Question 1

When using the high-low method, the denominator of the equation that determines the slope is the:

Accepted Answer

A) dependent variable 
B) independent variable 
C) difference between the high and low observations of the cost driver 
D) difference between the high and low observations of the dependent variables 
A) dependent variable 
B) independent variable 
C) difference between the high and low observations of the cost driver 
D) difference between the high and low observations of the dependent variables

Question 2

The cost components of a heater include $35 for the compressor, $12 for the sheet molded compound frame, and $80 per unit for assembly. The factory machines and tools cost is $55,000. The company expects to produce 1,500 heaters in the coming year. What cost function best represents these costs?

Accepted Answer

A) y = 1,500 + 127X 
B) y = 1,500 +55,000X 
C) y = 55,000 + 1,500X 
D) y = 55,000 +127X 
A) y = 1,500 + 127X 
B) y = 1,500 +55,000X 
C) y = 55,000 + 1,500X 
D) y = 55,000 +127X

Question 3

The cause and- effect relationship might arise as a result of which of the following:

Accepted Answer

A) a physical relationship between the level of activity and costs. 
B) a contractual arrangement. 
C) knowledge of operations. 
D) All of the above. 
A) a physical relationship between the level of activity and costs. 
B) a contractual arrangement. 
C) knowledge of operations. 
D) All of the above.

Question 4

Outside of the relevant range, variable and fixed cost-behavior patterns remain constant.

Accepted Answer

A) True 
 B)False

Question 5

Generally a coefficient of determination (r2)that is higher than 0.30 indicates a goodness of fit.

Accepted Answer

A) True 
 B)False

Question 6

Answer the following questions using the information below:
The Ranger Company uses the high-low method to estimate it's cost function. The information for 2011 is provided below:
  
-What is the slope coefficient per machine-hour?

Accepted Answer

A) $250.00 
B) $25 
C) $20.00 
D) $200.00 
A) $250.00 
B) $25 
C) $20.00 
D) $200.00

Question 7

Choosing an economically plausible cost driver for indirect costs is fairly simple and knowledge of operations is unnecessary.

Accepted Answer

A) True 
 B)False

Question 8

How many separate cost pools should be formed given the following information:

Accepted Answer

A) 1 cost pool 
B) 2 cost pools 
C) 3 cost pools 
D) 4 cost pools 
A) 1 cost pool 
B) 2 cost pools 
C) 3 cost pools 
D) 4 cost pools

Question 9

Managers who design data collection reports that regularly and routinely obtain required data are helping to ensure that:

Accepted Answer

A) inflationary effects are removed 
B) all data are recorded 
C) extreme values are not used to calculate cost functions 
D) the relationship between the cost driver and the cost remains stable over time 
A) inflationary effects are removed 
B) all data are recorded 
C) extreme values are not used to calculate cost functions 
D) the relationship between the cost driver and the cost remains stable over time

Question 10

The high-low method:

Accepted Answer

A) easily handles estimating the relationship between the dependent variable and two or more independent variables 
B) is more accurate than the regression method 
C) calculates the slope coefficient using only two observed values within the relevant range 
D) uses the residual term to measure goodness of fit 
A) easily handles estimating the relationship between the dependent variable and two or more independent variables 
B) is more accurate than the regression method 
C) calculates the slope coefficient using only two observed values within the relevant range 
D) uses the residual term to measure goodness of fit

Question 11

Collecting data on the dependent variable and the cost driver may include:

Accepted Answer

A) interviews with managers 
B) collecting data over a long period of time 
C) collecting data from different entities over the same period of time 
D) All of these answers are correct. 
A) interviews with managers 
B) collecting data over a long period of time 
C) collecting data from different entities over the same period of time 
D) All of these answers are correct.

Question 12

The account analysis method estimates cost functions by classifying various cost
accounts as variable, fixed, or mixed with respect to the identified level of activity.

Accepted Answer

A) True 
 B)False

Question 13

The y-intercept of a linear cost function is an accurate cost assessment of using zero machine-hours, only if zero machine-hours are within the relevant range.

