
51. Award: 1.00 point
a horizontal line.
a vertical line.
a series of staggered horizontal lines with the steps moving upward to the right.
A typical step-fixed cost appears as a series of staggered horizontal lines when graphed.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
Each of Boggart’s production managers (annual salary cost, $45,000) can oversee 60,000 machine hours of manufacturing activity.
Thus, if the company has 50,000 hours of manufacturing activity, one manager is needed; for 75,000 hours, two managers are needed;
for 125,000 hours, three managers are needed; and so forth. Boggart’s salary cost can best be described as a:
variable cost.
semivariable cost.
step-variable cost.
fixed cost.
step-fixed cost.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
53. Award: 1.00 point
Sophie Corporation recently produced and sold 100,000 units. Fixed costs at this level of activity amounted to $50,000; variable costs
were $100,000. How much cost would the company anticipate if during the next period it produced and sold 102,000 units?
$150,000.
$151,000.
$152,000.
$153,000.
Variable cost per unit = $100,000 ÷ 100,000 units = $1 per unit; $102,000 + $50,000 = $152,000.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
Organize, Inc. has only variable costs and fixed costs. A review of the company's records disclosed that when 200,000 units were
produced, fixed manufacturing costs amounted to $800,000 and the cost per unit manufactured totaled $11. On the basis of this
information, how much cost would the firm anticipate at an activity level of 205,000 units?
$2,235,000.
$2,222,000.
$2,214,000.
$2,200,000.
Variable cost per unit = (200,000 × $11) − $800,000 = $1,400,000 ÷ 200,000 = $7; Anticipated level of 205,000 units: ($7 × 205,000) +
$800,000 = $2,235,000.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
55. Award: 1.00 point
A review of Parson Corporation's accounting records found that at a volume of 90,000 units, the variable and fixed cost per unit
amounted to $8 and $4, respectively. On the basis of this information, what amount of total cost would Parson anticipate at a volume of
85,000 units?
$1,020,000.
$1,040,000.
$1,060,000.
$1,080,000.
Fixed costs = 90,000 × $4 = $360,000; Total cost = Total Variable + Total fixed = (85,000 × $8) + $360,000 = $1,040,000.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
step-fixed cost.
step-variable cost.
semivariable cost.
curvilinear cost.
discretionary cost.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
57. Award: 1.00 point
semivariable cost.
step-fixed cost.
variable cost.
curvilinear cost.
discretionary cost.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
Brock Morton has a fast-food franchise and must pay a franchise fee of $45,000 plus 4% of gross sales. In terms of cost behavior, the
fee is known as a:
variable cost.
fixed cost.
step-fixed cost.
semivariable cost.
curvilinear cost.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
59. Award: 1.00 point
I only.
II only.
I and III.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
Which of the following costs exhibits both decreasing and increasing marginal costs over a specific range of activity?
Semivariable cost.
Curvilinear cost.
Step-fixed cost.
Step-variable cost.
Fixed cost.
Curvilinear costs exhibit both decreasing and increasing marginal costs over a specific range of activity.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
61. Award: 1.00 point
The relevant range is that range of activity where management expects the firm to operate.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-03 Explain the importance of the
relevant range in using a cost behavior pattern for cost
prediction.
Within the relevant range of activity, costs can be estimated with reasonable accuracy.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 06-03 Explain the importance of the
relevant range in using a cost behavior pattern for cost
prediction.
63. Award: 1.00 point
Within the relevant range, a curvilinear cost function can sometimes be graphed as a:
jagged line.
curved line.
Within the relevant range a curvilinear cost function can sometime be graphed as a sloping straight line.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 06-03 Explain the importance of the
relevant range in using a cost behavior pattern for cost
prediction.
A variable cost that has a definitive physical relationship to the activity measure is called a (n):
discretionary cost.
engineered cost.
managed cost.
programmed cost.
committed cost.
A variable cost that has a definitive physical relationship to the activity measure is called an engineered cost.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-04 Define and give examples of
engineered costs, committed costs, and discretionary
costs.
65. Award: 1.00 point
Costs that result from a company's ownership or use of facilities and its basic organizational structure are known as:
engineered costs.
Costs that result from a company’s ownership or use of facilities and its basic organization structure are known as committed fixed
costs.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-04 Define and give examples of
engineered costs, committed costs, and discretionary
costs.
engineered cost.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-04 Define and give examples of
engineered costs, committed costs, and discretionary
costs.
67. Award: 1.00 point
Property taxes.
Depreciation on buildings.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-04 Define and give examples of
engineered costs, committed costs, and discretionary
costs.
advertising.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-04 Define and give examples of
engineered costs, committed costs, and discretionary
costs.
69. Award: 1.00 point
engineered cost.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-04 Define and give examples of
engineered costs, committed costs, and discretionary
costs.
Which of the following would not typically be classified as a discretionary fixed cost?
Equipment depreciation.
Advertising.
Charitable contributions.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-04 Define and give examples of
engineered costs, committed costs, and discretionary
costs.
71. Award: 1.00 point
Which of the following choices correctly classifies a committed fixed cost and a discretionary fixed cost?
Committed Discretionary
A. Promotion Management salaries
B. Building depreciation Charitable contributions
C. Management training Property taxes
D. Equipment rentals Equipment depreciation
E. Research and development Advertising
Choice A
Choice B
Choice C
Choice D
Choice E
Building depreciation is classified as a committed fixed cost and charitable contributions are discretionary fixed costs.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-04 Define and give examples of
engineered costs, committed costs, and discretionary
costs.
Which type of fixed cost (1) tends to be more long-term in nature and (2) can be cut back more easily in bad economic times without
doing serious harm to organizational goals and objectives?
Choice A
Choice B
Choice C
Choice D
Choice E
Fixed costs that are long-term in nature are committed and those that can be cut back more easily in bad economic times are
discretionary.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 06-04 Define and give examples of
engineered costs, committed costs, and discretionary
costs.
73. Award: 1.00 point
Least-squares regression.
High-low method.
Visual-fit method.
Linear programming.
Multiple regression.
References
The high-low method and least-squares regression are used by accountants to:
maximize output.
estimate costs.
control operations.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
75. Award: 1.00 point
Which of the following statements about the visual-fit method is (are) true?
I. The method results in the creation of a scatter diagram.
II. The method is not totally objective because of the manner in which the cost line is determined.
III. The method is especially helpful in the determination of outliers.
I only.
II only.
I and II.
I and III.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
The nonstatistical method of cost estimation that calls for the creation of a scatter diagram is the:
high-low method.
visual-fit method.
