Question 1

Periods of highest and lowest activity in a scatter diagram are always assumed to be representative of all cost observations.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following would be classified as a discretionary fixed cost?

Accepted Answer

A)  Depreciation 
B)  Research and Development 
C)  Property Taxes 
D)  Interest on Bonds 
A)  Depreciation 
B)  Research and Development 
C)  Property Taxes 
D)  Interest on Bonds B

Question 3

The introduction of production technology in a manufacturing process would:

Accepted Answer

A)  Decrease the probability of inappropriately matching activity and costs in the short run 
B)  Make cost estimation and prediction easier 
C)  Require the identification of the most appropriate activity that matches costs 
D)  Increase the probability that the coefficient of determination will decrease in the short run 
A)  Decrease the probability of inappropriately matching activity and costs in the short run 
B)  Make cost estimation and prediction easier 
C)  Require the identification of the most appropriate activity that matches costs 
D)  Increase the probability that the coefficient of determination will decrease in the short run C

Question 4

Comparing least-squares regression to high-low estimation:

Accepted Answer

A)  Least-squares regression is preferred to high-low estimation because with this method, the computer can make all the decisions after data entry 
B)  Least-squares regression provides superior estimates to high-low estimation when using unreliable data 
C)  Least-squares regression provides a means of estimating how well the data fit the model 
D)  All of the above 
A)  Least-squares regression is preferred to high-low estimation because with this method, the computer can make all the decisions after data entry 
B)  Least-squares regression provides superior estimates to high-low estimation when using unreliable data 
C)  Least-squares regression provides a means of estimating how well the data fit the model 
D)  All of the above

Question 5

As volume increases, which of the following statements is not correct?

Accepted Answer

A)  Variable cost per unit will remain the same. 
B)  Total fixed will remain the same. 
C)  Average cost per unit will increase. 
D)  Total variable costs will increase. 
A)  Variable cost per unit will remain the same. 
B)  Total fixed will remain the same. 
C)  Average cost per unit will increase. 
D)  Total variable costs will increase.

Question 6

Comparing least-squares regression to high-low estimation:

Accepted Answer

A)  Least-squares regression better predicts costs outside the range of past observations 
B)  Least-squares regression makes fuller use of the data 
C)  Least-squares regression requires fewer calculations 
D)  All of the above 
A)  Least-squares regression better predicts costs outside the range of past observations 
B)  Least-squares regression makes fuller use of the data 
C)  Least-squares regression requires fewer calculations 
D)  All of the above

Question 7

Kratz Manufacturing Company uses an activity-based costing system. It has the following manufacturing activity areas, related cost drivers and cost allocation rates:
   During the month, 100 units were produced, with no defects, requiring three setups. Each unit consisted of 17 parts, 3 direct labor hours and 2.5 machine hours. Direct materials cost $50 per finished unit.
-What is the per unit manufacturing cost for the period?

Accepted Answer

A)  $806.75 
B)  $106.25 
C)  $321.00 
D)  $172.50 
A)  $806.75 
B)  $106.25 
C)  $321.00 
D)  $172.50

Question 8

Which of the following methods of cost estimation utilizes all observations and relies on statistical measures to determine the cost estimation model?

Accepted Answer

A)  High-Low Method 
B)  Scatter Diagram 
C)  Least-Squares Regression 
D)  Linear Programming 
A)  High-Low Method 
B)  Scatter Diagram 
C)  Least-Squares Regression 
D)  Linear Programming

Question 9

The following information pertains to Nichole Company's weekly activity and total costs:
  What are Nichole's weekly fixed costs?

