Question 1

Inflation can distort data that are compared over time so purely inflationary effects should be removed.

Accepted Answer

A) True 
 B)False

Question 2

All of the following are cost analysis problems EXCEPT:

Accepted Answer

A) fixed costs are allocated as if they are variable costs 
B) extreme observations are adjusted or removed 
C) time periods differ for measuring items included in the dependent variable and the cost driver(s) 
D) homogeneous relationships between individual cost items in the dependent variable pool and cost drivers may not be present 
A) fixed costs are allocated as if they are variable costs 
B) extreme observations are adjusted or removed 
C) time periods differ for measuring items included in the dependent variable and the cost driver(s) 
D) homogeneous relationships between individual cost items in the dependent variable pool and cost drivers may not be present

Question 3

In multiple regression, when two or more independent variables are correlated with one another, the situation is known as:

Accepted Answer

A) heteroscedasticity 
B) homoscedasticity 
C) multicollinearity 
D) autocorrelation 
A) heteroscedasticity 
B) homoscedasticity 
C) multicollinearity 
D) autocorrelation

Question 4

Extreme values of observations may be the result of:

Accepted Answer

A) a misplaced decimal point in the recorded data 
B) classifying a cost incorrectly 
C) a temporary plant shutdown 
D) All of these answers are correct. 
A) a misplaced decimal point in the recorded data 
B) classifying a cost incorrectly 
C) a temporary plant shutdown 
D) All of these answers are correct.

Question 5

Tessmer Manufacturing Company produces inventory in a highly automated assembly plant in Olathe, Kansas. The automated system is in its first year of operation and management is still unsure of the best way to estimate the overhead costs of operations for budgetary purposes. For the first six months of operations, the following data were collected:
   Required:
a. Use the high-low method to determine the estimating cost function with machine-hours as the cost driver.
b. Use the high-low method to determine the estimating cost function with kilowatt-hours as the cost driver.
c. For July, the company ran the machines for 3,000 hours and used 4,000,000 kilowatt-hours of power. The overhead costs totaled $314,000. Which cost driver was the best predictor for July?

Accepted Answer

a. Machine-hours:
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Question 6

The most common forms of quantitative analysis are the conference method and the account analysis method.

Accepted Answer

A) True 
 B)False

Question 7

Activity-based costing systems use the quantitative analysis method exclusively for cost estimation because of its accuracy.

Accepted Answer

A) True 
 B)False

Question 8

Multiple regression analysis estimates the relationship between the dependent variable and two or more independent variables.

Accepted Answer

A) True 
 B)False

Question 9

Craig's Cola was to manufacture 1,000 cases of cola next week. The accountant provided the following analysis of total manufacturing costs.     What is the estimated cost of producing the 1,000 cases of cola?

Accepted Answer

A) $200,100 
B) $142,071 
C) $100,200 
D) $9,000 
A) $200,100 
B) $142,071 
C) $100,200 
D) $9,000

Question 10

Answer the following questions using the information below:
The Barnett Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Barnett Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation.
  
-What is the estimated total cost at an operating level of 8,000 hours?

Accepted Answer

A) $43,740 
B) $36,670 
C) $46,875 
D) $37,125 
A) $43,740 
B) $36,670 
C) $46,875 
D) $37,125

Question 11

Evidence of relationships and extreme observations are highlighted when costs and their cost drivers are plotted graphically.

Accepted Answer

A) True 
 B)False

Question 12

Answer the following questions using the information below:
The Delmonico Company uses the high-low method to estimate the cost function. The information for 2011 is provided below:
  
-What is the constant for the estimating cost equation?

Accepted Answer

A) $4,000 
B) $13,600 
C) $16,000 
D) $20,000 
A) $4,000 
B) $13,600 
C) $16,000 
D) $20,000

Question 13

An experience curve:

Accepted Answer

A) is a narrower application of the learning curve 
B) measures the decline in cost per unit as production decreases for various value-chain functions such as marketing as production increases 
C) only measures the decline in labor-hours per unit as units produced increases 
D) measures the increase in cost per unit as productivity increases 
A) is a narrower application of the learning curve 
B) measures the decline in cost per unit as production decreases for various value-chain functions such as marketing as production increases 
C) only measures the decline in labor-hours per unit as units produced increases 
D) measures the increase in cost per unit as productivity increases

Question 14

An inaccurate cost function with a slope coefficient that is estimated too low may most likely result in:

Accepted Answer

A) predicting total costs that are too high 
B) initiating cost cutting measures when they are unnecessary 
C) evaluating a weak manager as having strong performance 
D) promoting a product that is actually more profitable than budgeted 
A) predicting total costs that are too high 
B) initiating cost cutting measures when they are unnecessary 
C) evaluating a weak manager as having strong performance 
D) promoting a product that is actually more profitable than budgeted

Question 15

It is appropriate to incorporate expected learning-curve efficiencies when evaluating performance.