The nonstatistical method of cost estimation that calls for the creation of a scatter diagram is the visual-fit method.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
77. Award: 1.00 point
Which of the following methods of cost estimation relies on only two data points?
Least-squares regression.
Account analysis.
Multiple regression.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
Gentry Industries has the following information about maintenance costs in the past six months.
If the company uses the high-low method to analyze costs, Gentry’s variable cost is:
$8.70
$1.60
$7.90
$6.00
The variable cost per unit is (High − Low costs) ÷ (High − Low Units) = ($5,200 − $2,800) ÷ (600 − 200) = $6.00 per machine hour.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
79. Award: 1.00 point
Gentry Industries has the following information about maintenance costs in the past six months.
$1,600.
$1,200.
$3,600.
$112.
The variable cost per unit is (High − Low costs) ÷ (High − Low Units) = ($5,200 − $2,800) ÷ (600 − 200) = $6.00 per machine hour.
Variable costs (using the low level) = 200 × $6.00 = $1,200; Total costs − variable costs = fixed costs (or $2,800 − $1,200 = $1,600);
alternatively, Variable costs (using the high level): 600 × $6.00 = $3,600; Total costs − variable costs = fixed costs (or $5,200 − $3,600 =
$1,600).
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
80. Award: 1.00 point
Gentry Industries has the following information about maintenance costs in the past six months.
How much would Gentry pay if maintenance machine hours are 550?
$9,600.
$5,150.
$4,900.
$5,100.
The variable cost per unit is (High − Low costs) ÷ (High − Low Units) = ($5,200 − $2,800) ÷ (600 − 200) = $6.00 per machine hour.
Variable costs (using the low level) = 200 × $6.00 = $1,200; Total costs − variable costs = fixed costs (or $2,800 − $1,200 = $1,600);
alternatively, Variable costs (using the high level): 600 × $6.00 = $3,600; Total costs − variable costs = fixed costs (or $5,200 − $3,600 =
$1,600.
The variable cost per unit is Units × Variable cost per unit + Fixed costs = (550 × $6.00) + $1,600 = $4,900
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
81. Award: 1.00 point
Gentry Industries has the following information about maintenance costs in the past six months.
The cost formula that expresses the behavior of Gentry’s maintenance cost is:
Y = $0 + $1,600X.
Y = $160 + $6X.
Y = $16,000 + $6X.
Y = $0 + $6X.
Y = $1,600 + $6X.
The variable cost per unit is (High − Low costs) ÷ (High − Low Units) = ($5,200 − $2,800) ÷ (600 − 200) = $6.00 per machine hour.
Variable costs (using the low level) = 200 × $6.00 = $1,200; Total costs − variable costs = fixed costs (or $2,800 − $1,200 = $1,600);
alternatively, Variable costs (using the high level): 600 × $6.00 = $3,600; Total costs − variable costs = fixed costs (or $5,200 − $3,600 =
$1,600.
$6 variable times units + $1,600 from fixed = maintenance cost
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
Fulton and Sons, Inc. presently leases a copy machine under an agreement that calls for a fixed fee each month and a charge for each
copy made. Fulton made 7,000 copies and paid a total of $360 in March; in May, the firm paid $280 for 5,000 copies. The company
uses the high-low method to analyze costs.
$0.040.
$0.051.
$0.053.
$0.056.
The variable cost per unit is (High − Low costs) ÷ (High − Low Units) = ($360 − $280) ÷ (7,000 − 5,000) = $0.04 per copy.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
83. Award: 1.00 point
Fulton and Sons, Inc. presently leases a copy machine under an agreement that calls for a fixed fee each month and a charge for each
copy made. Fulton made 7,000 copies and paid a total of $360 in March; in May, the firm paid $280 for 5,000 copies. The company
uses the high-low method to analyze costs.
$80.
$102.
$106.
$112.
The variable cost per unit is (High − Low costs) ÷ (High − Low Units) = ($360 − $280) ÷ (7,000 − 5,000) = $0.04 per copy.
Variable costs (using the low level) = 5,000 × $0.040 = $200; Total costs − variable costs = fixed costs (or $280 − $200 = $80);
alternatively, Variable costs (using the high level): 7,000 × $0.04 = $280; Total costs − variable costs = fixed costs (or $360 − $280 =
$80).
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
Fulton and Sons, Inc. presently leases a copy machine under an agreement that calls for a fixed fee each month and a charge for each
copy made. Fulton made 7,000 copies and paid a total of $360 in March; in May, the firm paid $280 for 5,000 copies. The company
uses the high-low method to analyze costs.
$382.50.
$322.
$300.
$292.50.
The variable cost per unit is (High − Low costs) ÷ (High − Low Units) = ($360 − $280) ÷ (7,000 − 5,000) = $0.04 per copy. Variable costs
(using the low level) = 5,000 × $0.040 = $200; Total costs − variable costs = fixed costs (or $280 − $200 = $80) Units × Variable cost
per unit + Fixed costs = (5,500 × $0.04) + $80 = $300.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
85. Award: 1.00 point
Barkoff Enterprises, which uses the high-low method to analyze cost behavior, has determined that machine hours best explain the
company's utilities cost. The company's relevant range of activity varies from a low of 600 machine hours to a high of 1,100 machine
hours, with the following data being available for the first six months of the year:
The variable utilities cost per machine hour for Barkoff is:
$0.18.
$4.50.
$5.00.
$5.50.
(High − Low costs) ÷ (High − Low Units) = ($9,625 − $8,360) ÷ (950 − 720) = $1,265 ÷ 230 = $5.50 variable cost per unit
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
86. Award: 1.00 point
Barkoff Enterprises, which uses the high-low method to analyze cost behavior, has determined that machine hours best explain the
company's utilities cost. The company's relevant range of activity varies from a low of 600 machine hours to a high of 1,100 machine
hours, with the following data being available for the first six months of the year:
$3,764.
$4,400.
$4,760.
$5,100.
(High − Low costs) ÷ (High − Low Units) = ($9,625 − $8,360) ÷ (950 − 720) = $1,265 ÷ 230 = $5.50 variable cost per unit
Variable costs (using the high level) = 950 × $5.50 = $5,225; Total costs − variable costs = fixed costs (or $9,625 − $5,225 = $4,400).
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
87. Award: 1.00 point
Barkoff Enterprises, which uses the high-low method to analyze cost behavior, has determined that machine hours best explain the
company's utilities cost. The company's relevant range of activity varies from a low of 600 machine hours to a high of 1,100 machine
hours, with the following data being available for the first six months of the year:
Using the high-low method, the utilities cost for Barkoff associated with 980 machine hours would be:
$9,510.