Accepted Answer

A)  $ -0- 
B)  $ 150 
C)  $ 160 
D)  $ 800 
A)  $ -0- 
B)  $ 150 
C)  $ 160 
D)  $ 800

Question 10

The following procedure performed by a food wholesaler is the best example of a unit level activity within a customer cost hierarchy:

Accepted Answer

A)  Calling a retail customer to inquire if the customer is satisfied with the wholesaler's service 
B)  Driving the delivery truck to the retail customer's store 
C)  Sending the retail customer a bill for a recent order 
D)  Stacking items on the shelf of a retail customer's store 
A)  Calling a retail customer to inquire if the customer is satisfied with the wholesaler's service 
B)  Driving the delivery truck to the retail customer's store 
C)  Sending the retail customer a bill for a recent order 
D)  Stacking items on the shelf of a retail customer's store

Question 11

Kratz Manufacturing Company uses an activity-based costing system. It has the following manufacturing activity areas, related cost drivers and cost allocation rates:
   During the month, 100 units were produced, with no defects, requiring three setups. Each unit consisted of 17 parts, 3 direct labor hours and 2.5 machine hours. Direct materials cost $50 per finished unit.
-What is the total manufacturing cost for machine setups?

Accepted Answer

A)  $150 
B)  $500 
C)  $250 
D)  $300 
A)  $150 
B)  $500 
C)  $250 
D)  $300

Question 12

Number of parts per unit is most appropriate as a cost driver for which of the following types of activity costs?

Accepted Answer

A)  Machining 
B)  Purchasing 
C)  Assembly 
D)  Payroll 
A)  Machining 
B)  Purchasing 
C)  Assembly 
D)  Payroll

Question 13

Which one of the following statements about difficulties in cost estimation is true?

Accepted Answer

A)  Changes in the company's production technology make estimating the company's production costs easier 
B)  The shorter the time period, the higher the probability of inappropriately matching activity and cost 
C)  The stronger the economy, the harder it is to accurately match activity and cost 
D)  When prices of a company's raw materials or labor are rapidly increasing, cost estimations based on previous periods will overestimate future costs 
A)  Changes in the company's production technology make estimating the company's production costs easier 
B)  The shorter the time period, the higher the probability of inappropriately matching activity and cost 
C)  The stronger the economy, the harder it is to accurately match activity and cost 
D)  When prices of a company's raw materials or labor are rapidly increasing, cost estimations based on previous periods will overestimate future costs

Question 14

The Heartland Delivery Service has the following information about its truck fleet miles and operating costs:
  What is the best estimate of fixed costs for fleet operating expenses in 2017 using the high-low method?

Accepted Answer

A)  $50,000 
B)  $17,000 
C)  $17,500 
D)  $25,000 
A)  $50,000 
B)  $17,000 
C)  $17,500 
D)  $25,000

Question 15

The primary advantage of the High-Low method over other cost estimation methods is that:

Accepted Answer

A)  It utilizes only two data points rather all data points within a relevant range 
B)  It relies on judgment to determine the cost estimation model 
C)  It is a more straightforward approach to determining the variable and fixed elements of mixed costs 
D)  It can only be applied within the relevant range of observations of the independent variable 
A)  It utilizes only two data points rather all data points within a relevant range 
B)  It relies on judgment to determine the cost estimation model 
C)  It is a more straightforward approach to determining the variable and fixed elements of mixed costs 
D)  It can only be applied within the relevant range of observations of the independent variable

Question 16

Rock Bottom's Brew is a successful brewery engaged in the development and production of specialty micro brews. It uses manufacturing cost hierarchy to allocate costs to various activities. During the past year, it has incurred:
  
-Using the manufacturing cost hierarchy, what is the total cost that would be classified as facility-level activity costs?

Accepted Answer

A)  $ 500,000 
B)  $1,750,000 
C)  $ 875,000 
D)  $2,000,000 
A)  $ 500,000 
B)  $1,750,000 
C)  $ 875,000 
D)  $2,000,000

Question 17

The Johnson Furniture Company has the following information available regarding costs at various levels of monthly production:
   Identify each of the costs above as being variable, fixed, or mixed.

Accepted Answer

The answer of The Johnson Furniture Company has the following...

Question 18

The cost of raw materials would best be classified as what type of activity?

Accepted Answer

A)  A unit-level activity 
B)  A batch-level activity 
C)  A product-level activity 
D)  A facility-level activity 
A)  A unit-level activity 
B)  A batch-level activity 
C)  A product-level activity 
D)  A facility-level activity

Question 19

The Bright School Logo Products Company needs to predict the labor cost in producing specialty coffee mugs. The following production information is available:
   Wage rates have steadily increased since 2012; however, management expects no further increases in 2018.
a. Select the appropriate independent variable for estimating labor cost. Explain the reason for your selection.
b. Develop an equation to predict for 2018 the labor cost of producing specialty mugs. Use the high-low method.