Accepted Answer

A) True 
 B)False

Question 16

To complete the first setup on a new machine took an employee 200 minutes. Using an 80% incremental unit-time learning model indicates that the second setup on the new machine is expected to take:

Accepted Answer

A) 160 minutes 
B) 120 minutes 
C) 80 minutes 
D) 60 minutes 
A) 160 minutes 
B) 120 minutes 
C) 80 minutes 
D) 60 minutes

Question 17

Regression analysis:

Accepted Answer

A) is simple to compute 
B) measures the change in a dependent variable associated with one or more independent variables 
C) is mathematical so it does not require an understanding of operations 
D) uses the constant to measure goodness of fit 
A) is simple to compute 
B) measures the change in a dependent variable associated with one or more independent variables 
C) is mathematical so it does not require an understanding of operations 
D) uses the constant to measure goodness of fit

Question 18

Economic plausibility is an important criterion for choosing a cost driver.

Accepted Answer

A) True 
 B)False

Question 19

Roger Moon has just purchased the film studio of a movie company that specializes in comedies. He found that the company did not try to estimate the cost of making a movie. Instead, it just gave the producer a budget and told him/her to make a movie within budget. Mr. Moon does not like the former movie-budget concept and desires to establish a formal cost estimation system.
Required:
What are some of the potential problems that may be encountered in changing from a budget to a cost estimation movie making system?

Accepted Answer

One of the first problems will be the ti

Question 20

An example of a physical cause-and-effect relationship is when additional units of production increase total direct material costs.

Accepted Answer

A) True 
 B)False

Inflation can distort data that are compared over time so purely inflationary effects should be removed.

All of the following are cost analysis problems EXCEPT:

In multiple regression, when two or more independent variables are correlated with one another, the situation is known as:

Extreme values of observations may be the result of:

The most common forms of quantitative analysis are the conference method and the account analysis method.

Activity-based costing systems use the quantitative analysis method exclusively for cost estimation because of its accuracy.

Multiple regression analysis estimates the relationship between the dependent variable and two or more independent variables.

Craig's Cola was to manufacture 1,000 cases of cola next week. The accountant provided the following analysis of total manufacturing costs. What is the estimated cost of producing the 1,000 cases of cola?

Evidence of relationships and extreme observations are highlighted when costs and their cost drivers are plotted graphically.

Answer the following questions using the information below: The Delmonico Company uses the high-low method to estimate the cost function. The information for 2011 is provided below: -What is the constant for the estimating cost equation?

An experience curve:

An inaccurate cost function with a slope coefficient that is estimated too low may most likely result in:

It is appropriate to incorporate expected learning-curve efficiencies when evaluating performance.

To complete the first setup on a new machine took an employee 200 minutes. Using an 80% incremental unit-time learning model indicates that the second setup on the new machine is expected to take:

Regression analysis:

Economic plausibility is an important criterion for choosing a cost driver.

An example of a physical cause-and-effect relationship is when additional units of production increase total direct material costs.

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

Inflation can distort data that are compared over time so purely inflationary effects should be removed.

All of the following are cost analysis problems EXCEPT:

In multiple regression, when two or more independent variables are correlated with one another, the situation is known as:

Extreme values of observations may be the result of:

The most common forms of quantitative analysis are the conference method and the account analysis method.

Activity-based costing systems use the quantitative analysis method exclusively for cost estimation because of its accuracy.

Multiple regression analysis estimates the relationship between the dependent variable and two or more independent variables.

Craig's Cola was to manufacture 1,000 cases of cola next week. The accountant provided the following analysis of total manufacturing costs. What is the estimated cost of producing the 1,000 cases of cola?

Evidence of relationships and extreme observations are highlighted when costs and their cost drivers are plotted graphically.

Answer the following questions using the information below: The Delmonico Company uses the high-low method to estimate the cost function. The information for 2011 is provided below: -What is the constant for the estimating cost equation?

An experience curve:

An inaccurate cost function with a slope coefficient that is estimated too low may most likely result in:

It is appropriate to incorporate expected learning-curve efficiencies when evaluating performance.

To complete the first setup on a new machine took an employee 200 minutes. Using an 80% incremental unit-time learning model indicates that the second setup on the new machine is expected to take:

Regression analysis:

Economic plausibility is an important criterion for choosing a cost driver.

An example of a physical cause-and-effect relationship is when additional units of production increase total direct material costs.

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