$9,660.
$9,700.
$9,790.
(High − Low costs) ÷ (High − Low Units) = ($9,625 − $8,360) ÷ (950 − 720) = $1,265 ÷ 230 = $5.50 variable cost per unit
Variable costs (using the high level) = 950 × $5.50 = $5,225; Total costs − variable costs = fixed costs (or $9,625 − $5,225 = $4,400).
At the anticipated 980 machine hours: (980 × $5.50) + $4,400 = $5,390 + $4,400 = $9,790.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
Swan, Inc. uses the high-low method to analyze cost behavior. The company observed that at 22,000 machine hours of activity, total
maintenance costs averaged $33.40 per hour. When activity jumped to 25,000 machine hours, which was still within the relevant range,
the average total cost per machine hour was $30.40.
On the basis of this information, the variable cost per machine hour for Swan was:
$8.40.
$22.00.
$25.00.
$30.40.
$33.40.
Variable cost per machine hour = (High level cost − Low level cost) ÷ (High units − Low units) = [($30.40 × 25,000) − ($33.40 × 22,000)] ÷
(25,000 − 22,000) = ($760,000 − $734,800) ÷ 3,000 = $8.40.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
89. Award: 1.00 point
Swan, Inc. uses the high-low method to analyze cost behavior. The company observed that at 22,000 machine hours of activity, total
maintenance costs averaged $33.40 per hour. When activity jumped to 25,000 machine hours, which was still within the relevant range,
the average total cost per machine hour was $30.40.
On the basis of this information, the fixed cost for Swan was:
$184,800.
$210,000.
$550,000.
$734,800.
$760,000.
Variable cost per machine hour = (High level cost − Low level cost) ÷ (High units − Low units) = [($30.40 × 25,000) − ($33.40 × 22,000)] ÷
(25,000 − 22,000) = ($760,000 − $734,800) ÷ 3,000 = $8.40.
Total variable costs (using the low level): 22,000 × $8.40 = $184,800;
Total costs − Variable costs = Fixed costs; $734,800 − $184,800 = $550,000.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
Swan, Inc. uses the high-low method to analyze cost behavior. The company observed that at 22,000 machine hours of activity, total
maintenance costs averaged $33.40 per hour. When activity jumped to 25,000 machine hours, which was still within the relevant range,
the average total cost per machine hour was $30.40.
On the basis of this information, what were total maintenance costs when Swan experienced 23,000 machine hours?
$193,200.
$550,000.
$734,800.
$743,200.
$760,000.
Variable cost per machine hour = (High level cost − Low level cost) ÷ (High units − Low units) = [($30.40 × 25,000) − ($33.40 × 22,000)] ÷
(25,000 − 22,000) = ($760,000 − $734,800) ÷ 3,000 = $8.40.
Total variable costs (using the low level): 22,000 × $8.40 = $184,800;
Total costs − Variable costs = Fixed costs; $734,800 − $184,800 = $550,000.
Using the cost equation at the 23,000 machine hour level: (23,000 × $8.40) + $550,000 = $743,200.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
91. Award: 1.00 point
Tallequah, Inc. uses the high-low method to analyze cost behavior. The company observed that at 20,000 machine hours of activity,
total maintenance costs averaged $10.50 per hour. When activity jumped to 24,000 machine hours, which was still within the relevant
range, the average total cost per machine hour was $9.75. On the basis of this information, the company's fixed maintenance costs
were:
$24,000.
$90,000.
$210,000.
$234,000.
Variable cost per unit = (High level cost − Low level cost) ÷ (High units − Low units); [(24,000 × $9.75) − ($10.50 × 20,000)] ÷ (24,000 −
20,000) = $6 per unit variable cost per unit;
Calculate Variable cost at High level= 24,000 × $6 = $144,000;
Total cost − Variable cost = Fixed cost;
$234,000 − $144,000 = $90,000.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
The following data relate to the Torrence Company for May and August of the current year:
May August
Maintenance hours 25,000 29,000
Maintenance cost $1,175,000 $1,247,000
May and August were the lowest and highest activity levels, and Torrence uses the high-low method to analyze cost behavior. Which of
the following statements is true?
Variable cost per unit = (High level cost − Low level cost) ÷ (High units − Low units); ($1,247,000 − $1,175,000) ÷ (29,000 − 25,000) = $18
variable per unit; Calculating Fixed cost at high level: $1,247,000 − (29,000 × $18) = $725,000 fixed cost.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
93. Award: 1.00 point
Data below relate to the Torrence Company for May and August of the current year:
May August
Maintenance hours 25,000 29,000
Maintenance cost $1,175,000 $1,247,000
May and August were the lowest and highest activity levels, and Torrence uses the high-low method to analyze cost behavior. Which of
the following statements is true?
Variable cost per unit = (High level cost − Low level cost) ÷ (High units − Low units);
($1,247,000 − $1,175,000) ÷ (29,000 − 25,000) = $18 variable cost per unit
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
The following data relate to the Torrence Company for May and August:
May August
Maintenance hours 25,000 29,000
Maintenance cost $1,175,000 $1,247,000
May and August were the lowest and highest activity levels, and Torrence uses the high-low method to analyze cost behavior. If
maintenance hours are estimated to be 26,000 hours in October, which of the following statements is true?
Variable cost per unit = (High level cost − Low level cost) ÷ (High units − Low units);
($1,247,000 − $1,175,000) ÷ (29,000 − 25,000) = $18 variable cost per unit
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
95. Award: 1.00 point
The following data relate to the Torrence Company for May and August:
May August
Maintenance hours 25,000 29,000
Maintenance cost $1,175,000 $1,247,000
May and August were the lowest and highest activity levels, and Torrence uses the high-low method to analyze cost behavior. If
maintenance hours are estimated to be 26,000 hours in October, which of the following statements is true?
Variable cost per unit = (High level cost − Low level cost) ÷ (High units − Low units);
($1,247,000 − $1,175,000) ÷ (29,000 − 25,000) = $18 variable per unit; Calculating Fixed cost at high level: $1,247,000 − (29,000 × $18) =
$725,000 fixed cost. Total maintenance costs (calculated at estimated 26,000 hours): $1,193,000= (26,000 × $18) + $725,000).