Accepted Answer

A) True 
 B)False

Question 14

The Wildcat Company has provided the following information:
   Using the high-low method and the information provided above,
a. identify the linear cost function equation and
b. estimate the total cost at 36,000 units of output.

Accepted Answer

a. Variable cost = ($2,865,600

Question 15

Which cost estimation method may use time-and-motion studies to analyze the relationship between inputs and outputs in physical terms?

Accepted Answer

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

Question 16

To complete the first setup on a new machine took an employee 100 minutes. Using an 80% cumulative average-time learning curve indicates that the second setup on the new machine is expected to take:

Accepted Answer

A) 80 minutes 
B) 60 minutes 
C) 40 minutes 
D) 30 minutes 
A) 80 minutes 
B) 60 minutes 
C) 40 minutes 
D) 30 minutes

Question 17

In a graphical display of a cost function, the steepness of the slope represents the total amount of fixed costs.

Accepted Answer

A) True 
 B)False

Question 18

A step variable-cost function:

Accepted Answer

A) is fixed over the long run but not over the short run 
B) is often approximated with a continuous variable-cost function 
C) remains the same over a wide range of activity 
D) example includes adding additional warehouse space 
A) is fixed over the long run but not over the short run 
B) is often approximated with a continuous variable-cost function 
C) remains the same over a wide range of activity 
D) example includes adding additional warehouse space

Question 19

The cost of the personnel department at the Miller Company has always been charged to the production departments based upon number of employees. Recently, opinions gathered from the department managers indicated that the number of new hires might also be a predictor of personnel costs to be assigned. Total personnel department costs are $120,000.
   Required:
Using the above data, prepare a report that contrasts the different amounts of personnel department cost that would be allocated to each of the production departments if the cost driver used is
a. number of employees.
b. the number of new hires.
c. Which cost estimation method is being used by Miller Company?

Accepted Answer

@#IMG-DLM& c. Miller Company i

Question 20

Answer the following questions using the information below:
Jerry's TV and Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2011 operations.
  
-What was the variable cost per unit sold for 2011?

Accepted Answer

A) $36 
B) $436 
C) $678 
D) $400 
A) $36 
B) $436 
C) $678 
D) $400

Exam 10: Determining How Costs Behave

When using the high-low method, the denominator of the equation that determines the slope is the:

The cost components of a heater include $35 for the compressor, $12 for the sheet molded compound frame, and $80 per unit for assembly. The factory machines and tools cost is $55,000. The company expects to produce 1,500 heaters in the coming year. What cost function best represents these costs?

The cause and- effect relationship might arise as a result of which of the following:

Outside of the relevant range, variable and fixed cost-behavior patterns remain constant.

Generally a coefficient of determination (r2)that is higher than 0.30 indicates a goodness of fit.

Answer the following questions using the information below: The Ranger Company uses the high-low method to estimate it's cost function. The information for 2011 is provided below: -What is the slope coefficient per machine-hour?

Choosing an economically plausible cost driver for indirect costs is fairly simple and knowledge of operations is unnecessary.

How many separate cost pools should be formed given the following information:

Managers who design data collection reports that regularly and routinely obtain required data are helping to ensure that:

The high-low method:

Collecting data on the dependent variable and the cost driver may include:

The account analysis method estimates cost functions by classifying various cost accounts as variable, fixed, or mixed with respect to the identified level of activity.

The y-intercept of a linear cost function is an accurate cost assessment of using zero machine-hours, only if zero machine-hours are within the relevant range.

The Wildcat Company has provided the following information: Using the high-low method and the information provided above, a. identify the linear cost function equation and b. estimate the total cost at 36,000 units of output.

Which cost estimation method may use time-and-motion studies to analyze the relationship between inputs and outputs in physical terms?

To complete the first setup on a new machine took an employee 100 minutes. Using an 80% cumulative average-time learning curve indicates that the second setup on the new machine is expected to take:

In a graphical display of a cost function, the steepness of the slope represents the total amount of fixed costs.

A step variable-cost function:

Answer the following questions using the information below: Jerry's TV and Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2011 operations. -What was the variable cost per unit sold for 2011?

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

Generally a coefficient of determination (r²)that is higher than 0.30 indicates a goodness of fit.