Question 1

If the organisation has only operated for a short time several methods of determining the cost function cannot be used.

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 fixed?

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

Computer programmes such as Excel can be used to improve the analysis when using scatter plots.

Accepted Answer

A) True 
 B)False

Question 4

Cost behaviour is:

Accepted Answer

A)  another word for cost object. 
B)  irrelevant for service organisations. 
C)  the variation in costs relative to the variation in activities. 
D)  an old fashioned term for activity cost analysis. 
A)  another word for cost object. 
B)  irrelevant for service organisations. 
C)  the variation in costs relative to the variation in activities. 
D)  an old fashioned term for activity cost analysis.

Question 5

Which of the following should be checked before conducting regression analysis: 
I. The relationship between the cost and cost driver is economically plausible.
II. Data from unusual periods has been eliminated.
III. The number of observations is sufficient.

Accepted Answer

A)  I only 
B)  I and II only 
C)  II and III only 
D)  I, II, and III 
A)  I only 
B)  I and II only 
C)  II and III only 
D)  I, II, and III

Question 6

Hifi Company wants to develop a cost function for its maintenance costs to estimate such costs for the coming year. The following data are available: $$\begin{array} { | l | l | l | } 
\hline \text { Manth } & \text { Machine Hours } & \begin{array} { l } 
\text { Maintenance Costs } \
\text { Incurred }
\end{array} \
\hline \text { January } & \mathbf { 8 0 0 0 } & \mathbf { \$ 3 , 6 0 0 } \
\hline \text { February } & 13000 & \$ 5,300 \
\hline \text { March } & 14000 & \$ 6,000 \
\hline \text { April } & 11000 & \$ 4,600 \
\hline
\end{array}$$ Using the high-low method, what is the variable maintenance cost per machine hour?

Accepted Answer

A)  $0.30 
B)  $0.40 
C)  $0.20 
D)  $2.50 
A)  $0.30 
B)  $0.40 
C)  $0.20 
D)  $2.50

Question 7

Fixed costs per unit:

Accepted Answer

A)  Will not change over the relevant range 
B)  Are constant regardless of changes in activity 
C)  Vary inversely with changes in activity 
D)  Increase with an increase in activity 
A)  Will not change over the relevant range 
B)  Are constant regardless of changes in activity 
C)  Vary inversely with changes in activity 
D)  Increase with an increase in activity

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 fixed repair cost?

Accepted Answer

A)  $475 
B)  $850 
C)  $1,185 
D)  $565 
A)  $475 
B)  $850 
C)  $1,185 
D)  $565

Question 9

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 cost structure for communications is best described as a:

Accepted Answer

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

Question 10

A disadvantage of regression analysis as a method of determining a cost function is:

Accepted Answer

A)  it is time consuming 
B)  uses only two data points 
C)  mismeasures the cost function if data points come from more than one relevant range 
D)  all of the above are disadvantages 
A)  it is time consuming 
B)  uses only two data points 
C)  mismeasures the cost function if data points come from more than one relevant range 
D)  all of the above are disadvantages

Question 11

Which of the following statements is true?

Accepted Answer

A)  Past costs are always relevant for decisions and are often useful in estimating future cost behaviour 
B)  Past costs are always relevant for decisions, but are rarely useful in estimating future cost behaviour 
C)  Past costs are never relevant for decisions, but are often useful in estimating future cost behaviour 
D)  Past costs are never relevant for decisions, nor are they useful in estimating future cost behaviour 
A)  Past costs are always relevant for decisions and are often useful in estimating future cost behaviour 
B)  Past costs are always relevant for decisions, but are rarely useful in estimating future cost behaviour 
C)  Past costs are never relevant for decisions, but are often useful in estimating future cost behaviour 
D)  Past costs are never relevant for decisions, nor are they useful in estimating future cost behaviour

Question 12

Consider the following cost data for the cost object, number of machine setups. Each set of costs (A, B, and C) is from a different type of manufacturing operation and represents the cost behaviour for the cost of that company's machine setups. Cost C is best described as: $\begin{array}{c}
\begin{array}{c}
\text {Number of}\
\underline{\text { Machine Setups}}\
0 \
10 \
20 \
30 \
40 \
50
\end{array}
\begin{array}{c}
\
\underline{\text { Cost A }} \
\$ 0 \
20 \
40 \
60 \
80 \
100
\end{array}
\begin{array}{c}
\
\underline{\text { Cost B }} \
 \$ 80 \
79 \
82 \
78 \
81 \
79
\end{array}
\begin{array}{c}
\
\underline{\text { Cost C} } \
\$ 5 \
37 \
66 \
91 \
123 \
154 
\end{array}
\end{array}$

Accepted Answer

A)  Mixed 
B)  Variable 
C)  Fixed 
D)  Indirect 
A)  Mixed 
B)  Variable 
C)  Fixed 
D)  Indirect

Question 13

In regression analysis, the Adjusted R-square statistic is used to evaluate how well the cost driver explains the behaviour in the cost.

