Question 1

Direct material costs are not always linear variable costs as a result of quantity discounts on direct material purchases.

Accepted Answer

A) True 
 B)False

Question 2

The accounting manager at the Peanut Factory reported direct manufacturing labor cost of $14 per hour.Write a linear cost function equation to represent the cost.Use y for estimated costs and X to represent the activity of the cost driver.

Accepted Answer

The answer of The accounting manager at the Peanut Factory...

Question 3

What does the managerial accountant do if inflation impacts the costs,the cost driver,or both?

Accepted Answer

The managerial accountant or analyst nee

Question 4

The regression analysis approach illustrates how to evaluate different ________.

Accepted Answer

A) cost drivers 
B) decision trees 
C) high-low methods 
D) detection systems 
E) homogeneous relationships 
A) cost drivers 
B) decision trees 
C) high-low methods 
D) detection systems 
E) homogeneous relationships

Question 5

Which of the following is not a representation of a cause-and-effect relationship?

Accepted Answer

A) A physical relationship between the level of activity and costs. 
B) Units of production are used as the activity that affects direct material costs. 
C) A contractual agreement. 
D) Knowledge of operations. 
E) A contract that fails to specify the number of parts used as the activity measure of ordering costs. 
A) A physical relationship between the level of activity and costs. 
B) Units of production are used as the activity that affects direct material costs. 
C) A contractual agreement. 
D) Knowledge of operations. 
E) A contract that fails to specify the number of parts used as the activity measure of ordering costs.

Question 6

When inflation has affected the costs or the cost driver,managers remove purely inflationary price effects by:

Accepted Answer

A) adding each cost to the price index. 
B) dividing each cost by the price index. 
C) subtracting each cost from the price index. 
D) multiplying each cost by the price index. 
E) multiplying each cost by the price index and subtract the cost. 
A) adding each cost to the price index. 
B) dividing each cost by the price index. 
C) subtracting each cost from the price index. 
D) multiplying each cost by the price index. 
E) multiplying each cost by the price index and subtract the cost.

Question 7

The cost function y = 40 + 7X has a slope coefficient of 7.

Accepted Answer

A) True 
 B)False

Question 8

Variable and fixed cost behavior patterns are not valid for linear cost functions within a given relevant range.

Accepted Answer

A) True 
 B)False

Question 9

Errors in measuring the costs and the cost drivers are never serious because managers can always fix those errors.

Accepted Answer

A) True 
 B)False

Question 10

The Hallman Organization sells units of glass to manufacturers.The manager uses prices that are set by the market.The manager expects to sell 650 units of glass each week.The managerial accountant estimated that the company needs 72 machine-hours and 21 direct manufacturing labor-hours each week to produce 650 units of glass.
Hallman Organization would predict indirect manufacturing labor costs using the machine-hour regression equation of:
y = $300.98 + ($10.31 per machine hour × 72 machine hours)= $1,043.30.
Review the regression equation if the manager used direct manufacturing labor-hours as the cost driver:
y = $744.67 + ($7.72 per labor hour × 21 labor hours)= $906.79
Required:
Discuss the impact on cost if the managerial accountant used the direct manufacturing hours as the cost driver versus the indirect labor costs.

Accepted Answer

The prediction is incorrect if the manag

Question 11

Which of the following problems arise when managers fail to keep accounting records on the accrual basis?

Accepted Answer

A) The time period for measuring the independent variable does not properly match the period for measuring the cost driver. 
B) Costs such as depreciation,insurance,or rent may be allocated to products to calculate cost per unit of output. 
C) Marketing costs may be understated because costs of sales visits to customers may be incorrectly recorded as customer-service costs. 
D) Extreme values of observations occur. 
E) A homogeneous relationship exists when each activity whose costs are included in the dependent variable. 
A) The time period for measuring the independent variable does not properly match the period for measuring the cost driver. 
B) Costs such as depreciation,insurance,or rent may be allocated to products to calculate cost per unit of output. 
C) Marketing costs may be understated because costs of sales visits to customers may be incorrectly recorded as customer-service costs. 
D) Extreme values of observations occur. 
E) A homogeneous relationship exists when each activity whose costs are included in the dependent variable.

Question 12

The manager at Mymic,LLC,a government contracting firm,uses a cost-estimation method to estimate direct manufacturing costs.The manager complained to the managerial accountant because the relationship between inputs and outputs are difficult to specify for the items related to indirect manufacturing costs and R&D costs.Which cost estimation method do they use at the company?

Accepted Answer

A) Industrial Engineering Method. 
B) Conference Method. 
C) Account Analysis Method. 
D) Quantitative Analysis Method. 
E) High-Low Method. 
A) Industrial Engineering Method. 
B) Conference Method. 
C) Account Analysis Method. 
D) Quantitative Analysis Method. 
E) High-Low Method.

Question 13

The managerial accountant at Hampson Company reported the following information:
 
Required:
Use the high-low method to compute the difference of the Cost Driver: Machine Hours,the Difference of the Indirect Manufacturing Labor,and the slope coefficient b for each machine hour.

Accepted Answer

A) 55;$855;$13.68 
B) 65;$905;$13.92 
C) 75;$910;$14.85 
D) 85;$925;$15.65 
E) 95;$950;$16.22 
A) 55;$855;$13.68 
B) 65;$905;$13.92 
C) 75;$910;$14.85 
D) 85;$925;$15.65 
E) 95;$950;$16.22

Question 14

Why are learning curves important to managers?

Accepted Answer

A manager can use a learning c

Question 15

Which of the following problems arise when costs of depreciation,insurance,or rent are allocated to products to calculate the cost of each unit of output?

Accepted Answer

A) Fixed costs are erroneously allocated as variable costs. 
B) The measured observations of cost driver are reliable. 
C) The measured observations of related costs are reliable. 
D) The estimates of the cost driver are more accurate compared to costs. 
E) The cost drivers are accurate because they are all grouped together. 
A) Fixed costs are erroneously allocated as variable costs. 
B) The measured observations of cost driver are reliable. 
C) The measured observations of related costs are reliable. 
D) The estimates of the cost driver are more accurate compared to costs. 
E) The cost drivers are accurate because they are all grouped together.

Question 16

The independent variable is the factor used to predict the dependent variable.

Accepted Answer

A) True 
 B)False

Question 17

In which step of estimating a cost function using quantitative analysis would a manager determine the dependent variable to use in a cost relationship?

Accepted Answer

A) Step 1: Choose the Dependent Variable. 
B) Step 2: Identify the Independent Variable,or Cost Driver. 
C) Step 3: Collect Data on the Dependent Variable and the Cost Driver. 
D) Step 4: Plot the Data. 
E) Step 5: Estimate the Cost Driver of the Estimated Cost Function. 
A) Step 1: Choose the Dependent Variable. 
B) Step 2: Identify the Independent Variable,or Cost Driver. 
C) Step 3: Collect Data on the Dependent Variable and the Cost Driver. 
D) Step 4: Plot the Data. 
E) Step 5: Estimate the Cost Driver of the Estimated Cost Function.

Question 18

What is the relationship of machine-hours used compared to indirect manufacturing labor costs if the vertical differences between actual costs and predicted costs are smaller for machine-hour regression than for the direct manufacturing labor-hour regression?

Accepted Answer

The number of machine hours us

Question 19

Why do managers plot data on graphs?

Accepted Answer

Managers use graphs to plot data so they

Question 20

How can managers avoid ethical or legal problems with cost estimates and obtain accurate cost data?

Accepted Answer

Managers can ensure they revie

Direct material costs are not always linear variable costs as a result of quantity discounts on direct material purchases.

The accounting manager at the Peanut Factory reported direct manufacturing labor cost of $14 per hour.Write a linear cost function equation to represent the cost.Use y for estimated costs and X to represent the activity of the cost driver.

What does the managerial accountant do if inflation impacts the costs,the cost driver,or both?

The regression analysis approach illustrates how to evaluate different ________.

Which of the following is not a representation of a cause-and-effect relationship?

When inflation has affected the costs or the cost driver,managers remove purely inflationary price effects by:

The cost function y = 40 + 7X has a slope coefficient of 7.

Variable and fixed cost behavior patterns are not valid for linear cost functions within a given relevant range.

Errors in measuring the costs and the cost drivers are never serious because managers can always fix those errors.

Which of the following problems arise when managers fail to keep accounting records on the accrual basis?

The managerial accountant at Hampson Company reported the following information: Required: Use the high-low method to compute the difference of the Cost Driver: Machine Hours,the Difference of the Indirect Manufacturing Labor,and the slope coefficient b for each machine hour.

Why are learning curves important to managers?

Which of the following problems arise when costs of depreciation,insurance,or rent are allocated to products to calculate the cost of each unit of output?

The independent variable is the factor used to predict the dependent variable.

In which step of estimating a cost function using quantitative analysis would a manager determine the dependent variable to use in a cost relationship?

What is the relationship of machine-hours used compared to indirect manufacturing labor costs if the vertical differences between actual costs and predicted costs are smaller for machine-hour regression than for the direct manufacturing labor-hour regression?

Why do managers plot data on graphs?

How can managers avoid ethical or legal problems with cost estimates and obtain accurate cost data?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Process Costing and Cost Allocation

Activity-Based Costing and Activity-Based Management

Pricing Decisions, customer Profitability, and Cost Management

Decision Making and Relevant Information

Quality, inventory Management, and Time

Capital Investments

Master Budget and Responsibility Accounting

Flexible Budgets, cost Variances, and Management Control

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Transfer Pricing

Performance Measurement and Compensation

Filters

Exam 8: Determining How Costs Behave

Direct material costs are not always linear variable costs as a result of quantity discounts on direct material purchases.

The accounting manager at the Peanut Factory reported direct manufacturing labor cost of $14 per hour.Write a linear cost function equation to represent the cost.Use y for estimated costs and X to represent the activity of the cost driver.

What does the managerial accountant do if inflation impacts the costs,the cost driver,or both?

The regression analysis approach illustrates how to evaluate different ________.

Which of the following is not a representation of a cause-and-effect relationship?

When inflation has affected the costs or the cost driver,managers remove purely inflationary price effects by:

The cost function y = 40 + 7X has a slope coefficient of 7.

Variable and fixed cost behavior patterns are not valid for linear cost functions within a given relevant range.

Errors in measuring the costs and the cost drivers are never serious because managers can always fix those errors.

Which of the following problems arise when managers fail to keep accounting records on the accrual basis?

The managerial accountant at Hampson Company reported the following information: Required: Use the high-low method to compute the difference of the Cost Driver: Machine Hours,the Difference of the Indirect Manufacturing Labor,and the slope coefficient b for each machine hour.

Why are learning curves important to managers?

Which of the following problems arise when costs of depreciation,insurance,or rent are allocated to products to calculate the cost of each unit of output?

The independent variable is the factor used to predict the dependent variable.

In which step of estimating a cost function using quantitative analysis would a manager determine the dependent variable to use in a cost relationship?

What is the relationship of machine-hours used compared to indirect manufacturing labor costs if the vertical differences between actual costs and predicted costs are smaller for machine-hour regression than for the direct manufacturing labor-hour regression?

Why do managers plot data on graphs?

How can managers avoid ethical or legal problems with cost estimates and obtain accurate cost data?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Process Costing and Cost Allocation

Activity-Based Costing and Activity-Based Management

Pricing Decisions, customer Profitability, and Cost Management

Decision Making and Relevant Information

Quality, inventory Management, and Time

Capital Investments

Master Budget and Responsibility Accounting

Flexible Budgets, cost Variances, and Management Control

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Transfer Pricing

Performance Measurement and Compensation

Filters