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
96. Award: 1.00 point
Shum Manufacturing, which uses the high-low method, makes a product called Kwan. The company incurs three different cost types (A,
B, and C) and has a relevant range of operation between 2,500 units and 10,000 units per month. Per-unit costs at two different activity
levels for each cost type are presented below.
Choice A
Choice B
Choice C
Choice D
Choice E
Based on the per unit costs, Type A is variable, Type B is fixed, and Type C is semivariable.
References
Shum Manufacturing, which uses the high-low method, makes a product called Kwan. The company incurs three different cost types (A,
B, and C) and has a relevant range of operation between 2,500 units and 10,000 units per month. Per-unit costs at two different activity
levels for each cost type are presented below.
$90,000.
$100,000.
$110,000.
$125,000.
Variable cost = $4 × 10,000 = $40,000; Fixed = $45,000; Semi-variable = ($22,500 − $20,000) ÷ (5,000 − 2,500) = $1 variable portion;
Fixed portion: $20,000 − ($1 × 5,000) = $15,000; $40,000 + $45,000 + ($1 × 10,000) + $15,000 = $110,000.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
Shum Manufacturing, which uses the high-low method, makes a product called Kwan. The company incurs three different cost types (A,
B, and C) and has a relevant range of operation between 2,500 units and 10,000 units per month. Per-unit costs at two different activity
levels for each cost type are presented below.
The cost formula that expresses the behavior of Shum’s total cost is:
Y = $0 + $17X.
Y = $20,000 + $13X.
Y = $40,000 + $9X.
Y = $45,000 + $4X.
Y = $60,000 + $5X.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
99. Award: 1.00 point
independent variable.
dependent variable.
explanatory variable.
interdependent variable.
functional variable.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
Almed Products has determined that the number of machine hours worked (MH) drives the amount of manufacturing overhead incurred
(MOH). On the basis of this relationship, a staff analyst has constructed the following regression equation:
Dependent Independent
A. MOH MOH
B. MOH MH
C. MH MOH
D. MH MH
E. 8 240,000
Choice A
Choice B
Choice C
Choice D
Choice E
Since MOH is being predicted it is the dependent variable and MH is the independent variable.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
101. Award: 1.00 point
Focus, Inc. operates a small package delivery service in the Atlanta suburbs. If the company uses a regression equation to forecast
total operating costs, the equation's intercept would correspond to the:
number of deliveries.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
Rushmont, Inc. operates a small package delivery service in the Nashville suburbs. If the company uses a regression equation to
forecast total operating costs, the coefficient of the equation's independent variable would correspond to the:
number of deliveries.
The coefficient of the equation's independent variable is variable operating cost per delivery.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
103. Award: 1.00 point
Corrine Corporation, which uses least-squares regression analysis, has derived the following regression equation for estimates of
manufacturing overhead: Y = 495,000 + 5.65X. Which of the following statements is true if the primary cost driver is machine hours?
The company anticipates $495,000 of fixed manufacturing overhead and "X" represents the number of machine hours.
The company anticipates $495,000 of fixed manufacturing overhead and "X" represents the number of machine hours.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
Blaster, Inc. recently conducted a least-squares regression analysis to predict selling expenses. The company has constructed the
following regression equation: Y = 329,000 + 7.80X. Which of the following statements is false if the primary cost driver is number of
units sold?
For each unit sold, total selling expenses will increase by $7.80.
References
Trey, Inc. is studying marketing cost and sales volume, and has generated the following information by use of a scatter diagram and a
least-squares regression analysis:
Scatter Regression
Diagram Analysis
Variable cost per unit sold $ 6.50 $ 6.80
Total monthly fixed cost $45,000 $42,500
Trey is now preparing an estimate for monthly sales of 18,000 units. On the basis of the data presented, compute the most accurate
sales forecast possible.
$159,500.
$162,000.
$164,900.
$167,400.
Regression is more accurate than a scatter diagram, so the answer is: (18,000 × $6.80) + $42,500 = $164,900.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
Bogata Enterprises has determined that three variables play a key role in determining company revenues. To arrive at an objective
forecast of revenues for the next accounting period, Bogata should use:
simple regression.
multiple regression.
a scatter diagram.
complex regression.
To arrive at an objective forecast of revenues for the next accounting period, multiple regression should be used.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 06-06 Describe the multiple
regression, engineering, and learning-curve approaches
to cost estimation.
107. Award: 1.00 point
Least-squares regression.
Multiple regression.
Inversion equations.
Learning curves.
References
A staff assistant at Warrington Corporation recently determined that the first five units completed in a new manufacturing process took
500 hours to complete, or an average of 100 hours per unit. The assistant also found that when the cumulative output produced
doubles, the average labor time declines by 20%. On the basis of this information, how many total hours would Warrington use if it
produces a cumulative amount of 40 units?
128.
160.
1,280.
2,048.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-06 Describe the multiple
regression, engineering, and learning-curve approaches
to cost estimation.
109. Award: 1.00 point
Berringer Designs hired a graphic artist. It is estimated that the artist’s learning rate is at 70% and her first quarter’s output amounted to
300 relatively equal job outputs, which took her a total of 50 hours to complete. Output is expected to double in every succeeding
quarter.
1,500.
3,000.
2,400.
4,800.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-06 Describe the multiple
regression, engineering, and learning-curve approaches
to cost estimation.
110. Award: 1.00 point
Berringer Designs hired a graphic artist. It is estimated that the artist’s learning rate is at 70% and her first quarter’s output amounted to
300 relatively equal job outputs, which took her a total of 50 hours to complete. Output is expected to double in every succeeding
quarter.
What is the total time requirement as of the 5th quarter? (Do not round your intermediate calculations.)
150 hours.
175 hours.
250 hours.
192.08 hours.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-06 Describe the multiple
regression, engineering, and learning-curve approaches
to cost estimation.
111. Award: 1.00 point
Berringer Designs hired a graphic artist. It is estimated that the artist’s learning rate is at 70% and her first quarter’s output amounted to
300 relatively equal job outputs, which took her a total of 50 hours to complete. Output is expected to double in every succeeding
quarter.
By the 5th quarter, based on learning curve estimates, what should the artist’s average time (in hours) be for the units of output?
17.15 hours.
3.5 hours.
12.005 hours.
6.9 hours.
References
Multiple Choice Difficulty: 3 Hard Learning Objective: 06-06 Describe the multiple
regression, engineering, and learning-curve approaches
to cost estimation.
Which of the following is not an issue in the collection of data for cost estimation?
Outliers.
Missing data.
Inflation.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 06-07 Describe some problems often
encountered in collecting data for cost estimation.
