Question 1

If cost accountants decide to use production of prior periods as a cost driver for repair cost of the current period they understand that

Accepted Answer

A)  there is no correlation between repair costs and levels of production 
B)  repair costs tend to lag periods of high production 
C)  cost accountants do not need to understand operations 
D)  there is no cause-and-effect between production and repair costs 
A)  there is no correlation between repair costs and levels of production 
B)  repair costs tend to lag periods of high production 
C)  cost accountants do not need to understand operations 
D)  there is no cause-and-effect between production and repair costs

Question 2

The Michigan Manufacturing Company has provided the following information:
   
Using the high-low method and the information provided above,
a.identify the linear cost function equation and
b.estimate the total cost at 38,000 units of output.

Accepted Answer

a.Variable cost = ($3,261,840 - $2,528,7

Question 3

Multiple regression analysis uses only independent variables and not dependent variables.

Accepted Answer

A) True 
 B)False

Question 4

Ben and Mildred's Stables used two different independent variables (trainer hours and number of horses) in two different equations to evaluate the cost of training horses. The most recent results of the two regressions are as follows:
 
What is the estimated total cost for the coming year if 14,700 trainer hours are incurred and the stable has 310 horses to be trained, based upon the best cost driver?

Accepted Answer

A)  $7,992.85 
B)  $300,276.50 
C)  $332,343.45 
D)  $13,995,671.20 
A)  $7,992.85 
B)  $300,276.50 
C)  $332,343.45 
D)  $13,995,671.20

Question 5

Simple regression analysis estimates the relationship between the dependent variable
and one independent variable.

Accepted Answer

A) True 
 B)False

Question 6

The first step in estimating a cost function using quantitative analysis is to plot the data.

Accepted Answer

A) True 
 B)False

Question 7

A cost function is a ________.

Accepted Answer

A)  process of calculating present value of projected cash flows 
B)  process of allocating costs to cost centers or cost objects 
C)  mathematical description of how a cost changes with changes in the level of an activity relating to that cost 
D)  is a very thorough and detailed way to identifying a cost object when there is a physical relationship between inputs and outputs 
A)  process of calculating present value of projected cash flows 
B)  process of allocating costs to cost centers or cost objects 
C)  mathematical description of how a cost changes with changes in the level of an activity relating to that cost 
D)  is a very thorough and detailed way to identifying a cost object when there is a physical relationship between inputs and outputs

Question 8

The cost of the personnel department at the Speedy Process Company has always been charged to the production departments based upon number of employees. Recently, opinions gathered from the department managers indicated that the number of new hires might also be a predictor of personnel costs to be assigned. Total personnel department costs are $200.000.
   
Required:
Using the above data, prepare a report that contrasts the different amounts of personnel department cost that would be allocated to each of the production departments if the cost driver used is:
a.number of employees.
b.the number of new hires.
c.Which cost estimation method is being used by Speedy Company?

Accepted Answer

The answer of The cost of the personnel department at...

Question 9

For February, the cost components of a picture frame include $0.40 for the glass, $0.67 for the wooden frame, and $0.83 for assembly. The assembly desk and tools cost $570. Two hundred fifty frames are expected to be produced in the coming year. What cost function best represents these costs?

Accepted Answer

A)  y = 1.90 + 570X 
B)  y = 570 + 1.90X 
C)  y = 570 + 1.07X 
D)  y = 1.07 + 570X 
A)  y = 1.90 + 570X 
B)  y = 570 + 1.90X 
C)  y = 570 + 1.07X 
D)  y = 1.07 + 570X

Question 10

Patrick Ross, the president of M & M Materials Company, has asked for information about the cost behavior of manufacturing overhead costs. Specifically, he wants to know how much overhead cost is fixed and how much is variable. The following data are the only records available:
   
Required:
Using the high-low method, determine the overhead cost equation. Use machine-hours as your cost driver.

Accepted Answer

The answer of Patrick Ross, the president of M &...

Question 11

Activity-based costing systems use the quantitative analysis method exclusively for cost estimation because of its accuracy.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is true of activity-based costing?

Accepted Answer

A)  There is a clear cause-and-effect relationship between costs and the cost driver in the long run. 
B)  There is no variety of cost drivers and cost pools. 
C)  The system focuses on activities in together and not on individual activities. 
D)  A single cost driver should be identified for all the activities. 
A)  There is a clear cause-and-effect relationship between costs and the cost driver in the long run. 
B)  There is no variety of cost drivers and cost pools. 
C)  The system focuses on activities in together and not on individual activities. 
D)  A single cost driver should be identified for all the activities.

Question 13

If a cost item is fixed for one cost object, it will be fixed for all cost objects for which it is associated.

Accepted Answer

A) True 
 B)False

Question 14

Misinterpretation of data can arise when fixed costs are reported on a per unit basis.

Accepted Answer

A) True 
 B)False

Question 15

All cost functions are linear.

