Question 1

To understand cost behaviour accountants need to consider the drivers of the organisation's costs.

Accepted Answer

A) True 
 B)False

Question 2

Three different divisions of a university are estimating costs for their human resources departments. Each division has a cost structure that is different from the other divisions and those structures are represented by the following cost behaviour patterns.
 $\begin{array}{c}
\begin{array}{c}
\text {Number of}\
\underline{\text {Employees}}\
0 \
25\
 50\
 75\
 100
\end{array}
\begin{array}{c}
\
\underline{\text { Cost A }} \
 \$ 0 \
50 \
100 \
125 \
200
\end{array}
\begin{array}{c}
\
\underline{\text { Cost B} } \
\$ 120 \
118 \
123 \
124 \
119
\end{array}

\begin{array}{c}
\
\underline{\text { Cost C} } \
\$ 118 \
180 \
245 \
296\
360 
\end{array}

\end{array}$

Which cost is best described as mixed?

Accepted Answer

A)  Cost A 
B)  Cost B 
C)  Cost C 
D)  Cost B and Cost C 
A)  Cost A 
B)  Cost B 
C)  Cost C 
D)  Cost B and Cost C

Question 3

Design Fashion has an average overhead cost per hour of $21.00 at 3,500 machine hours, and at 3,000 hours it is $22.50. The company managers wish to estimate the overhead cost function. What is the variable overhead cost per machine hour?

Accepted Answer

A)  $1.50 
B)  $12.00 
C)  $6.00 
D)  $1.75 
A)  $1.50 
B)  $12.00 
C)  $6.00 
D)  $1.75

Question 4

In regression analysis it is not necessary to eliminate data from unusual periods because the statistical analysis is able to factor this in to the regression outputs.

Accepted Answer

A) True 
 B)False

Question 5

Mixed costs:

Accepted Answer

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 
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

Question 6

In a regression equation, fixed costs per unit are represented by the:

Accepted Answer

A)  Slope 
B)  Intercept 
C)  Adjusted R-square coefficient 
D)  None of the above 
A)  Slope 
B)  Intercept 
C)  Adjusted R-square coefficient 
D)  None of the above

Question 7

Within the relevant range the variable cost approximates the marginal cost.

Accepted Answer

A) True 
 B)False

Question 8

When determining whether a coefficient should be used in a cost function the relevant statistic in the regression output is:

Accepted Answer

A)  the coefficient value 
B)  p-value for the coefficient 
C)  t-statistic for the coefficient 
D)  number of observations 
A)  the coefficient value 
B)  p-value for the coefficient 
C)  t-statistic for the coefficient 
D)  number of observations

Question 9

Reviewing the pattern of a cost over time is a critical step in determining an engineered cost estimate.

Accepted Answer

A) True 
 B)False

Question 10

The first step in estimating a cost function is to identify relevant costs for the cost object.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements is NOT true when using analysis at the account level to estimate a cost function:

Accepted Answer

A)  Salaries are usually fixed. 
B)  Manufacturing overhead is usually treated as a mixed cost. 
C)  Materials used in production are usually variable. 
D)  Maintenance on the buildings and facilities is usually treated as variable. 
A)  Salaries are usually fixed. 
B)  Manufacturing overhead is usually treated as a mixed cost. 
C)  Materials used in production are usually variable. 
D)  Maintenance on the buildings and facilities is usually treated as variable.

Question 12

Multiple regression analysis develops a cost function for the statistical relationship between total cost and two or more cost drivers.

Accepted Answer

A) True 
 B)False

Question 13

A firm has the capacity to produce 3,100 units per week. At 80% capacity, the average total cost per unit is $12.50 and the average variable cost per unit is $7.50. What is the total fixed cost per week, assuming the firm is still operating within its relevant range?

Accepted Answer

A)  $12,400 
B)  $19,375 
C)  $23,200 
D)  $15,500 
A)  $12,400 
B)  $19,375 
C)  $23,200 
D)  $15,500

Question 14

The dependent variable in regression analysis is the cost driver.

Accepted Answer

A) True 
 B)False

Question 15

Which of the follow is not an assumption when estimating a cost function over the relevant range of activity?

Accepted Answer

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. 
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.

Question 16

A stepwise linear cost function is a cost function in which total fixed costs change at some point but remain constant after the change.

Accepted Answer

A) True 
 B)False

Question 17

An example of a fixed cost is the cost of petrol in a transport company.