113. Award: 1.00 point
Consider the graphs that follow (the horizontal axis represents activity; the vertical axis represents total dollars).
Required:
For items A-I that follow, choose the graph that best represents the cost behavior pattern described. Note: Graphs can be used more
than once.
A. Straight-line depreciation on machinery.
B. The cost of chartering a private airplane. The cost is $800 per hour for the first 6 hours of a flight; it then drops to $600 per hour.
C. The wages of table service personnel in a restaurant. The employees are part-time workers who can be called upon for as little as 4
hours at a time.
D. Weekly wages of store clerks who work 40 hours each week. One clerk is hired for every 125 sales made during the month.
E. The cost of tires used in the production of trucks.
F. Outbound shipping charges that increase at a decreasing rate as sales rise because the firm can use more efficient modes of
transportation (e.g., full trailer loads, full rail cars, etc.). Gradually, however, at high levels of sales, freight costs start to increase at an
increasing rate, which reflects more transactions made to customers in far-away locations.
G. Equipment leasing costs that are computed at $2 per machine hour worked. The company pays a maximum of $120,000 per month.
H. The monthly cost of a franchise fee for a fast-food restaurant. The franchisee must pay $20,000 plus 5% of gross dollar sales.
I. The cost of electricity during peak demand periods, which is based on the following schedule:
Up to 20,000 kilowatt hours (KWH): $4,000
Above 20,000 kilowatt hours: $4,000 + $0.02 per KWH
A. 2 B. 4 C. 7 D. 5 E. 1 F. 8 G. 9 H. 6 I. 3
References
Essay Difficulty: 2 Medium Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
114. Award: 1.00 point
Required:
A. Classify each of these costs as variable, committed fixed, discretionary fixed, or semivariable.
B. Briefly describe the behavior of a per-unit variable cost as activity changes.
C. What elements are present in a semivariable cost that cause it to behave in a semivariable manner?
D. Generally speaking, does management have more flexibility when dealing with committed fixed costs or discretionary fixed costs?
A.
1. Discretionary fixed
2. Variable
3. Committed fixed
4. Semivariable
5. Committed fixed
6. Variable
References
Rolling Hills Bistro produces one of the best sausage products in Tennessee. The company's controller compiled the following
information by analyzing the accounting records:
1. Meat costs the company $3.25 per pound of sausage produced.
2. Compensation of production employees is $2.25 per pound of sausage produced.
3. Supervisory salaries total $23,000 per month.
4. The company incurs utility costs of $9,000 per month plus $0.35 per pound of sausage produced.
5. Insurance and property taxes average $6,400 per month.
Required:
A. Classify each cost as variable, fixed, or semivariable.
B. Write a formula to express the behavior of the firm's production costs. (Use the form Y = a + bX, where X denotes the quantity of
sausage produced.)
A.
1. Variable
2. Variable
3. Fixed
4. Semivariable
5. Fixed
B.
References
Vargis Corporation has a machining capacity of 200,000 hours per year. Utilization of capacity is normally 75%; it has been as low as
40% and as high as 90%. An analysis of the accounting records revealed the following selected costs:
Required:
A. Classify each of the costs as being either variable, fixed, or semivariable.
B. Calculate amounts for the two unknowns in the preceding table.
C. Calculate the total amount that Vargis would expect at a 75% utilization rate for Cost A, Cost B, and Cost C.
D. Develop an equation that Vargis can use to predict total cost for any level of hours within its range of operation.
Cost A $440,000
Cost B (150,000 × $10.80) 1,620,000
Cost C:
Variable portion (150,000 × $6.50) 975,000
Fixed portion 160,000
Total cost $3,195,000
References
Cheyenne Corporation operates a small medical lab in Wyoming that conducts minor medical procedures (including blood tests and x-
rays) for a number of doctors. The lab consumes various medical supplies and is staffed by two technicians, both of whom are paid a
monthly salary. In addition, there is an on-site office manager who is also paid by the month.
Required:
A. If the lab's patient count increases by 15%, will the lab's total operating costs increase by 15%? Explain.
B. Cheyenne is considering opening an additional lab in a new suburban medical building. What will likely happen to the lab's level of
fixed cost incurrence? Why?
C. What analysis methods would be available to the office manager and/or Cheyenne management if a close look at the lab's cost
behavior is desired?
A. No. The lab has a mixture of both variable and fixed costs. Variable costs (such as supplies) will increase, directly paralleling the
increase in clients. The salaries of the technicians and office manager are step-fixed in nature, meaning that a 15% hike in client load
will likely do nothing to these expenditures. A possibility exists, though, that an increase in patient load could create the need for an
added technician.
B. Fixed costs typically do not change when activity changes. However, the opening of a new branch will create the need for added
technicians and presumably another office manager, thus causing costs to rise. In addition, facility rental charges will increase and there
will be an added cost if the firm leases and/or depreciates equipment. Note: This answer assumes that the original facility will continue
with existing personnel and not implement a job-sharing arrangement through a cutback in operating hours.
C. Possible methods include account classification, visual fit, high-low, and least-squares regression.
References
The following selected data were taken from the accounting records of Colorado Enterprises:
Manufacturing overhead consists of three different costs; (1) machine supplies (variable), (2) property taxes (fixed), and (3) plant
maintenance (semivariable). July's overhead costs were $170,000 for machine supplies, $24,000 for property taxes, and $1,080,000 for
plant maintenance.
Required:
A. Determine the machine supplies and property taxes for May.
B. By using the high-low method, analyze Colorado’s plant maintenance cost and calculate the monthly fixed portion and the variable
cost per machine hour.
C. Assume that present cost behavior patterns continue into future months. Estimate the total amount of manufacturing overhead the
company can expect in September if 56,000 machine hours are worked.
A. Machine supplies: $170,000 ÷ 68,000 hours = $2.50 per hour; 46,000 hours × $2.50 = $115,000
Property taxes: Fixed at $24,000
References
Lichtenstein Imports needs to determine the variable utilities rate per machine hour in order to estimate cost for August. Relevant
information is as follows.
Machine Hours
Month Worked Utilities Cost
April 4,500 $9,560
May 4,200 9,440
June 6,500 10,725
July 7,000 11,400
Lichtenstein anticipates producing 5,000 units in August, each unit requiring 1.5 hours of machine time. The company uses the high-low
method to analyze costs.
Required:
A. Calculate the variable and fixed components of the utilities cost.
B. Using the data calculated above, estimate the utilities cost for August.
C. Compare the high-low method versus the visual-fit method with respect to (1) number of data observations used in the analysis and
(2) objectivity of the results.
