Question 1

Committed fixed costs can be altered by management if management decides that different levels of spending are desirable.

Accepted Answer

A) True 
 B)False

Question 2

Costs that may be essential to the long run achievement of the organization's goals, but that managers can almost reduce to zero in the short run, are called

Accepted Answer

A)  engineered costs. 
B)  mixed costs. 
C)  committed fixed costs. 
D)  discretionary fixed costs. 
A)  engineered costs. 
B)  mixed costs. 
C)  committed fixed costs. 
D)  discretionary fixed costs.

Question 3

________ selects a volume-related cost driver and classifies each account as a variable or fixed cost.

Accepted Answer

A)  Engineering analysis 
B)  Account analysis 
C)  The high-low method 
D)  The least-squares regression method 
A)  Engineering analysis 
B)  Account analysis 
C)  The high-low method 
D)  The least-squares regression method

Question 4

Account analysis is the process of selecting a volume-related cost driver and classifying each account as a variable or fixed cost.

Accepted Answer

A) True 
 B)False

Question 5

________ measures a cost function objectively (with statistics rather than human eyesight) using all the data available.

Accepted Answer

A)  Engineering analysis 
B)  Account analysis 
C)  The visual-fit method 
D)  The least-squares regression method 
A)  Engineering analysis 
B)  Account analysis 
C)  The visual-fit method 
D)  The least-squares regression method

Question 6

Presented below is the production data for the last six months of the year for the mixed costs incurred by Vignovich Company.
   Vignovich Company uses the high-low method to analyze mixed costs.
-The variable cost per unit is

Accepted Answer

A)  $3.06. 
B)  $2.80. 
C)  $0.36. 
D)  $0.33. 
A)  $3.06. 
B)  $2.80. 
C)  $0.36. 
D)  $0.33.

Question 7

The Schmidt Company used regression analysis to predict the annual cost of indirect materials. The results were as follows:  
-The variable cost per unit of product is:

Accepted Answer

A)  $1.03. 
B)  $0.92. 
C)  $2.35. 
D)  $0.44. 
A)  $1.03. 
B)  $0.92. 
C)  $2.35. 
D)  $0.44.

Question 8

Which of the following methods of measuring cost functions is the most subjective?

Accepted Answer

A)  High-low. 
B)  Visual-fit. 
C)  Least-squares regression. 
D)  Engineering. 
A)  High-low. 
B)  Visual-fit. 
C)  Least-squares regression. 
D)  Engineering.

Question 9

________ is a method in which the cost analyst draws a straight line through a plot of all the available data.

Accepted Answer

A)  Engineering analysis 
B)  Account analysis 
C)  The visual-fit method 
D)  The least-squares regression method 
A)  Engineering analysis 
B)  Account analysis 
C)  The visual-fit method 
D)  The least-squares regression method

Question 10

Presented below is the production data for the last six months of the year for the mixed costs incurred by Vignovich Company.
   Vignovich Company uses the high-low method to analyze mixed costs.
-The total fixed cost is

Accepted Answer

A)  $39,250. 
B)  $17,816. 
C)  $2,200. 
D)  $536. 
A)  $39,250. 
B)  $17,816. 
C)  $2,200. 
D)  $536.

Question 11

In the mixed-cost function, Y = F + VX, the F stands for

Accepted Answer

A)  total fixed cost. 
B)  total cost. 
C)  variable cost per unit of cost driver. 
D)  number of units of the cost driver. 
A)  total fixed cost. 
B)  total cost. 
C)  variable cost per unit of cost driver. 
D)  number of units of the cost driver.

Question 12

The Stewart Company used regression analysis to predict the annual cost of utilities. The results were as follows:  
-The coefficient of determination is

Accepted Answer

A)  0.458329. 
B)  22. 
C)  7.16. 
D)  0.9436. 
A)  0.458329. 
B)  22. 
C)  7.16. 
D)  0.9436.

