Question 1

When referring to a cost function,plausibility refers to whether you can rely upon the cost function for predicting the future.

Accepted Answer

A) True 
 B)False

Question 2

Engineering analysis and account analysis are similar because ________.

Accepted Answer

A) both provide timely results 
B) both do not develop a cost function 
C) both provide more objective results than the high-low method 
D) both require the subjective judgment of the analyst 
A) both provide timely results 
B) both do not develop a cost function 
C) both provide more objective results than the high-low method 
D) both require the subjective judgment of the analyst

Question 3

The use of high-technology methods rather than labor in manufacturing products usually creates less risk for companies with wide variations in demand.

Accepted Answer

A) True 
 B)False

Question 4

Mixed costs are composed of only fixed costs.

Accepted Answer

A) True 
 B)False

Question 5

The first step in regression analysis is to plot the cost data against each potential cost driver because the plots may show ________.

Accepted Answer

A) nonlinear trends in the data 
B) outliers 
C) nonlinear trends in the data and outliers 
D) missing cost data 
A) nonlinear trends in the data 
B) outliers 
C) nonlinear trends in the data and outliers 
D) missing cost data

Question 6

A car lease payment is computed based solely on the number of miles driven.This is an example of a ________.

Accepted Answer

A) purely variable cost 
B) mixed cost 
C) step cost 
D) stair cost 
A) purely variable cost 
B) mixed cost 
C) step cost 
D) stair cost

Question 7

Most companies make capacity decisions frequently.

Accepted Answer

A) True 
 B)False

Question 8

Capacity costs are mixed costs related to a desired level of production or service.

Accepted Answer

A) True 
 B)False

Question 9

It may be difficult to trace costs to products or services if the costs are ________.

Accepted Answer

A) volume-driven 
B) affected by activities directly related to volume 
C) affected by multiple cost drivers 
D) none of the above 
A) volume-driven 
B) affected by activities directly related to volume 
C) affected by multiple cost drivers 
D) none of the above

Question 10

Cleveland Recreation Center is planning its annual fundraiser.The event committee has developed the following budget for the event.
   The committee expects 3,000 people will attend the event.
Required: 
A)Compute the fixed and variable costs of the event.
B)Prepare the cost function.
C)If Cleveland Recreation charges $100 per person,how much money will be raised by this event?

Accepted Answer

A)Fixed Cost: $2,900 + $4,500

Question 11

An engineering cost analysis is often not timely in measuring the cost function.

Accepted Answer

A) True 
 B)False

Question 12

________ have no obvious relationship to levels of output activity,but are determined as part of the periodic planning process.

Accepted Answer

A) Discretionary fixed costs 
B) Committed fixed costs 
C) Capacity costs 
D) Engineered costs 
A) Discretionary fixed costs 
B) Committed fixed costs 
C) Capacity costs 
D) Engineered costs

Question 13

Consider the following linear mixed-cost function: Y = $72,000 + $7.70X
Where: Y = total annual custodial cost
  What does the $7.70 represent?

Accepted Answer

A) variable cost per patient-day 
B) total variable cost 
C) fixed cost per patient-day 
D) total fixed cost 
A) variable cost per patient-day 
B) total variable cost 
C) fixed cost per patient-day 
D) total fixed cost

Question 14

Goodness of fit pertains to how well a cost function predicts cost behavior.

Accepted Answer

A) True 
 B)False

Question 15

In a small construction firm,a crew supervisor is added for every ten workers employed.The salaries of the crew supervisors are a ________.

Accepted Answer

A) variable cost 
B) mixed cost 
C) step cost 
D) fixed cost 
A) variable cost 
B) mixed cost 
C) step cost 
D) fixed cost

Question 16

Dog Company makes metal signs for businesses and residences.These signs are made of sheet metal,which the owner paints by hand.The owner is concerned that he does not have a good measure of support costs for the signs.Currently,he predicts support costs to be 30 percent of the cost of materials.Close investigation of the business reveals that $10 per direct labor hour is a more plausible and reliable support cost measure.Dog Company has the following information available:   Using direct labor hours as the cost driver,what amount of support costs is assigned to the large sign?

Accepted Answer

A) $33 
B) $60 
C) $110 
D) $160 
A) $33 
B) $60 
C) $110 
D) $160

Question 17

Account analysis and engineering analysis will remain the ________ methods of measuring cost behavior because the other methods ________.

