Question 1

A cost function with a lower slope coefficient than a year ago could indicate that:

Accepted Answer

A) total variable costs have decreased 
B) new cost-cutting initiatives are beneficial 
C) production has decreased 
D) rental costs have decreased 
A) total variable costs have decreased 
B) new cost-cutting initiatives are beneficial 
C) production has decreased 
D) rental costs have decreased B

Question 2

Any linear cost function can be graphed by knowing only the slope coefficient.

Accepted Answer

A) True 
 B)False  False

Question 3

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 C

Question 4

The cost function y = 90 + 8X:

Accepted Answer

A) has a slope coefficient of -8 
B) will intersect the y-axis at 8 
C) has a slope coefficient of 8 
D) is a curved line 
A) has a slope coefficient of -8 
B) will intersect the y-axis at 8 
C) has a slope coefficient of 8 
D) is a curved line

Question 5

Which of the following statements related to assumptions about estimating linear cost functions is FALSE?

Accepted Answer

A) Variations in a single cost driver explain variations in total costs. 
B) A cost object is anything for which a separate measurement of costs is desired. 
C) A linear function approximates cost behavior within the relevant range of the cost driver. 
D) A high correlation between two variables ensures that a cause-and-effect relationship exists. 
A) Variations in a single cost driver explain variations in total costs. 
B) A cost object is anything for which a separate measurement of costs is desired. 
C) A linear function approximates cost behavior within the relevant range of the cost driver. 
D) A high correlation between two variables ensures that a cause-and-effect relationship exists.

Question 6

A learning curve measures the effect of learning on efficiency.

Accepted Answer

A) True 
 B)False

Question 7

For February, the cost components of a picture frame include $0.25 for the glass, $.65 for the wooden frame, and $0.80 for assembly. The assembly desk and tools cost $400. 1,000 frames are expected to be produced in the coming year. What cost function best represents these costs?

Accepted Answer

A) y = 1.70 + 400X 
B) y = 400 +1.70X 
C) y = 2.10 + 1,000X 
D) y = .90 + 400X 
A) y = 1.70 + 400X 
B) y = 400 +1.70X 
C) y = 2.10 + 1,000X 
D) y = .90 + 400X

Question 8

In regression analysis, the term "goodness of fit" indicates the strength of the relationship between the cost driver and the costs.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) cost driver 
B) dependent variables 
C) slope coefficient 
D) residual term 
A) cost driver 
B) dependent variables 
C) slope coefficient 
D) residual term

Question 10

A cost function with a lower constant than a year ago could indicate all of the following EXCEPT:

Accepted Answer

A) last year's cost function was inaccurate 
B) a new operations manager is being effective 
C) the sales commission percentage has decreased 
D) insurance premiums have decreased 
A) last year's cost function was inaccurate 
B) a new operations manager is being effective 
C) the sales commission percentage has decreased 
D) insurance premiums have decreased

Question 11

The longer the time horizon, the more likely a cost will be variable.

Accepted Answer

A) True 
 B)False

Question 12

The slope of the line of regression is the:

Accepted Answer

A) rate at which the dependent variable varies 
B) rate at which the independent variable varies 
C) level of total fixed costs 
D) level of total variable costs 
A) rate at which the dependent variable varies 
B) rate at which the independent variable varies 
C) level of total fixed costs 
D) level of total variable costs

Question 13

A cost function is a mathematical description of how a cost changes with changes in the level of an activity relating to that cost.

Accepted Answer

A) True 
 B)False

Question 14

What are the two assumptions behind a simple linear cost function? Briefly explain the three ways that a linear cost function may behave?
1)Variations in the level of a single activity (the cost driver)explain the variations in the related total costs; and
"2)Cost behavior is approximated by a linear cost function within the relevant range. This means that total cost versus the level of a single activity that is related to that cost is a straight line within the relevant range.
Once linearity is established, there are three possible types of linearity:"

Accepted Answer

The two usual assumptions behind a simpl

Question 15

The conference method estimates cost functions:

Accepted Answer

A) using quantitative methods that can be very time consuming and costly 
B) based on analysis and opinions gathered from various departments 
C) using time-and-motion studies 
D) by mathematically analyzing the relationship between inputs and outputs in physical terms 
A) using quantitative methods that can be very time consuming and costly 
B) based on analysis and opinions gathered from various departments 
C) using time-and-motion studies 
D) by mathematically analyzing the relationship between inputs and outputs in physical terms

Question 16

Patrick Ross, the president of Ross's Wild Game 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

@#IMG-DLM& Variable cost per M

Question 17

Answer the following questions using the information below:
Miller's Good Value Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2011 operations.
  
