Question 1

Which of the following statements is not true?

Accepted Answer

A)  Using the account classification method requires us to examine each cost account in detail. 
B)  Using the account classification method frequently requires considerable knowledge and experience. 
C)  Using the account classification method may be a daunting task for very large firms that offer a wide range of products and have expansive account lists. 
D)  Using the account classification method requires us to use statistical analysis. 
E)  All of the above are correct statements. 
A)  Using the account classification method requires us to examine each cost account in detail. 
B)  Using the account classification method frequently requires considerable knowledge and experience. 
C)  Using the account classification method may be a daunting task for very large firms that offer a wide range of products and have expansive account lists. 
D)  Using the account classification method requires us to use statistical analysis. 
E)  All of the above are correct statements.

Question 2

The high-low method:

Accepted Answer

A)  Utilizes the average and the mean values of costs to determine fixed and variable costs. 
B)  Utilizes the high and low values of aggregate costs to estimate total fixed costs and the unit variable costs. 
C)  Utilizes regression analysis to estimate total fixed costs and the unit variable costs. 
D)  Requires cost items to be specifically classified as fixed costs or variable costs to be utilized. 
A)  Utilizes the average and the mean values of costs to determine fixed and variable costs. 
B)  Utilizes the high and low values of aggregate costs to estimate total fixed costs and the unit variable costs. 
C)  Utilizes regression analysis to estimate total fixed costs and the unit variable costs. 
D)  Requires cost items to be specifically classified as fixed costs or variable costs to be utilized.

Question 3

The regression analysis method results in the least error between the estimated and true total cost line.

Accepted Answer

A) True 
 B)False

Question 4

The contribution margin statement focuses attention on:

Accepted Answer

A)  Revenues and variable costs. 
B)  Revenues and fixed costs. 
C)  Revenues and costs of goods sold. 
D)  Revenues only. 
E)  Revenues and total costs. 
A)  Revenues and variable costs. 
B)  Revenues and fixed costs. 
C)  Revenues and costs of goods sold. 
D)  Revenues only. 
E)  Revenues and total costs.

Question 5

Relevant range is defined as:

Accepted Answer

A)  The proportion of total costs that are fixed and variable. 
B)  A statistical method that uses the normal range of operations to estimate fixed and variable costs. 
C)  A non-statistical method that uses the normal range of operations to estimate fixed and variable costs. 
D)  A firm's normal range of operations in which we expect a stable relation between activity and cost. 
E)  None of the above. 
A)  The proportion of total costs that are fixed and variable. 
B)  A statistical method that uses the normal range of operations to estimate fixed and variable costs. 
C)  A non-statistical method that uses the normal range of operations to estimate fixed and variable costs. 
D)  A firm's normal range of operations in which we expect a stable relation between activity and cost. 
E)  None of the above.

Question 6

Account classification involves systematically:

Accepted Answer

A)  Classifying a company's list of revenue accounts into fixed and variable categories. 
B)  Classifying a company's list of accounts into asset, liability, shareholders' equity, revenue, and expense accounts. 
C)  Classifying a company's list of cost accounts into fixed and variable categories. 
D)  Classifying a company's list of accounts into revenue and expense accounts only. 
A)  Classifying a company's list of revenue accounts into fixed and variable categories. 
B)  Classifying a company's list of accounts into asset, liability, shareholders' equity, revenue, and expense accounts. 
C)  Classifying a company's list of cost accounts into fixed and variable categories. 
D)  Classifying a company's list of accounts into revenue and expense accounts only.

Question 7

Which of the following is a drawback of using regression analysis?

Accepted Answer

A)  It is difficult to implement. 
B)  It makes a number of assumptions about the data, and accounting data sometimes do not satisfy these assumptions. 
C)  It is not a well-defined statistical method. 
D)  It provides only one statistic to evaluate the data. 
E)  None of the above are drawbacks of using regression analysis. 
A)  It is difficult to implement. 
B)  It makes a number of assumptions about the data, and accounting data sometimes do not satisfy these assumptions. 
C)  It is not a well-defined statistical method. 
D)  It provides only one statistic to evaluate the data. 
E)  None of the above are drawbacks of using regression analysis.

Question 8

Trish's Quilt Connection is an on-line company specializing in high-quality quilt frames and accessories. Trish does not charge customers shipping charges for quilt frame orders. She has provided the following information;   Using the high-low method, estimate Trish's total variable and fixed costs are at if she sells 1,280 frames:

Accepted Answer

A)  Total variable cost=$5,120; Total Fixed Cost $4,880 
B)  Total variable cost=$320; Total Fixed Cost $9,680 
C)  Total variable cost=$10,000; Total Fixed Cost $0 
D)  Total variable cost=$2,000; Total Fixed Cost $8,000 
E)  Total variable cost=$7,500; Total Fixed Cost $500 
A)  Total variable cost=$5,120; Total Fixed Cost $4,880 
B)  Total variable cost=$320; Total Fixed Cost $9,680 
C)  Total variable cost=$10,000; Total Fixed Cost $0 
D)  Total variable cost=$2,000; Total Fixed Cost $8,000 
E)  Total variable cost=$7,500; Total Fixed Cost $500

Question 9

The major disadvantage of the account classification method is that it uses few observations of aggregate cost data to estimate total fixed and variable costs.

Accepted Answer

A) True 
 B)False

Question 10

The contribution margin statement groups costs by their function.

Accepted Answer

A) True 
 B)False

Question 11

When provided data in an Excel format, regression analysis:

Accepted Answer

A)  Will provide total fixed costs as the Coefficient/Intercept and total variable costs as Coefficient/# of members. 
B)  Will provide total fixed costs as the Coefficient/Intercept and unit variable costs as Coefficient/# of members. 
C)  Will provide individual member fixed costs as the Coefficient/Intercept and individual variable costs as Coefficient/# of members. 
D)  Will provide total fixed costs as the Coefficient/Intercept and unit variable costs as p-value/# of members. 
A)  Will provide total fixed costs as the Coefficient/Intercept and total variable costs as Coefficient/# of members. 
B)  Will provide total fixed costs as the Coefficient/Intercept and unit variable costs as Coefficient/# of members. 
C)  Will provide individual member fixed costs as the Coefficient/Intercept and individual variable costs as Coefficient/# of members. 
D)  Will provide total fixed costs as the Coefficient/Intercept and unit variable costs as p-value/# of members.

Question 12

P-value:

Accepted Answer

A)  Is not useful in interpreting the results of regression analysis. 
B)  Indicates the goodness-of-fit. 
C)  Is a residual number obtained when using the high-low method. 
D)  Indicates the confidence that the coefficient estimates reliably differ from zero. 
E)  Both b and c. 
A)  Is not useful in interpreting the results of regression analysis. 
B)  Indicates the goodness-of-fit. 
C)  Is a residual number obtained when using the high-low method. 
D)  Indicates the confidence that the coefficient estimates reliably differ from zero. 
E)  Both b and c.

Question 13

The contribution margin is the amount that contributes toward recovering fixed costs and earning a profit.

Accepted Answer

A) True 
 B)False

Question 14

The change in variable costs is calculated as:

Accepted Answer

A)  The sum of the variable costs divided by the volume of activities which is then multiplied by the change in activity levels. 
B)  The sum of the variable costs multiplied by the change in activity levels. 
C)  The sum of the variable costs divided by the activity levels which is then multiplied by the change in volume of activities. 
D)  The sum of the variable revenues divided by the volume of activities which is then multiplied by the change in activity levels. 
A)  The sum of the variable costs divided by the volume of activities which is then multiplied by the change in activity levels. 
B)  The sum of the variable costs multiplied by the change in activity levels. 
C)  The sum of the variable costs divided by the activity levels which is then multiplied by the change in volume of activities. 
D)  The sum of the variable revenues divided by the volume of activities which is then multiplied by the change in activity levels.

Question 15

Segmented contribution margin statements:

Accepted Answer

A)  Can combine one or more products or regions into a single column presentation. 
B)  Can present individual product information for a single region. 
C)  Can be tailored to the requirements of the company. 
D)  All of the possibilities, A, B, and, C, are correct answers. 
A)  Can combine one or more products or regions into a single column presentation. 
B)  Can present individual product information for a single region. 
C)  Can be tailored to the requirements of the company. 
D)  All of the possibilities, A, B, and, C, are correct answers.