A. Variable cost:
($11,400 − $9,440) ÷ (7,000 − 4,200) = $0.70 per hour
B.
C. The high-low method uses only two data observations, the highest and the lowest, whereas the visual-fit method utilizes all data
points that have been gathered (except outliers). Many analysts would say the visual-fit method is advantageous in this regard.
However, the visual-fit method lacks total objectivity because of the manner in which the cost line is fit through the data points (drawn
by "visual approximation"). The high-low method is therefore said to be more objective.
References
Essay Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
120. Award: 1.00 point
Trane Medical Clinic offers a number of specialized medical services. A review of data for the year just ended revealed variable costs of
$32 per patient day; annual fixed costs of $480,000, which are incurred evenly throughout the year; and semivariable costs that
displayed the following behavior at the "peak" and "valley" of activity:
January (2,400 patient days): $258,400
August (2,900 patient days): $278,900
Required:
A. Calculate the total cost for an upcoming month (2,800 patient days) if current cost behavior patterns continue. Trane uses the high-
low method to analyze cost behavior.
B. There is a high probability that Trane’s volume will increase in forthcoming months as patients take advantage of new scientific
advances. Can the data and methodology used in part (a) for predicting the costs of 2,800 patient days be employed to estimate the
costs for, say, 3,800 patient days? Why or why not?
B. No. The "peak" and "valley" of operation were 2,900 patient days and 2,400 patient days, respectively. The 3,800-patient-day data
point is well outside this range of observed cost relationships and recent activity (i.e., the relevant range). Costs can change outside of
this range (e.g., fixed costs may be higher), and the lack of past experience will likely create unknowns for the analyst.
References
Essay Learning Objective: 06-02 Learning Objective: 06-05 Describe and use the
Define and describe the following cost estimation methods: account classification,
behavior of the following visual fit, high-low, and least-squares regression.
types of costs: variable,
step-variable, fixed, step-
fixed, semivariable (or
mixed), and curvilinear.
Hogan Mining extracts ore for eight different companies in South Dakota. The firm anticipates variable costs of $65 per ton along with
annual fixed overhead of $840,000, which is incurred evenly throughout the year. These costs exclude the following semivariable
costs, which are expected to total the amounts shown for the high and low points of ore extraction activity:
March (850 tons): $39,900
August (1,300 tons): $46,200
Required:
A. Calculate the semivariable cost for an upcoming month when 875 tons will be extracted.
B. Calculate the total cost for that same month.
C. Hogan uses Martinez Trucking to haul extracted ore. Martinez’s monthly charges are as follows:
B.
Semivariable cost: $40,250
Variable cost (875 × $65) 56,875
Fixed cost ($840,000 ÷ 12 months) 70,000
Total cost $167,125
C.
1. Step-fixed.
2. No. Notice that the bill will be $70,000 for Hogan’s tonnage, and the company could have Martinez haul up to 1,099 tons for the
same cost. Ideally, Hogan should try to move to the right side of the step to get a better return on its investment.
References
T.L. Franklin Corporation has three costs: A, which is variable; B, which is fixed; and C, which is semivariable. The company uses the
high-low method and extracted the following data from its accounting records:
Required:
A. Compute the variable portion (total) of Cost C at 140,000 hours of activity.
B. Compute Cost C (total) at 160,000 hours of activity.
C. Compute Cost B (total) at 160,000 hours of activity.
A. Cost C's fixed portion will total the same amount, $350,000 (200,000 hours × $1.75), at both 200,000 hours and 140,000 hours. Thus,
the variable portion of C at 140,000 hours will be $1,148,000 ($1,498,000 − $350,000).
B. The variable portion of Cost C is $8.20 per hour ($1,148,000 ÷ 140,000 hours). Cost C will therefore total $1,662,000 [(160,000 hours
× $8.20) + $350,000].
C. At 160,000 hours, Cost A equals $2,320,000 [($2,610,000 ÷ 180,000 hours) × 160,000 hours]. Thus:
References
Shortly after being hired as an analyst with Hidden Cove Rentals in Coastal North Carolina, Matt Loman was asked to prepare a report
that focused on the company's order processing costs—a cost driven largely by the number of rental invoices written. Matt knew that
he could use several different tools to analyze cost behavior, including scatter diagrams, least-squares regression, and the high-low
method. In addition, he knew that he could present the results of his analysis in the form of algebraic equations. Those equations
follow.
Matt had analyzed data over the past 12 months and built equations based on these data, purposely including the slowest month of the
year and the busiest month so that things would "tend to even out." He observed that February was especially slow because of a
paralyzing ice storm, one that forced the company to close for four days.
Required:
A. Will scatter diagrams, least-squares regression, and the high-low method normally result in the same equation? Why?
B. Assuming the use of least-squares regression, explain what the $59,000 and $6.75 figures represent.
C. Assuming the use of a scatter diagram, predict the order processing cost of an upcoming month when Hidden Cove expects to write
2,500 rental invoices.
D. Did Matt err in constructing the equations on data of the past 12 months? Briefly discuss. If "yes," determine which of the three tools
is likely to be affected the most and explain why.
A. No. The three methods produce equations by different means. Scatter diagrams and least-squares regression rely on an examination
of all data points. The scatter diagram, however, requires an analyst to fit a line through the points by visual approximation, or
"eyeballing." In contrast, least-squares regression involves the use of statistical formulas to derive the best possible fit of the line
through the points. Finally, the high-low method is based on an analysis of only two data points: the highest and the lowest.
B. These amounts represent the fixed and variable elements of the company's order processing cost. Fixed cost totals $59,000, and
Hidden Cove incurs $6.75 of variable cost for each invoice written.
C. OP = $56,000 + $6.80RI; OP = $56,000 + ($6.80 × 2,500); OP = $73,000
D. Yes, he did err by including February data. February is not representative because of the effects of the ice storm. The month is an
outlier and should be eliminated from the data set. The equation constructed by using the high-low method is likely to be affected the
most since the equation is based on only two data points. One of those two points should have been excluded from the analysis.
References
Duke Corporation uses least-squares regression to analyze a variety of operating costs. A staff assistant determined that monthly
machine hours (MH) have a strong cause-and-effect relationship with total maintenance costs, and generated the following statistics:
Intercept: $170,000
b coefficient: $3.80
Total machine hours for the year: 36,500
Required:
A. Construct the company's regression equation.
B. Based on your answer in part "A," identify Duke’s dependent variable and independent variable.
C. What does the b coefficient really represent?
D. Predict the company's maintenance cost in a month when 3,200 machine hours are worked.
A. Y = $170,000 + $3.80MH
B. Y (total maintenance cost) is the dependent variable; MH (machine hours) is the independent variable.
C. The b coefficient represents both the slope of the regression line and the variable maintenance cost per machine hour.