Accepted Answer

A) True 
 B)False

Question 16

South Coast Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2017 operations.
 
What are the estimated total costs if South Coast's store expects to sell 8,900 units next year?

Accepted Answer

A)  $3,567,950 
B)  $2,192,400 
C)  $4,104,950 
D)  $901,900 
A)  $3,567,950 
B)  $2,192,400 
C)  $4,104,950 
D)  $901,900

Question 17

M & G TV and Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2017 operations.
 
What are the estimated total costs if the company expects to sell 3,300 units next year?

Accepted Answer

A)  $1,458,400 
B)  $2,803,700 
C)  $2,361,700 
D)  $517,900 
A)  $1,458,400 
B)  $2,803,700 
C)  $2,361,700 
D)  $517,900

Question 18

When using the high-low method, the two observations used are the high and low observations of the ________.

Accepted Answer

A)  cost driver 
B)  fixed cost component 
C)  slope coefficient 
D)  direct cost 
A)  cost driver 
B)  fixed cost component 
C)  slope coefficient 
D)  direct cost

Question 19

The White Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. White Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation.
 
How is the cost function stated?

Accepted Answer

A)  y = $34,500 + $9.90X 
B)  y = $69,300 + $8.70X 
C)  y = $34,800 + $11.50X 
D)  y = $8,400 + $8.70X 
A)  y = $34,500 + $9.90X 
B)  y = $69,300 + $8.70X 
C)  y = $34,800 + $11.50X 
D)  y = $8,400 + $8.70X

Question 20

Data collection problems arise when ________.

Accepted Answer

A)  data are recorded electronically rather than manually 
B)  accrual-basis costs are used rather than cash-basis costs 
C)  fixed and variable costs are not separately identified and both are allocated to products on a per unit basis 
D)  purely inflationary price effects are removed 
A)  data are recorded electronically rather than manually 
B)  accrual-basis costs are used rather than cash-basis costs 
C)  fixed and variable costs are not separately identified and both are allocated to products on a per unit basis 
D)  purely inflationary price effects are removed

If cost accountants decide to use production of prior periods as a cost driver for repair cost of the current period they understand that

The Michigan Manufacturing Company has provided the following information: Using the high-low method and the information provided above, a.identify the linear cost function equation and b.estimate the total cost at 38,000 units of output.

Multiple regression analysis uses only independent variables and not dependent variables.

Simple regression analysis estimates the relationship between the dependent variable and one independent variable.

The first step in estimating a cost function using quantitative analysis is to plot the data.

A cost function is a ________.

For February, the cost components of a picture frame include $0.40 for the glass, $0.67 for the wooden frame, and $0.83 for assembly. The assembly desk and tools cost $570. Two hundred fifty frames are expected to be produced in the coming year. What cost function best represents these costs?

Activity-based costing systems use the quantitative analysis method exclusively for cost estimation because of its accuracy.

Which of the following statements is true of activity-based costing?

If a cost item is fixed for one cost object, it will be fixed for all cost objects for which it is associated.

Misinterpretation of data can arise when fixed costs are reported on a per unit basis.

All cost functions are linear.

South Coast Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2017 operations. What are the estimated total costs if South Coast's store expects to sell 8,900 units next year?

M & G TV and Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2017 operations. What are the estimated total costs if the company expects to sell 3,300 units next year?

When using the high-low method, the two observations used are the high and low observations of the ________.

Data collection problems arise when ________.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, Just-in-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters

Exam 10: Determining How Costs Behave

If cost accountants decide to use production of prior periods as a cost driver for repair cost of the current period they understand that

The Michigan Manufacturing Company has provided the following information: Using the high-low method and the information provided above, a.identify the linear cost function equation and b.estimate the total cost at 38,000 units of output.

Multiple regression analysis uses only independent variables and not dependent variables.

Simple regression analysis estimates the relationship between the dependent variable and one independent variable.

The first step in estimating a cost function using quantitative analysis is to plot the data.

A cost function is a ________.

For February, the cost components of a picture frame include $0.40 for the glass, $0.67 for the wooden frame, and $0.83 for assembly. The assembly desk and tools cost $570. Two hundred fifty frames are expected to be produced in the coming year. What cost function best represents these costs?

Activity-based costing systems use the quantitative analysis method exclusively for cost estimation because of its accuracy.

Which of the following statements is true of activity-based costing?

If a cost item is fixed for one cost object, it will be fixed for all cost objects for which it is associated.

Misinterpretation of data can arise when fixed costs are reported on a per unit basis.

All cost functions are linear.

South Coast Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2017 operations. What are the estimated total costs if South Coast's store expects to sell 8,900 units next year?

M & G TV and Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2017 operations. What are the estimated total costs if the company expects to sell 3,300 units next year?

When using the high-low method, the two observations used are the high and low observations of the ________.

Data collection problems arise when ________.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, Just-in-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters