Question 1

In regression analysis, the variable that is being predicted is known as the independent variable.

Accepted Answer

A) True 
 B)False  False

Question 2

The determination of cost behavior is called a cost prediction.

Accepted Answer

A) True 
 B)False  False

Question 3

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?

Accepted Answer

A)  128. 
B)  160. 
C)  1,280. 
D)  2,048. 
E)  None of the answers is correct. 
A)  128. 
B)  160. 
C)  1,280. 
D)  2,048. 
E)  None of the answers is correct. D

Question 4

The slope of a regression line measures how steeply the cost line rises as activity increases.

Accepted Answer

A) True 
 B)False

Question 5

Lichtenstein Imports needs to determine the variable utilities rate per machine hour in order to estimate cost for August. Relevant information is as follows.
   
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.

Accepted Answer

The answer of Lichtenstein Imports needs to determine the variable...

Question 6

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?

Accepted Answer

A)  The company anticipates $329,000 of fixed selling expenses. 
B)  "Y" represents total selling expenses. 
C)  The company expects both variable and fixed selling expenses. 
D)  For each unit sold, total selling expenses will increase by $7.80. 
E)  "X" represents the number of hours worked during the period. 
A)  The company anticipates $329,000 of fixed selling expenses. 
B)  "Y" represents total selling expenses. 
C)  The company expects both variable and fixed selling expenses. 
D)  For each unit sold, total selling expenses will increase by $7.80. 
E)  "X" represents the number of hours worked during the period.

Question 7

The high-low method and least-squares regression are used by accountants to:

Accepted Answer

A)  evaluate divisional managers for purposes of raises and promotions. 
B)  choose among alternative courses of action. 
C)  maximize output. 
D)  estimate costs. 
E)  control operations. 
A)  evaluate divisional managers for purposes of raises and promotions. 
B)  choose among alternative courses of action. 
C)  maximize output. 
D)  estimate costs. 
E)  control operations.

Question 8

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?

Accepted Answer

A)  $150,000. 
B)  $151,000. 
C)  $152,000. 
D)  $153,000. 
E)  None of the answers is correct. 
A)  $150,000. 
B)  $151,000. 
C)  $152,000. 
D)  $153,000. 
E)  None of the answers is correct.

Question 9

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.

Accepted Answer

A) True 
 B)False

Question 10

Variable costs change in direct proportion to a change in the activity level.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not an issue in the collection of data for cost estimation?

Accepted Answer

A)  Outliers. 
B)  Missing data. 
C)  Mismatched time periods. 
D)  Inflation. 
E)  All of the answers are issues in data collection. 
A)  Outliers. 
B)  Missing data. 
C)  Mismatched time periods. 
D)  Inflation. 
E)  All of the answers are issues in data collection.

Question 12

Cost that are nearly variable, but increase in small steps instead of continuously are called step-variable costs.

Accepted Answer

A) True 
 B)False

Question 13

Cost estimation typically focuses on the future.

Accepted Answer

A) True 
 B)False

Question 14

The following selected data were taken from the accounting records of Colorado Enterprises:

Accepted Answer

A. Machine supplies: $170,000 / 68,000 h

Question 15

Property taxes are an example of a (n):

Accepted Answer

A)  committed fixed cost. 
B)  committed variable cost. 
C)  discretionary fixed cost. 
D)  discretionary variable cost. 
E)  engineered cost. 
A)  committed fixed cost. 
B)  committed variable cost. 
C)  discretionary fixed cost. 
D)  discretionary variable cost. 
E)  engineered cost.

Question 16

The following data relate to the Torrence Company for May and August:
 
-
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?

Accepted Answer

A)  The variable maintenance cost is $18 per hour. 
B)  The variable maintenance cost is $22 per hour. 
C)  The variable maintenance cost is $24 per hour. 
D)  The fixed maintenance cost is $72,000 per month. 
E)  More than one of the other answers is true. 
A)  The variable maintenance cost is $18 per hour. 
B)  The variable maintenance cost is $22 per hour. 
C)  The variable maintenance cost is $24 per hour. 
D)  The fixed maintenance cost is $72,000 per month. 
E)  More than one of the other answers is true.