Accepted Answer

A) True 
 B)False

Question 14

An input or activity that causes changes in total cost is a cost driver.

Accepted Answer

A) True 
 B)False

Question 15

Simple regression analysis output produces a variety of statistics. Which of the following statistics best summarises how well the cost driver explains the behaviour of the cost?

Accepted Answer

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

Question 16

Overhead cost pools are used to allocate indirect fixed costs only.

Accepted Answer

A) True 
 B)False

Question 17

The traditional basis for understanding cost behaviour uses an activity analysis cost framework.

Accepted Answer

A) True 
 B)False

Question 18

Consider the following cost data for the cost object, number of machine setups. Each set of costs (A, B, and C) is from a different type of manufacturing operation and represents the cost behaviour for the cost of that company's machine setups. Cost B is best described as $\begin{array}{c}
\begin{array}{c}
\text {Number of}\
\underline{\text { Machine Setups}}\
0 \
10 \
20 \
30 \
40 \
50
\end{array}
\begin{array}{c}
\
\underline{\text { Cost A }} \
\$ 0 \
20 \
40 \
60 \
80 \
100
\end{array}
\begin{array}{c}
\
\underline{\text { Cost B }} \
 \$ 80 \
79 \
82 \
78 \
81 \
79
\end{array}
\begin{array}{c}
\
\underline{\text { Cost C} } \
\$ 5 \
37 \
66 \
91 \
123 \
154 
\end{array}
\end{array}$

Accepted Answer

A)  Mixed 
B)  Variable 
C)  Fixed 
D)  Discretionary 
A)  Mixed 
B)  Variable 
C)  Fixed 
D)  Discretionary

Question 19

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 variable?

Accepted Answer

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

Question 20

The statistical technique that measure the average change in a dependent variable for every unit change in one or more independent variables is called regression analysis.

Accepted Answer

A) True 
 B)False

If the organisation has only operated for a short time several methods of determining the cost function cannot be used.

Computer programmes such as Excel can be used to improve the analysis when using scatter plots.

Cost behaviour is:

Which of the following should be checked before conducting regression analysis: I. The relationship between the cost and cost driver is economically plausible. II. Data from unusual periods has been eliminated. III. The number of observations is sufficient.

Fixed costs per unit:

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 fixed repair cost?

A disadvantage of regression analysis as a method of determining a cost function is:

Which of the following statements is true?

In regression analysis, the Adjusted R-square statistic is used to evaluate how well the cost driver explains the behaviour in the cost.

An input or activity that causes changes in total cost is a cost driver.

Simple regression analysis output produces a variety of statistics. Which of the following statistics best summarises how well the cost driver explains the behaviour of the cost?

Overhead cost pools are used to allocate indirect fixed costs only.

The traditional basis for understanding cost behaviour uses an activity analysis cost framework.

The statistical technique that measure the average change in a dependent variable for every unit change in one or more independent variables is called regression analysis.

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

If the organisation has only operated for a short time several methods of determining the cost function cannot be used.

Computer programmes such as Excel can be used to improve the analysis when using scatter plots.

Cost behaviour is:

Which of the following should be checked before conducting regression analysis: I. The relationship between the cost and cost driver is economically plausible. II. Data from unusual periods has been eliminated. III. The number of observations is sufficient.

Fixed costs per unit:

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 fixed repair cost?

A disadvantage of regression analysis as a method of determining a cost function is:

Which of the following statements is true?

In regression analysis, the Adjusted R-square statistic is used to evaluate how well the cost driver explains the behaviour in the cost.

An input or activity that causes changes in total cost is a cost driver.

Simple regression analysis output produces a variety of statistics. Which of the following statistics best summarises how well the cost driver explains the behaviour of the cost?

Overhead cost pools are used to allocate indirect fixed costs only.

The traditional basis for understanding cost behaviour uses an activity analysis cost framework.

The statistical technique that measure the average change in a dependent variable for every unit change in one or more independent variables is called regression analysis.

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