Accepted Answer

A) True 
 B)False

Question 18

The calculation of average cost is total costs ÷ activity.

Accepted Answer

A) True 
 B)False

Question 19

It is always easy to determine whether a cost is a variable or a fixed cost.

Accepted Answer

A) True 
 B)False

Question 20

Past costs can be used for estimating future cost behaviour.

Accepted Answer

A) True 
 B)False

To understand cost behaviour accountants need to consider the drivers of the organisation's costs.

Design Fashion has an average overhead cost per hour of $21.00 at 3,500 machine hours, and at 3,000 hours it is $22.50. The company managers wish to estimate the overhead cost function. What is the variable overhead cost per machine hour?

In regression analysis it is not necessary to eliminate data from unusual periods because the statistical analysis is able to factor this in to the regression outputs.

Mixed costs:

In a regression equation, fixed costs per unit are represented by the:

Within the relevant range the variable cost approximates the marginal cost.

When determining whether a coefficient should be used in a cost function the relevant statistic in the regression output is:

Reviewing the pattern of a cost over time is a critical step in determining an engineered cost estimate.

The first step in estimating a cost function is to identify relevant costs for the cost object.

Which of the following statements is NOT true when using analysis at the account level to estimate a cost function:

Multiple regression analysis develops a cost function for the statistical relationship between total cost and two or more cost drivers.

A firm has the capacity to produce 3,100 units per week. At 80% capacity, the average total cost per unit is $12.50 and the average variable cost per unit is $7.50. What is the total fixed cost per week, assuming the firm is still operating within its relevant range?

The dependent variable in regression analysis is the cost driver.

Which of the follow is not an assumption when estimating a cost function over the relevant range of activity?

A stepwise linear cost function is a cost function in which total fixed costs change at some point but remain constant after the change.

An example of a fixed cost is the cost of petrol in a transport company.

The calculation of average cost is total costs ÷ activity.

It is always easy to determine whether a cost is a variable or a fixed cost.

Past costs can be used for estimating future cost behaviour.

The Role of Accounting Information in Management Decision Making

A Costing Framework and Cost Allocation

Costvolumeprofit Cvp Analysis

Planning Budgeting and Behaviour

Operational Budgets

Job and Process Costing Systems

Flexible Budgets, Standard Costs and Variance Analysis

Variance Analysis: Revenue and Cost

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Strategy and Control

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

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Exam 2: Cost Concepts, Behaviour and Estimation

To understand cost behaviour accountants need to consider the drivers of the organisation's costs.

Design Fashion has an average overhead cost per hour of $21.00 at 3,500 machine hours, and at 3,000 hours it is $22.50. The company managers wish to estimate the overhead cost function. What is the variable overhead cost per machine hour?

In regression analysis it is not necessary to eliminate data from unusual periods because the statistical analysis is able to factor this in to the regression outputs.

Mixed costs:

In a regression equation, fixed costs per unit are represented by the:

Within the relevant range the variable cost approximates the marginal cost.

When determining whether a coefficient should be used in a cost function the relevant statistic in the regression output is:

Reviewing the pattern of a cost over time is a critical step in determining an engineered cost estimate.

The first step in estimating a cost function is to identify relevant costs for the cost object.

Which of the following statements is NOT true when using analysis at the account level to estimate a cost function:

Multiple regression analysis develops a cost function for the statistical relationship between total cost and two or more cost drivers.

A firm has the capacity to produce 3,100 units per week. At 80% capacity, the average total cost per unit is $12.50 and the average variable cost per unit is $7.50. What is the total fixed cost per week, assuming the firm is still operating within its relevant range?

The dependent variable in regression analysis is the cost driver.

Which of the follow is not an assumption when estimating a cost function over the relevant range of activity?

A stepwise linear cost function is a cost function in which total fixed costs change at some point but remain constant after the change.

An example of a fixed cost is the cost of petrol in a transport company.

The calculation of average cost is total costs ÷ activity.

It is always easy to determine whether a cost is a variable or a fixed cost.

Past costs can be used for estimating future cost behaviour.

The Role of Accounting Information in Management Decision Making

A Costing Framework and Cost Allocation

Costvolumeprofit Cvp Analysis

Planning Budgeting and Behaviour

Operational Budgets

Job and Process Costing Systems

Flexible Budgets, Standard Costs and Variance Analysis

Variance Analysis: Revenue and Cost

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Strategy and Control

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

Filters