Accepted Answer

A) secondary; are more objective 
B) secondary; are more accurate 
C) primary; require more past cost data 
D) primary; are too difficult to work with 
A) secondary; are more objective 
B) secondary; are more accurate 
C) primary; require more past cost data 
D) primary; are too difficult to work with

Question 18

When developing cost functions,which of the following statement is FALSE?

Accepted Answer

A) The cost function must be believable. 
B) The cost function should explain past cost behavior. 
C) Personal observations of costs and activities provide the best evidence of a plausible relationship between a cost and its cost driver. 
D) The cost function does not have to be reliable. 
A) The cost function must be believable. 
B) The cost function should explain past cost behavior. 
C) Personal observations of costs and activities provide the best evidence of a plausible relationship between a cost and its cost driver. 
D) The cost function does not have to be reliable.

Question 19

When examining the output from regression analysis,the cost driver is the ________ variable in the cost function.

Accepted Answer

A) dependent 
B) independent 
C) constant 
D) slope 
A) dependent 
B) independent 
C) constant 
D) slope

Question 20

A lump sum amount of money set aside for research and development would be called a ________.

Accepted Answer

A) purely variable cost 
B) discretionary fixed cost 
C) committed fixed cost 
D) mixed cost 
A) purely variable cost 
B) discretionary fixed cost 
C) committed fixed cost 
D) mixed cost

When referring to a cost function,plausibility refers to whether you can rely upon the cost function for predicting the future.

Engineering analysis and account analysis are similar because ________.

The use of high-technology methods rather than labor in manufacturing products usually creates less risk for companies with wide variations in demand.

Mixed costs are composed of only fixed costs.

The first step in regression analysis is to plot the cost data against each potential cost driver because the plots may show ________.

A car lease payment is computed based solely on the number of miles driven.This is an example of a ________.

Most companies make capacity decisions frequently.

Capacity costs are mixed costs related to a desired level of production or service.

It may be difficult to trace costs to products or services if the costs are ________.

An engineering cost analysis is often not timely in measuring the cost function.

________ have no obvious relationship to levels of output activity,but are determined as part of the periodic planning process.

Consider the following linear mixed-cost function: Y = $72,000 + $7.70X Where: Y = total annual custodial cost What does the $7.70 represent?

Goodness of fit pertains to how well a cost function predicts cost behavior.

In a small construction firm,a crew supervisor is added for every ten workers employed.The salaries of the crew supervisors are a ________.

Account analysis and engineering analysis will remain the methods of measuring cost behavior because the other methods .

When developing cost functions,which of the following statement is FALSE?

When examining the output from regression analysis,the cost driver is the ________ variable in the cost function.

A lump sum amount of money set aside for research and development would be called a ________.

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

When referring to a cost function,plausibility refers to whether you can rely upon the cost function for predicting the future.

Engineering analysis and account analysis are similar because ________.

The use of high-technology methods rather than labor in manufacturing products usually creates less risk for companies with wide variations in demand.

Mixed costs are composed of only fixed costs.

The first step in regression analysis is to plot the cost data against each potential cost driver because the plots may show ________.

A car lease payment is computed based solely on the number of miles driven.This is an example of a ________.

Most companies make capacity decisions frequently.

Capacity costs are mixed costs related to a desired level of production or service.

It may be difficult to trace costs to products or services if the costs are ________.

An engineering cost analysis is often not timely in measuring the cost function.

________ have no obvious relationship to levels of output activity,but are determined as part of the periodic planning process.

Consider the following linear mixed-cost function: Y = $72,000 + $7.70X Where: Y = total annual custodial cost What does the $7.70 represent?

Goodness of fit pertains to how well a cost function predicts cost behavior.

In a small construction firm,a crew supervisor is added for every ten workers employed.The salaries of the crew supervisors are a ________.

Account analysis and engineering analysis will remain the ________ methods of measuring cost behavior because the other methods ________.

When developing cost functions,which of the following statement is FALSE?

When examining the output from regression analysis,the cost driver is the ________ variable in the cost function.

A lump sum amount of money set aside for research and development would be called a ________.

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

Account analysis and engineering analysis will remain the methods of measuring cost behavior because the other methods .