D. Y = $170,000 + $3.80MH
Y = $170,000 + ($3.80 × 3,200)
Y = $182,160
References
Essay Difficulty: 3 Hard Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
125. Award: 1.00 point
Townson Company is making plans for the introduction of a new product, which has a target selling price of $7 per unit. The following
estimates of manufacturing costs have been derived for 6 million units, to be produced during the first year:
Overhead costs have not yet been estimated, but monthly data on total production and overhead for the past 12 months have been
analyzed by using least-squares regression. The major overhead cost driver is direct labor hours, with the following results:
Computed values:
Fixed overhead cost: $3,200,000
Coefficient of independent variable: $2.25
Required:
A. Prepare the company's regression equation (Y = a + bX) to estimate overhead.
B. Calculate the predicted overhead cost at an activity level of 6,300,000 units.
C. What is Townson’s dependent variable in this case?
A.
Y = $3,200,000 + $2.25X
B.
Direct labor:
For 6 million units, direct labor totals 150,000 hours ($2,100,000 ÷ $14).
For 1 unit, direct labor totals 0.025 hours (150,000 ÷ 6,000,000).
For 6,300,000 units, direct labor totals 157,500 hours (6,300,000 × 0.025).
Y = $3,200,000 + (157,500 × $2.25) = $3,554,375
C.
The dependent variable is Y, or total overhead cost.
References
Compare and contrast the following types of costs: (1) variable and step-variable and (2) fixed and step-fixed.
(1) A variable cost changes in direct proportion to a change in an activity level or cost driver, with a typical example being direct
material. A step-variable cost is nearly variable, but it increases in small steps rather than continuously (e.g., additional direct labor).
(2) A fixed cost remains unchanged as the activity level varies (e.g., rent). In contrast, a step-fixed cost remains fixed over a sizable
range of activity, but jumps to a different amount for activities outside that range (e.g., the salaries of new employees who are needed
because of volume changes).
References
Essay Difficulty: 1 Easy Learning Objective: 06-02 Define and describe the
behavior of the following types of costs: variable, step-
variable, fixed, step-fixed, semivariable (or mixed), and
curvilinear.
Define the term "relevant range" and explain its importance in understanding cost behavior.
The relevant range is the range of activity within which management expects a company to operate. This can be based on past
experience and/or sales projections.
This concept is important because management need not concern itself with extremely high or low levels of activity that are unlikely to
occur. Also, observed cost relationships are typically valid within the relevant range and can therefore be used for purposes of
estimation at other levels within that range.
References
Essay Difficulty: 1 Easy Learning Objective: 06-03 Explain the importance of the
relevant range in using a cost behavior pattern for cost
prediction.
128. Award: 1.00 point
Differentiate between committed costs and discretionary costs. Be sure to present two examples of each and explain which of the two
cost types would likely be cut should a company encounter financial difficulties.
A committed cost is a fixed amount that stems from an organization's ownership or use of facilities, and its basic organizational
structure. Property taxes, rent, and salaries of top management are examples of committed costs.
A discretionary cost, also a fixed amount, occurs as a result of a management decision to spend a particular amount of money for some
purpose. Examples are advertising, training, promotion, and contributions to charitable organizations.
The distinction between committed and discretionary costs is that committed costs can be changed only by major decisions with long-
term implications. Discretionary costs can be changed in the short run and, thus, are cost-cutting targets should an organization
encounter financial difficulties.
References
Essay Difficulty: 1 Easy Learning Objective: 06-04 Define and give examples of
engineered costs, committed costs, and discretionary
costs.
Both the visual-fit and high-low methods of cost estimation have inherent limitations. Briefly identify the major deficiency associated
with each method.
The visual-fit method suffers from a lack of objectivity. Given that the cost line is created by visual approximation or "eyeballing,"
different cost analysts will likely produce different lines. The high-low method, on the other hand, is objective. However, it uses only two
data points and ignores the rest, thus generalizing about cost behavior by relying on only a very small percentage of possible data
observations.
References
Essay Difficulty: 2 Medium Learning Objective: 06-05 Describe and use the
following cost estimation methods: account classification,
visual fit, high-low, and least-squares regression.
Visit TestBankBell.com to get complete for all chapters
Distinguish between least-squares regression and multiple regression as cost estimation methods.
In the least-squares regression (LSR) method, the cost line is positioned to minimize the sum of the squared deviations between the
cost line and the data points. The cost line fit to the data using LSR is called a regression line. The statistical equation for this line is
represented by the formula: Y = a + bX, with X denoting activity level (independent variable) and Y denoting the total cost (dependent
variable).
Test Bank for Managerial Accounting: Creating Value in a Dynamic Business Environment, 12th Edition, Ronald Hilton, David Platt
The multiple-regression line has all the same properties of the simple LSR line, but more than one independent variable is taken into
consideration. The use of more independent variables can better explain accompanying changes in cost.
References
Language: English
The cover image was created by the transcriber, and is placed in the public domain.
Please see the note at the end of the book, which is preceded by the Index to Volumes I
and II, copied from Volume II.
ENGLAND
UNDER
KATE NORGATE
IN TWO VOLUMES—VOL. I.
London
MACMILLAN AND CO.
AND NEW YORK
1887
TO THE MEMORY OF
CHAPTER I
PAGE
The England of Henry I., 1100–1135 1
CHAPTER II
The Beginnings of Anjou, 843–987 97
Note A.—The Sources of Angevin History 126
Note B.—The Palace of the Counts at Angers 132
Note C.—The Marriages of Geoffrey Greygown 134
Note D.—The Breton and Poitevin Wars of Geoffrey
Greygown 136
Note E.—The Grant of Maine to Geoffrey Greygown 140
CHAPTER III
Anjou and Blois, 987–1044 143
Note A.—The Siege of Melun 189
Note B.—The Parents of Queen Constance 190
Note C.—The Pilgrimages of Fulk Nerra 192
Note D.—Geoffrey Martel and Poitou 197
CHAPTER IV
Anjou and Normandy, 1044–1128 200
Note A.—The Houses of Anjou and Gâtinais 249
Note B.—The Heir of Geoffrey Martel 251
Note C.—The War of Saintonge 252
Note D.—The Descendants of Herbert Wake-dog 253
Note E.—The Siege of La Flèche and Treaty of
Blanchelande 256
Note F.—The Marriage of Geoffrey and Matilda 258
CHAPTER V
Geoffrey Plantagenet and Stephen of Blois, 1128–
1139 261
CHAPTER VI
England and the Barons, 1139–1147 308
Note.—The Topography of the Battle of Lincoln 344
CHAPTER VII
The English Church, 1136–1149 347
CHAPTER VIII
Henry Duke of the Normans, 1149–1154 372
CHAPTER IX
Henry and England, 1154–1157 407
CHAPTER X
Henry and France, 1156–1161 440
CHAPTER XI
The Last Years of Archbishop Theobald, 1156–1161 474
LIST OF MAPS
PLANS
1100–1135.
