Question 1

A scatter plot is especially useful when managers wish to:

Accepted Answer

A)  Compute a cost function 
B)  Update a past cost function for future changes 
C)  Study the relationship between a cost and a potential cost driver 
D)  Analyse cost behaviour when only one period of data is available 
A)  Compute a cost function 
B)  Update a past cost function for future changes 
C)  Study the relationship between a cost and a potential cost driver 
D)  Analyse cost behaviour when only one period of data is available

Question 2

A cost driver is also known as the variable cost per unit.

Accepted Answer

A) True 
 B)False

Question 3

The high-low method is a specific application of the two-point method of cost estimation.

Accepted Answer

A) True 
 B)False

Question 4

There are a number of methods available for estimating cost functions. Which of the following is not one of them?

Accepted Answer

A)  Two point method. 
B)  Regression analysis 
C)  Modular analysis 
D)  Engineered estimates 
A)  Two point method. 
B)  Regression analysis 
C)  Modular analysis 
D)  Engineered estimates

Question 5

Regression analysis works best when the relationship between costs and cost drivers is:

Accepted Answer

A)  Positive and linear 
B)  Negative and linear 
C)  Positive and indirect 
D)  Positive, linear, and indirect 
A)  Positive and linear 
B)  Negative and linear 
C)  Positive and indirect 
D)  Positive, linear, and indirect

Question 6

The number of patients treated is an example of a cost driver for a hospital's cardiac ward.

Accepted Answer

A) True 
 B)False

Question 7

Management accounting commonly uses average costs in reports because they are more useful for decision making purposes.

Accepted Answer

A) True 
 B)False

Question 8

Highland Rose Ltd is attempting to develop the cost function for repair costs. The following past data are available: $$\begin{array} { c c } 
\underline{\text { Machine Hours }} &\underline{ \text { Repair Costs }} \
4,800 & \$ 6,385 \
3,400 & 4,585 \
4,000 & 5,285 \
5,900 & 7,085
\end{array}$$ Using the high-low method, what is the variable repair cost per machine hour?

Accepted Answer

A)  $1.00 
B)  $0.15 
C)  $4.00 
D)  $5.00 
A)  $1.00 
B)  $0.15 
C)  $4.00 
D)  $5.00

Question 9

Cost objects only ever have one cost driver.

Accepted Answer

A) True 
 B)False

Question 10

The cost and time associated with using regression analysis means that it is likely that the costs of using outweigh the benefits of doing so.

Accepted Answer

A) True 
 B)False

Question 11

When estimating cost functions it is important to continuously evaluate uncertainties and quality of information.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is an alternative name for the cost being predicted in a regression analysis?

Accepted Answer

A)  Independent variable 
B)  Dependent variable 
C)  Beta 
D)  Slope 
A)  Independent variable 
B)  Dependent variable 
C)  Beta 
D)  Slope

Question 13

Keep Smiling Dental Surgery is located in Christchurch. The company employs three dentists, four dental assistants and two receptionists who book appointments and keep records. The surgery provides a range of services including general dental care, paediatric dental care and teeth whitening. The clinic includes a small retail section that carries specialised products for home treatment. The surgery has recently updated its communications plan and negotiated a plan with a new provider which includes a monthly line charge and a usage charge for internet activity. The internet usage change is best described as a:

Accepted Answer

A)  Fixed cost 
B)  Variable cost 
C)  Sunk cost 
D)  Mixed cost 
A)  Fixed cost 
B)  Variable cost 
C)  Sunk cost 
D)  Mixed cost

Question 14

The method of cost estimation that analyses accounting records to determine future cost patterns is called engineered cost analysis.

Accepted Answer

A) True 
 B)False

Question 15

The algebraic equation of a cost function is represented as: TC = F + V*Q

Accepted Answer

A) True 
 B)False

Question 16

When an organisation operates in an environment where technologies and costs change rapidly the information quality of past cost data is reduced.