Accepted Answer

a. In periods of changing prices, unadju

Question 20

The depreciation cost for a manufacturing building is an example of a committed fixed cost:

Accepted Answer

A) True 
 B)False

Periods of highest and lowest activity in a scatter diagram are always assumed to be representative of all cost observations.

Which of the following would be classified as a discretionary fixed cost?

The introduction of production technology in a manufacturing process would:

Comparing least-squares regression to high-low estimation:

As volume increases, which of the following statements is not correct?

Comparing least-squares regression to high-low estimation:

Which of the following methods of cost estimation utilizes all observations and relies on statistical measures to determine the cost estimation model?

The following information pertains to Nichole Company's weekly activity and total costs: What are Nichole's weekly fixed costs?

The following procedure performed by a food wholesaler is the best example of a unit level activity within a customer cost hierarchy:

Number of parts per unit is most appropriate as a cost driver for which of the following types of activity costs?

Which one of the following statements about difficulties in cost estimation is true?

The Heartland Delivery Service has the following information about its truck fleet miles and operating costs: What is the best estimate of fixed costs for fleet operating expenses in 2017 using the high-low method?

The primary advantage of the High-Low method over other cost estimation methods is that:

The Johnson Furniture Company has the following information available regarding costs at various levels of monthly production: Identify each of the costs above as being variable, fixed, or mixed.

The cost of raw materials would best be classified as what type of activity?

The depreciation cost for a manufacturing building is an example of a committed fixed cost:

Managerial Accounting: Tools for Decision Making

Cost-Volume-Profit Analysis and Planning

Relevant Costs and Benefits for Decision Making

Product Costing: Job and Process Operations

Activity-Based Costing, Customer Profitability, and Activity-Based Management

Additional Topics in Product Costing

Pricing and Other Product Management Decisions

Operational Budgeting and Profit Planning

Standard Costs and Performance Reports

Segment Reporting, Transfer Pricing, and Balanced Scorecard

Capital Budgeting Decisions

Appendix: Managerial Analysis of Financial Statements

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Exam 2: Cost Behavior, Activity Analysis, and Cost Estimation

Periods of highest and lowest activity in a scatter diagram are always assumed to be representative of all cost observations.

Which of the following would be classified as a discretionary fixed cost?

The introduction of production technology in a manufacturing process would:

Comparing least-squares regression to high-low estimation:

As volume increases, which of the following statements is not correct?

Comparing least-squares regression to high-low estimation:

Which of the following methods of cost estimation utilizes all observations and relies on statistical measures to determine the cost estimation model?

The following information pertains to Nichole Company's weekly activity and total costs: What are Nichole's weekly fixed costs?

The following procedure performed by a food wholesaler is the best example of a unit level activity within a customer cost hierarchy:

Number of parts per unit is most appropriate as a cost driver for which of the following types of activity costs?

Which one of the following statements about difficulties in cost estimation is true?

The Heartland Delivery Service has the following information about its truck fleet miles and operating costs: What is the best estimate of fixed costs for fleet operating expenses in 2017 using the high-low method?

The primary advantage of the High-Low method over other cost estimation methods is that:

The Johnson Furniture Company has the following information available regarding costs at various levels of monthly production: Identify each of the costs above as being variable, fixed, or mixed.

The cost of raw materials would best be classified as what type of activity?

The depreciation cost for a manufacturing building is an example of a committed fixed cost:

Managerial Accounting: Tools for Decision Making

Cost-Volume-Profit Analysis and Planning

Relevant Costs and Benefits for Decision Making

Product Costing: Job and Process Operations

Activity-Based Costing, Customer Profitability, and Activity-Based Management

Additional Topics in Product Costing

Pricing and Other Product Management Decisions

Operational Budgeting and Profit Planning

Standard Costs and Performance Reports

Segment Reporting, Transfer Pricing, and Balanced Scorecard

Capital Budgeting Decisions

Appendix: Managerial Analysis of Financial Statements

Filters