“When the green tree, cut asunder in the midst and severed by the
space of three furlongs, shall be grafted in again and shall bring forth
flowers and fruit,—then at last may England hope to see the end of
her sorrows.”[1]
There are, at first glance, few stranger things in history than the
revival thus prefigured:—a national revival growing up, as it seems,
in the most adverse circumstances, under the pressure of an alien
government, of a race of kings who were strangers alike to the men
of old English blood and to the descendants of those who had come
over with the Conqueror: at a time when, in a merely political point of
view, England seemed to be not only conquered but altogether
swallowed up in the vast and varied dominions of the house of
Anjou. It was indeed not the first time that the island had become an
appendage to a foreign empire compared with which she was but a
speck in the ocean. Cnut the Dane was, like Henry of Anjou, not only
king of England but also ruler of a great continental monarchy far
exceeding England in extent, and forming together with her a
dominion only to be equalled, if equalled at all, by that of the
Emperor. But the parallel goes no farther. Cnut’s first kingdom, the
prize of his youthful valour, was his centre and his home, of which
his Scandinavian realms, even his native Denmark, were mere
dependencies. Whatever he might be when he revisited them, in his
island-kingdom he was an Englishman among Englishmen. The heir
of Geoffrey of Anjou and Matilda of Normandy, on the other hand,
was virtually of no nationality, no country; but if he could be said to
have a home at all, it was certainly not on this side of the sea—it was
the little marchland of his fathers. In the case of his sons, the
southern blood of their mother Eleanor added a yet more un-English
element; and of Richard, indeed, it might almost be said that the
home of his choice was not in Europe at all, but in Holy Land. Alike
to him and to his father, England was simply the possession which
gave them their highest title, furnished them with resources for
prosecuting their schemes of continental policy, and secured to them
a safe refuge on which to fall back in moments of difficulty or danger.
It was not till the work of revival was completed, till it had resulted in
the creation of the new England which comes to light with Edward I.,
that it could find a representative and a leader in the king himself.
The sovereign in whose reign the chief part of the work was done
stood utterly aloof from it in sympathy; yet he is in fact its central
figure and its most important actor. The story of England’s
developement from the break-down of the Norman system under
Stephen to the consolidation of a national monarchy under Edward I.
is the story of Henry of Anjou, of his work and of its results. But as
the story does not end with Henry, so neither does it begin with him.
It is impossible to understand Henry himself without knowing
something of the race from which he sprang; of those wonderful
Angevin counts who, beginning as rulers of a tiny under-fief of the
duchy of France, grew into a sovereign house extending its sway
from one end of Christendom to the other. It is impossible to
understand his work without knowing something of what England
was, and how she came to be what she was, when the young count
of Anjou was called to wear her crown.
The project of an empire such as that which Henry II. actually
wielded had been the last dream of William Rufus. In the summer of
1100 the duke of Aquitaine, about to join the Crusaders in Holy Land,
offered his dominions in pledge to the king of England. Rufus
clutched at the offer “like a lion at his prey.”[4] Five years before he
had received the Norman duchy on the same terms from his brother
Robert; he had bridled its restless people and brought them under
control; he had won back its southern dependency, his father’s first
conquest, the county of Maine. Had this new scheme been realized,
nothing but the little Angevin march would have broken the continuity
of a Norman dominion stretching from the Forth to the Pyrenees, and
in all likelihood the story of the Angevin kings would never have had
to be told. Jesting after his wont with his hunting-companions,
William—so the story goes—declared that he would keep his next
Christmas feast at Poitiers, if he should live so long.[5] But that same
evening the Red King lay dead in the New Forest, and his territories
fell asunder at once. Robert of Normandy came back from Palestine
in triumph to resume possession of his duchy; while the barons of
England, without waiting for his return, chose his English-born
brother Henry for their king.
[4] Ord. Vit. (Duchesne, Hist. Norm. Scriptt.), p. 780.
Thirteen years before, at his father’s death, Henry, the only child of
William and Matilda who was actually born in the purple—the child of
a crowned king and queen, born on English soil, and thus by birth,
though not by descent, entitled to rank as an English Ætheling—had
been launched into the world at the age of nineteen without a foot of
land that he could call his own. The story went that he had
complained bitterly to the dying Conqueror of his exclusion from all
share in the family heritage. “Have patience, boy,” was William’s
answer, “let thine elder brothers go before thee; the day will come
when thou shalt be greater than either of them.” Henry was,
however, not left a penniless adventurer dependent on the bounty of
his brothers; the Conqueror gave him a legacy of ten thousand
pounds as a solid provision wherewith to begin his career. A year
had scarcely passed before Duke Robert, overwhelmed with troubles
in Normandy, found himself at his wits’ end with an empty treasury,
and besought Henry to lend him some money. The Ætheling, as cool
and calculating as his brothers were impetuous, refused; the duke in
desperation offered to sell him any territory he chose, and a bargain
was struck whereby Henry received, for the sum of three thousand
pounds, the investiture of the Cotentin, the Avranchin, and the Mont-
St.-Michel—in a word, the whole western end of the Norman duchy.
[6] Next summer, while the duke was planning an attempt on the
English crown and vainly awaiting a fair wind to enable him to cross
the Channel, the count of the Cotentin managed to get across
without one, to claim the estates in Gloucestershire formerly held by
his mother and destined for him by his father’s will. He was received
by William Rufus only too graciously, for the consequence was that
some mischief-makers, always specially plentiful at the Norman
court, persuaded Duke Robert that his youngest brother was plotting
against him with the second, and when Henry returned in the autumn
he had no sooner landed than he was seized and cast into prison.[7]
Within a year he was free again, reinstated, if not in the Cotentin, at