Question 13

A cost function

Accepted Answer

A)  need not have a cause-and-effect relationship. 
B)  should include only personal observations of costs and activities. 
C)  does not explain past cost behaviour. 
D)  should be a reliable predictor of future costs. 
A)  need not have a cause-and-effect relationship. 
B)  should include only personal observations of costs and activities. 
C)  does not explain past cost behaviour. 
D)  should be a reliable predictor of future costs.

Question 14

Conquest Industries made the following observations of supply costs at different production volume levels:   a. Using the method of least squares, develop an estimate of total fixed costs and variable cost per unit. (Round your estimate of variable cost per unit to two decimal points.)
b. Develop a cost function to estimate supply cost at different volume levels and then estimate supply cost if production is expected to be 700 units.
c. If the coefficient of correlation was .95, what percentage of the change in supply cost could be explained by changes in production volume?

Accepted Answer

a. Method of least squares: @#IMG-DLM& The slope o

Question 15

Strategic decisions about the scale and scope of an organization's activities generally result in fixed levels of

Accepted Answer

A)  capacity costs. 
B)  discretionary costs. 
C)  mixed costs. 
D)  engineered costs. 
A)  capacity costs. 
B)  discretionary costs. 
C)  mixed costs. 
D)  engineered costs.

Question 16

An algebraic equation used by managers to describe the relationship between a cost and its cost driver(s) is called a

Accepted Answer

A)  cost behaviour. 
B)  cost function. 
C)  budget. 
D)  cost analysis. 
A)  cost behaviour. 
B)  cost function. 
C)  budget. 
D)  cost analysis.

Question 17

In order to better predict setup costs, the plant manager has asked the computer centre to use the least squares method to generate a printout for use in estimating setup costs.
The following computer printout was generated and given to the plant manager.   The plant manager brought the printout to you and said, "How am I supposed to use this to estimate setup costs? This printout is worthless!"
a. Explain how the printout information can be used to estimate setup costs.
b. Estimate setup costs if 30 setups are expected next month.
c. What percentage change in setup costs can be explained by changes in the number of setups?

Accepted Answer

a. If the intercept is within the releva

Question 18

The Schmidt Company used regression analysis to predict the annual cost of indirect materials. The results were as follows:  
-The linear cost function is

Accepted Answer

A)  Y = $4,378 + $2.35X. 
B)  Y = $ 912 + $1.03X. 
C)  Y = $4,020 + $0.92X. 
D)  Y = $ 918 + $0.44X. 
A)  Y = $4,378 + $2.35X. 
B)  Y = $ 912 + $1.03X. 
C)  Y = $4,020 + $0.92X. 
D)  Y = $ 918 + $0.44X.

Question 19

The Stewart Company used regression analysis to predict the annual cost of utilities. The results were as follows:  
-The linear cost function is

Accepted Answer

A)  Y = $16,650 + $7.16X. 
B)  Y = $15,711 + $1.86X. 
C)  Y = $ 3,726 + $0.96X. 
D)  Y = $ 6,562 + $0.46X. 
A)  Y = $16,650 + $7.16X. 
B)  Y = $15,711 + $1.86X. 
C)  Y = $ 3,726 + $0.96X. 
D)  Y = $ 6,562 + $0.46X.

Question 20

One of the simplest methods to measure a linear cost function from past data is the

Accepted Answer

A)  account method. 
B)  high-low method. 
C)  least-squares regression method. 
D)  mixed cost method. 
A)  account method. 
B)  high-low method. 
C)  least-squares regression method. 
D)  mixed cost method.

Committed fixed costs can be altered by management if management decides that different levels of spending are desirable.

Costs that may be essential to the long run achievement of the organization's goals, but that managers can almost reduce to zero in the short run, are called

________ selects a volume-related cost driver and classifies each account as a variable or fixed cost.

Account analysis is the process of selecting a volume-related cost driver and classifying each account as a variable or fixed cost.

________ measures a cost function objectively (with statistics rather than human eyesight) using all the data available.

Presented below is the production data for the last six months of the year for the mixed costs incurred by Vignovich Company. Vignovich Company uses the high-low method to analyze mixed costs. -The variable cost per unit is

The Schmidt Company used regression analysis to predict the annual cost of indirect materials. The results were as follows: -The variable cost per unit of product is:

Which of the following methods of measuring cost functions is the most subjective?

________ is a method in which the cost analyst draws a straight line through a plot of all the available data.

Presented below is the production data for the last six months of the year for the mixed costs incurred by Vignovich Company. Vignovich Company uses the high-low method to analyze mixed costs. -The total fixed cost is

In the mixed-cost function, Y = F + VX, the F stands for

The Stewart Company used regression analysis to predict the annual cost of utilities. The results were as follows: -The coefficient of determination is

A cost function

Strategic decisions about the scale and scope of an organization's activities generally result in fixed levels of

An algebraic equation used by managers to describe the relationship between a cost and its cost driver(s) is called a

The Schmidt Company used regression analysis to predict the annual cost of indirect materials. The results were as follows: -The linear cost function is

The Stewart Company used regression analysis to predict the annual cost of utilities. The results were as follows: -The linear cost function is

One of the simplest methods to measure a linear cost function from past data is the

Management Accounting and Management Decisions

Cost Behaviour and Cost-Volume Relationships

Cost Management Systems

Cost Allocation and Activity-Based Costing Systems

Job-Costing Systems

Process-Costing Systems

Relevant Information and Decision Making: Marketing Decisions

Relevant Information and Decision Making: Production Decisions

Capital Budgeting Decisions

The Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems, the Balanced Scorecard, and Responsibility Accounting

Management Control in Decentralized Organizations

Filters

Exam 3: Measurement of Cost Behaviour

Committed fixed costs can be altered by management if management decides that different levels of spending are desirable.

Costs that may be essential to the long run achievement of the organization's goals, but that managers can almost reduce to zero in the short run, are called

________ selects a volume-related cost driver and classifies each account as a variable or fixed cost.

Account analysis is the process of selecting a volume-related cost driver and classifying each account as a variable or fixed cost.

________ measures a cost function objectively (with statistics rather than human eyesight) using all the data available.

Presented below is the production data for the last six months of the year for the mixed costs incurred by Vignovich Company. Vignovich Company uses the high-low method to analyze mixed costs. -The variable cost per unit is

The Schmidt Company used regression analysis to predict the annual cost of indirect materials. The results were as follows: -The variable cost per unit of product is:

Which of the following methods of measuring cost functions is the most subjective?

________ is a method in which the cost analyst draws a straight line through a plot of all the available data.

Presented below is the production data for the last six months of the year for the mixed costs incurred by Vignovich Company. Vignovich Company uses the high-low method to analyze mixed costs. -The total fixed cost is

In the mixed-cost function, Y = F + VX, the F stands for

The Stewart Company used regression analysis to predict the annual cost of utilities. The results were as follows: -The coefficient of determination is

A cost function

Strategic decisions about the scale and scope of an organization's activities generally result in fixed levels of

An algebraic equation used by managers to describe the relationship between a cost and its cost driver(s) is called a

The Schmidt Company used regression analysis to predict the annual cost of indirect materials. The results were as follows: -The linear cost function is

The Stewart Company used regression analysis to predict the annual cost of utilities. The results were as follows: -The linear cost function is

One of the simplest methods to measure a linear cost function from past data is the

Management Accounting and Management Decisions

Cost Behaviour and Cost-Volume Relationships

Cost Management Systems

Cost Allocation and Activity-Based Costing Systems

Job-Costing Systems

Process-Costing Systems

Relevant Information and Decision Making: Marketing Decisions

Relevant Information and Decision Making: Production Decisions

Capital Budgeting Decisions

The Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems, the Balanced Scorecard, and Responsibility Accounting

Management Control in Decentralized Organizations

Filters