Question 17

Within the relevant range, a curvilinear cost function can sometimes be graphed as a:

Accepted Answer

A)  sloping straight line. 
B)  jagged line. 
C)  vertical straight line. 
D)  curved line. 
E)  horizontal straight line. 
A)  sloping straight line. 
B)  jagged line. 
C)  vertical straight line. 
D)  curved line. 
E)  horizontal straight line.

Question 18

Within the relevant range of activity, costs:

Accepted Answer

A)  can be estimated with reasonable accuracy. 
B)  can be expected to change radically. 
C)  exhibit decreasing marginal cost patterns. 
D)  exhibit increasing marginal cost patterns. 
E)  cannot be estimated satisfactorily. 
A)  can be estimated with reasonable accuracy. 
B)  can be expected to change radically. 
C)  exhibit decreasing marginal cost patterns. 
D)  exhibit increasing marginal cost patterns. 
E)  cannot be estimated satisfactorily.

Question 19

The relevant range is that range of activity:

Accepted Answer

A)  where a company achieves its maximum efficiency. 
B)  where units produced equal units sold. 
C)  where management expects the firm to operate. 
D)  where the firm will earn a profit. 
E)  where expected results are abnormally high. 
A)  where a company achieves its maximum efficiency. 
B)  where units produced equal units sold. 
C)  where management expects the firm to operate. 
D)  where the firm will earn a profit. 
E)  where expected results are abnormally high.

Question 20

Which of the following costs changes in direct proportion to a change in the activity level?

Accepted Answer

A)  Variable cost. 
B)  Fixed cost. 
C)  Semivariable cost. 
D)  Step-variable cost. 
E)  Step-fixed cost. 
A)  Variable cost. 
B)  Fixed cost. 
C)  Semivariable cost. 
D)  Step-variable cost. 
E)  Step-fixed cost.

In regression analysis, the variable that is being predicted is known as the independent variable.

The determination of cost behavior is called a cost prediction.

The slope of a regression line measures how steeply the cost line rises as activity increases.

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?

The high-low method and least-squares regression are used by accountants to:

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?

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.

Variable costs change in direct proportion to a change in the activity level.

Which of the following is not an issue in the collection of data for cost estimation?

Cost that are nearly variable, but increase in small steps instead of continuously are called step-variable costs.

Cost estimation typically focuses on the future.

The following selected data were taken from the accounting records of Colorado Enterprises:

Property taxes are an example of a (n):

Within the relevant range, a curvilinear cost function can sometimes be graphed as a:

Within the relevant range of activity, costs:

The relevant range is that range of activity:

Which of the following costs changes in direct proportion to a change in the activity level?

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Cost-Volume-Profit Analysis

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

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Exam 6: Activity Analysis, Cost Behavior, and Cost Estimation

In regression analysis, the variable that is being predicted is known as the independent variable.

The determination of cost behavior is called a cost prediction.

The slope of a regression line measures how steeply the cost line rises as activity increases.

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?

The high-low method and least-squares regression are used by accountants to:

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?

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.

Variable costs change in direct proportion to a change in the activity level.

Which of the following is not an issue in the collection of data for cost estimation?

Cost that are nearly variable, but increase in small steps instead of continuously are called step-variable costs.

Cost estimation typically focuses on the future.

The following selected data were taken from the accounting records of Colorado Enterprises:

Property taxes are an example of a (n):

Within the relevant range, a curvilinear cost function can sometimes be graphed as a:

Within the relevant range of activity, costs:

The relevant range is that range of activity:

Which of the following costs changes in direct proportion to a change in the activity level?

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Cost-Volume-Profit Analysis

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

Filters