-Which cost estimation method is being used by Miller's Good Value Appliance Store?

Accepted Answer

A) the account analysis method 
B) the conference method 
C) the quantitative analysis method 
D) the industrial engineering method 
A) the account analysis method 
B) the conference method 
C) the quantitative analysis method 
D) the industrial engineering method

Question 18

The industrial engineering method of cost estimation is based on opinions from various departments and is quick and of low cost to apply.

Accepted Answer

A) True 
 B)False

Question 19

Write a linear cost function equation for each of the following conditions. Use y for estimated costs and x for activity of the cost driver.
a. Direct materials cost is $1.50 per pound.
b. Direct labor cost is $33.50 per hour.
c. Auto rental has a fixed fee of $150.00 per day plus $1.00 per mile driven.
d. Machine operating costs include $700 of maintenance per month, and $10.00 of coolant usage costs for each day the machinery is in operation.

Accepted Answer

a. y = $1.50X
b. y =

Question 20

A flat or slightly sloped regression line indicates a strong relationship.

Accepted Answer

A) True 
 B)False

A cost function with a lower slope coefficient than a year ago could indicate that:

Any linear cost function can be graphed by knowing only the slope coefficient.

Data collection problems arise when:

The cost function y = 90 + 8X:

Which of the following statements related to assumptions about estimating linear cost functions is FALSE?

A learning curve measures the effect of learning on efficiency.

For February, the cost components of a picture frame include $0.25 for the glass, $.65 for the wooden frame, and $0.80 for assembly. The assembly desk and tools cost $400. 1,000 frames are expected to be produced in the coming year. What cost function best represents these costs?

In regression analysis, the term "goodness of fit" indicates the strength of the relationship between the cost driver and the costs.

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

A cost function with a lower constant than a year ago could indicate all of the following EXCEPT:

The longer the time horizon, the more likely a cost will be variable.

The slope of the line of regression is the:

A cost function is a mathematical description of how a cost changes with changes in the level of an activity relating to that cost.

The conference method estimates cost functions:

The industrial engineering method of cost estimation is based on opinions from various departments and is quick and of low cost to apply.

A flat or slightly sloped regression line indicates a strong relationship.

The Accountants Role in the Organization

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

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

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, Time, and the Theory of Constraints

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

A cost function with a lower slope coefficient than a year ago could indicate that:

Any linear cost function can be graphed by knowing only the slope coefficient.

Data collection problems arise when:

The cost function y = 90 + 8X:

Which of the following statements related to assumptions about estimating linear cost functions is FALSE?

A learning curve measures the effect of learning on efficiency.

For February, the cost components of a picture frame include $0.25 for the glass, $.65 for the wooden frame, and $0.80 for assembly. The assembly desk and tools cost $400. 1,000 frames are expected to be produced in the coming year. What cost function best represents these costs?

In regression analysis, the term "goodness of fit" indicates the strength of the relationship between the cost driver and the costs.

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

A cost function with a lower constant than a year ago could indicate all of the following EXCEPT:

The longer the time horizon, the more likely a cost will be variable.

The slope of the line of regression is the:

A cost function is a mathematical description of how a cost changes with changes in the level of an activity relating to that cost.

The conference method estimates cost functions:

The industrial engineering method of cost estimation is based on opinions from various departments and is quick and of low cost to apply.

A flat or slightly sloped regression line indicates a strong relationship.

The Accountants Role in the Organization

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

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

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, Time, and the Theory of Constraints

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