Question 1

The least-squares regression method can be used to approximate a cost function.A disadvantage of this method is ________.

Accepted Answer

A) it does not use all the available data points 
B) it requires a lot of prior cost data 
C) it requires subjective placement of the line 
D) it is more subjective than engineering analysis 
A) it does not use all the available data points 
B) it requires a lot of prior cost data 
C) it requires subjective placement of the line 
D) it is more subjective than engineering analysis

Question 2

In a linear mixed cost function,the slope of the function is the fixed cost per unit of the cost driver.

Accepted Answer

A) True 
 B)False

Question 3

Volume-driven costs can be easily traced to products or services.

Accepted Answer

A) True 
 B)False

Question 4

Snead currently produces 120,000 units at a cost of $400,000.Of the $400,000 cost,$200,000 is a fixed cost.Next year Snead expects to produce 145,000 units.Snead's relevant range for production activities is 100,000 to 150,000 units.If 145,000 units are produced next year,what is the expected fixed cost for next year?

Accepted Answer

A) $200,000 
B) $241,667 
C) $265,833 
D) $483,333 
A) $200,000 
B) $241,667 
C) $265,833 
D) $483,333

Question 5

Due to the economic downturn,a company has reduced charitable donations to community groups.This is an example of a ________.

Accepted Answer

A) variable cost 
B) committed fixed cost 
C) capacity cost 
D) discretionary fixed cost 
A) variable cost 
B) committed fixed cost 
C) capacity cost 
D) discretionary fixed cost

Question 6

To estimate or approximate cost functions,managers have a broad selection of methods that do NOT include ________.

Accepted Answer

A) engineering analysis 
B) account analysis 
C) sales mix analysis 
D) visual fit method 
A) engineering analysis 
B) account analysis 
C) sales mix analysis 
D) visual fit method

Question 7

The following data has been assembled for Tire Company.Use the high-low method.   The total fixed cost is ________.

Accepted Answer

A) $3,600 
B) $10,112 
C) $21,360 
D) $26,672 
A) $3,600 
B) $10,112 
C) $21,360 
D) $26,672

Question 8

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

Accepted Answer

A) $0.75 
B) $1.25 
C) $1.31 
D) $1.35 
A) $0.75 
B) $1.25 
C) $1.31 
D) $1.35

Question 9

________ is a method of approximating cost functions.

Accepted Answer

A) Cost driver analysis 
B) Activity analysis 
C) Account analysis 
D) Cost volume profit analysis 
A) Cost driver analysis 
B) Activity analysis 
C) Account analysis 
D) Cost volume profit analysis

Question 10

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) capacity costs 
B) committed fixed costs 
C) discretionary fixed costs 
D) mixed costs 
A) capacity costs 
B) committed fixed costs 
C) discretionary fixed costs 
D) mixed costs

Question 11

The Rockford Company used regression analysis to predict the annual cost of utilities.The results were as follows:   The total fixed cost is ________.

Accepted Answer

A) $2.037 
B) $595 
C) $2,500 
D) none of the above 
A) $2.037 
B) $595 
C) $2,500 
D) none of the above

Question 12

Only major changes in the scale or scope of operations can change ________ in future periods.Managers can very spending levels for ________ in the short run.

Accepted Answer

A) committed fixed costs; capacity costs 
B) committed fixed costs; discretionary fixed costs 
C) discretionary fixed costs; capacity costs 
D) capacity costs; committed fixed costs 
A) committed fixed costs; capacity costs 
B) committed fixed costs; discretionary fixed costs 
C) discretionary fixed costs; capacity costs 
D) capacity costs; committed fixed costs

Question 13

In an economic downturn,a company could temporarily reduce or eliminate a(n)________.

Accepted Answer

A) lease payment 
B) salaries of key personnel 
C) employee training program 
D) insurance on corporate offices 
A) lease payment 
B) salaries of key personnel 
C) employee training program 
D) insurance on corporate offices

Question 14

A telephone bill,which includes a monthly base rate plus an extra fee for each local and long-distance call is an example of a variable cost.

Accepted Answer

A) True 
 B)False

Question 15

Wacky Bird Company,a producer of fine quality clocks,produced 5,000 clocks at a cost of $1,150,000 in July.In August,the company produced 3,000 clocks at a cost of $900,000.
Required:
A)Using the two data points,determine a cost function for Wacky Bird Company.
B)Determine the expected total cost if Wacky Bird Company produces 4,000 clocks.

Accepted Answer

A)Variable cost per clock: ($1,150,000 -

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 behavior 
B) cost function 
C) cost system 
D) cost analysis 
A) cost behavior 
B) cost function 
C) cost system 
D) cost analysis

Question 17

Least-squares regression provides statistical information about the reliability of its cost estimates.

Accepted Answer

A) True 
 B)False

Question 18

In an economic downturn,a company could temporarily reduce or eliminate a(n)________.

Accepted Answer

A) property taxes on factory building 
B) insurance on factory building 
C) lease payments on computers in corporate headquarters 
D) public relations department 
A) property taxes on factory building 
B) insurance on factory building 
C) lease payments on computers in corporate headquarters 
D) public relations department

Question 19

In engineering analysis,cost analysts estimate cost functions using ________.

Accepted Answer

A) past experience and experiments with prototypes 
B) accounting and industrial engineering literature 
C) experience from competitors 
D) all of the above 
A) past experience and experiments with prototypes 
B) accounting and industrial engineering literature 
C) experience from competitors 
D) all of the above

Question 20

When evaluating a cost function and its estimates,it is important to see if the estimated cost function makes economic sense.This is assessed by ________.

Accepted Answer

A) examining the sign of the coefficient of determination 
B) examining the sign of the fixed cost estimate 
C) examining the sign of the variable cost estimate 
D) examining the standard deviation of the cost driver 
A) examining the sign of the coefficient of determination 
B) examining the sign of the fixed cost estimate 
C) examining the sign of the variable cost estimate 
D) examining the standard deviation of the cost driver

The least-squares regression method can be used to approximate a cost function.A disadvantage of this method is ________.

In a linear mixed cost function,the slope of the function is the fixed cost per unit of the cost driver.

Volume-driven costs can be easily traced to products or services.

Due to the economic downturn,a company has reduced charitable donations to community groups.This is an example of a ________.

To estimate or approximate cost functions,managers have a broad selection of methods that do NOT include ________.

The following data has been assembled for Tire Company.Use the high-low method. The total fixed cost is ________.

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

________ is a method of approximating cost functions.

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 ________.

The Rockford Company used regression analysis to predict the annual cost of utilities.The results were as follows: The total fixed cost is ________.

Only major changes in the scale or scope of operations can change in future periods.Managers can very spending levels for in the short run.

In an economic downturn,a company could temporarily reduce or eliminate a(n)________.

A telephone bill,which includes a monthly base rate plus an extra fee for each local and long-distance call is an example of a variable cost.

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

Least-squares regression provides statistical information about the reliability of its cost estimates.

In an economic downturn,a company could temporarily reduce or eliminate a(n)________.

In engineering analysis,cost analysts estimate cost functions using ________.

When evaluating a cost function and its estimates,it is important to see if the estimated cost function makes economic sense.This is assessed by ________.

Managerial Accounting, the Business Organization

Introduction to Cost Behavior and Cost-Volume Relationships

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus

Relevant Information for Decision Making With a Focus

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Exam 3: Measurement of Cost Behavior

The least-squares regression method can be used to approximate a cost function.A disadvantage of this method is ________.

In a linear mixed cost function,the slope of the function is the fixed cost per unit of the cost driver.

Volume-driven costs can be easily traced to products or services.

Due to the economic downturn,a company has reduced charitable donations to community groups.This is an example of a ________.

To estimate or approximate cost functions,managers have a broad selection of methods that do NOT include ________.

The following data has been assembled for Tire Company.Use the high-low method. The total fixed cost is ________.

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

________ is a method of approximating cost functions.

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 ________.

The Rockford Company used regression analysis to predict the annual cost of utilities.The results were as follows: The total fixed cost is ________.

Only major changes in the scale or scope of operations can change ________ in future periods.Managers can very spending levels for ________ in the short run.

In an economic downturn,a company could temporarily reduce or eliminate a(n)________.

A telephone bill,which includes a monthly base rate plus an extra fee for each local and long-distance call is an example of a variable cost.

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

Least-squares regression provides statistical information about the reliability of its cost estimates.

In an economic downturn,a company could temporarily reduce or eliminate a(n)________.

In engineering analysis,cost analysts estimate cost functions using ________.

When evaluating a cost function and its estimates,it is important to see if the estimated cost function makes economic sense.This is assessed by ________.

Managerial Accounting, the Business Organization

Introduction to Cost Behavior and Cost-Volume Relationships

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus

Relevant Information for Decision Making With a Focus

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Only major changes in the scale or scope of operations can change in future periods.Managers can very spending levels for in the short run.