Accepted Answer

A) True 
 B)False

Question 17

When an organisation changes their capacity or operations significantly it is likely that the relevant range will also change.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not an assumption of linear regression analysis:

Accepted Answer

A)  The error terms have a constant variance 
B)  The error terms are independent 
C)  There is a cause and effect relationship between the dependent and independent variables 
D)  A linear relationship exists between the dependent and independent variables 
A)  The error terms have a constant variance 
B)  The error terms are independent 
C)  There is a cause and effect relationship between the dependent and independent variables 
D)  A linear relationship exists between the dependent and independent variables

Question 19

Simple regression analysis output produces a variety of information and statistics. Which of the following statistics provides information for fixed costs?

Accepted Answer

A)  T-statistic and p-value for the alpha coefficient 
B)  T-statistics for alpha and beta coefficients 
C)  Adjusted R-square 
D)  P-values for alpha and beta coefficients 
A)  T-statistic and p-value for the alpha coefficient 
B)  T-statistics for alpha and beta coefficients 
C)  Adjusted R-square 
D)  P-values for alpha and beta coefficients

Question 20

Cost drivers are always considered based on a specific cost object.

Accepted Answer

A) True 
 B)False

A scatter plot is especially useful when managers wish to:

A cost driver is also known as the variable cost per unit.

The high-low method is a specific application of the two-point method of cost estimation.

There are a number of methods available for estimating cost functions. Which of the following is not one of them?

Regression analysis works best when the relationship between costs and cost drivers is:

The number of patients treated is an example of a cost driver for a hospital's cardiac ward.

Management accounting commonly uses average costs in reports because they are more useful for decision making purposes.

Highland Rose Ltd is attempting to develop the cost function for repair costs. The following past data are available: 4,800 \ 6,385 3,400 4,585 4,000 5,285 5,900 7,085 Using the high-low method, what is the variable repair cost per machine hour?

Cost objects only ever have one cost driver.

The cost and time associated with using regression analysis means that it is likely that the costs of using outweigh the benefits of doing so.

When estimating cost functions it is important to continuously evaluate uncertainties and quality of information.

Which of the following is an alternative name for the cost being predicted in a regression analysis?

The method of cost estimation that analyses accounting records to determine future cost patterns is called engineered cost analysis.

The algebraic equation of a cost function is represented as: TC = F + V*Q

When an organisation operates in an environment where technologies and costs change rapidly the information quality of past cost data is reduced.

When an organisation changes their capacity or operations significantly it is likely that the relevant range will also change.

Which of the following is not an assumption of linear regression analysis:

Simple regression analysis output produces a variety of information and statistics. Which of the following statistics provides information for fixed costs?

Cost drivers are always considered based on a specific cost object.

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

Exam 2: Cost Concepts, Behaviour and Estimation

A scatter plot is especially useful when managers wish to:

A cost driver is also known as the variable cost per unit.

The high-low method is a specific application of the two-point method of cost estimation.

There are a number of methods available for estimating cost functions. Which of the following is not one of them?

Regression analysis works best when the relationship between costs and cost drivers is:

The number of patients treated is an example of a cost driver for a hospital's cardiac ward.

Management accounting commonly uses average costs in reports because they are more useful for decision making purposes.

Highland Rose Ltd is attempting to develop the cost function for repair costs. The following past data are available: 4,800 \ 6,385 3,400 4,585 4,000 5,285 5,900 7,085 Using the high-low method, what is the variable repair cost per machine hour?

Cost objects only ever have one cost driver.

The cost and time associated with using regression analysis means that it is likely that the costs of using outweigh the benefits of doing so.

When estimating cost functions it is important to continuously evaluate uncertainties and quality of information.

Which of the following is an alternative name for the cost being predicted in a regression analysis?

The method of cost estimation that analyses accounting records to determine future cost patterns is called engineered cost analysis.

The algebraic equation of a cost function is represented as: TC = F + V*Q

When an organisation operates in an environment where technologies and costs change rapidly the information quality of past cost data is reduced.

When an organisation changes their capacity or operations significantly it is likely that the relevant range will also change.

Which of the following is not an assumption of linear regression analysis:

Simple regression analysis output produces a variety of information and statistics. Which of the following statistics provides information for fixed costs?

Cost drivers are always considered based on a specific cost object.

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