Question 16

The "segmented" contribution margin statement is one way firms modify the contribution margin statement to reflect GAAP.

Accepted Answer

A) True 
 B)False

Question 17

The major disadvantage of the account classification method is

Accepted Answer

A)  While some cost items will exactly correspond to a fixed or variable cost, other cost items will not. 
B)  The difficulty associated with implementing it. 
C)  Small companies may have an expansive account list making the task hard. 
D)  Incorrectly classifying costs could lead to minor errors in cost estimates. 
A)  While some cost items will exactly correspond to a fixed or variable cost, other cost items will not. 
B)  The difficulty associated with implementing it. 
C)  Small companies may have an expansive account list making the task hard. 
D)  Incorrectly classifying costs could lead to minor errors in cost estimates.

Question 18

R-square will always lie between negative one and positive one.

Accepted Answer

A) True 
 B)False

Question 19

Capacity costs are controllable in the short term.

Accepted Answer

A) True 
 B)False

Question 20

We obtain the data for the account classification method from the contribution margin statement.

Accepted Answer

A) True 
 B)False

Which of the following statements is not true?

The high-low method:

The regression analysis method results in the least error between the estimated and true total cost line.

The contribution margin statement focuses attention on:

Relevant range is defined as:

Account classification involves systematically:

Which of the following is a drawback of using regression analysis?

The major disadvantage of the account classification method is that it uses few observations of aggregate cost data to estimate total fixed and variable costs.

The contribution margin statement groups costs by their function.

When provided data in an Excel format, regression analysis:

P-value:

The contribution margin is the amount that contributes toward recovering fixed costs and earning a profit.

The change in variable costs is calculated as:

Segmented contribution margin statements:

The "segmented" contribution margin statement is one way firms modify the contribution margin statement to reflect GAAP.

The major disadvantage of the account classification method is

R-square will always lie between negative one and positive one.

Capacity costs are controllable in the short term.

We obtain the data for the account classification method from the contribution margin statement.

Accounting: Information for Decision Making

Identification and Estimating Costs and Benefits

Cost Flows and Cost Terminology

Cost-Volume-Profit Analysis

Decision Making in the Short Term

Operating Budgets: Bridging Planning and Control

Budgetary Control and Variance Analysis

Cost Allocations: Theory and Applications

Activity-Based Costing and Management

Managing Long-Lived Resources: Capital Budgeting

Performance Evaluation in Decentralized Organizations

Strategic Planning and Control

Job Costing

Process Costing

Support Activity and Dual Rate Allocations

Filters

Exam 4: Techniques for Estimating Fixed and Variable Costs

Which of the following statements is not true?

The high-low method:

The regression analysis method results in the least error between the estimated and true total cost line.

The contribution margin statement focuses attention on:

Relevant range is defined as:

Account classification involves systematically:

Which of the following is a drawback of using regression analysis?

The major disadvantage of the account classification method is that it uses few observations of aggregate cost data to estimate total fixed and variable costs.

The contribution margin statement groups costs by their function.

When provided data in an Excel format, regression analysis:

P-value:

The contribution margin is the amount that contributes toward recovering fixed costs and earning a profit.

The change in variable costs is calculated as:

Segmented contribution margin statements:

The "segmented" contribution margin statement is one way firms modify the contribution margin statement to reflect GAAP.

The major disadvantage of the account classification method is

R-square will always lie between negative one and positive one.

Capacity costs are controllable in the short term.

We obtain the data for the account classification method from the contribution margin statement.

Accounting: Information for Decision Making

Identification and Estimating Costs and Benefits

Cost Flows and Cost Terminology

Cost-Volume-Profit Analysis

Decision Making in the Short Term

Operating Budgets: Bridging Planning and Control

Budgetary Control and Variance Analysis

Cost Allocations: Theory and Applications

Activity-Based Costing and Management

Managing Long-Lived Resources: Capital Budgeting

Performance Evaluation in Decentralized Organizations

Strategic Planning and Control

Job Costing

Process Costing

Support Activity and Dual Rate Allocations

Filters