Question 1

In estimating a cost function using quantitative analysis, the dependent variable is the factor used to predict the independent variable.

Accepted Answer

A) True 
 B)False

Question 2

Answer the following questions using the information below:
Presented below are the production data for the first six months of the year for the mixed costs incurred by Gallup Company.
   Gallup Company uses the high-low method to analyze mixed costs.
-What is the estimated total cost at an operating level of 5,000 units?

Accepted Answer

A) $6,227.20 
B) $6,040.00 
C) $4,283.20 
D) $8,510.00 
A) $6,227.20 
B) $6,040.00 
C) $4,283.20 
D) $8,510.00

Question 3

The account analysis method estimates cost functions:

Accepted Answer

A) by classifying cost accounts as variable, fixed, or mixed based on qualitative analysis 
B) using time-and-motion studies 
C) at a high cost, which renders it seldom used 
D) in a manner that cannot be usefully combined with any other cost estimation methods 
A) by classifying cost accounts as variable, fixed, or mixed based on qualitative analysis 
B) using time-and-motion studies 
C) at a high cost, which renders it seldom used 
D) in a manner that cannot be usefully combined with any other cost estimation methods

Question 4

When plotted on a graph, cost functions are usually displayed by having the level of activity (machine hours, etc.)plotted on the horizontal axis (called the x-axis )and the amount of total costs corresponding to (or dependent on)the levels of that activity on the vertical axis (called the y-axis).

Accepted Answer

A) True 
 B)False

Question 5

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.
  
-What are the estimated total costs if Miller's expects to sell 6,500 units next year?

Accepted Answer

A) $932,500 
B) $1,114,750 
C) $1,017,500 
D) $665,000 
A) $932,500 
B) $1,114,750 
C) $1,017,500 
D) $665,000

Question 6

The account analysis method of cost estimation classifies account costs as fixed, mixed, or variable using qualitative judgments.

Accepted Answer

A) True 
 B)False

Question 7

The managers of the production department have decided to use the production levels of 2011 and 2014 as examples of the highest and lowest years of operating levels. Data for those years are as follows:
   Required:
What is the cost estimating equation for the department if gallons of chemicals are used as the cost driver?

Accepted Answer

The answer of The managers of the production department have...

Question 8

The new cost analyst in your accounting department has just received a computer-generated report that contains the results of a simple regression program for cost estimation. The summary results of the report appear as follows:
     Required:
a. What is the cost estimation equation according to the report?
b. What is the goodness of fit? What does it tell about the estimating equation?

Accepted Answer

a. y = $71.23 + $1,030.25X
b. Goodness o

Question 9

The quantitative analysis method uses a formal mathematical method to identify cause-and-effect relationships among past data observations.

Accepted Answer

A) True 
 B)False

Question 10

A strength of the high-low method of cost estimation is that the high point and the low point are representative of all data points.

Accepted Answer

A) True 
 B)False

Question 11

A linear cost function can represent:

Accepted Answer

A) mixed cost behaviors 
B) fixed cost behaviors 
C) variable cost behaviors 
D) All of these answers are correct. 
A) mixed cost behaviors 
B) fixed cost behaviors 
C) variable cost behaviors 
D) All of these answers are correct.

Question 12

A plot of data that results in bunched points with little slope generally indicates:

Accepted Answer

A) a strong relationship 
B) a weak relationship 
C) a positive relationship 
D) a negative relationship 
A) a strong relationship 
B) a weak relationship 
C) a positive relationship 
D) a negative relationship

Question 13

Gathering cost information through observations and interviews from departments within an organization is known as the:

Accepted Answer

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

Question 14

McGuinness Company employs 8 individuals. They are all paid $14.50 per hour. How would total costs of personnel be classified?

Accepted Answer

A) variable 
B) mixed 
C) a variable cost within a relevant range 
D) a fixed cost within a relevant range 
A) variable 
B) mixed 
C) a variable cost within a relevant range 
D) a fixed cost within a relevant range

Question 15

What are the three criteria a company should use to evaluate and choose a cost driver? Briefly explain each of the three criteria.

Accepted Answer

The three criteria a company should use

Question 16

Individual cost items included in the dependent variable should have the same cost driver or more than one cost function should be estimated.

Accepted Answer

A) True 
 B)False

Question 17

To implement ABC systems, managers must identify a cost driver for each activity.

Accepted Answer

A) True 
 B)False

Question 18

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.
  
-What was the variable cost per unit sold for 2011?

Accepted Answer

A) $13.50 
B) $108 
C) $121.50 
D) $186.50 
A) $13.50 
B) $108 
C) $121.50 
D) $186.50

Question 19

The cost function y = 10,000 + 3X:

Accepted Answer

A) represents a mixed cost 
B) will intersect the y-axis at 3 
C) has a slope coefficient of 10,000 
D) is a curved line 
A) represents a mixed cost 
B) will intersect the y-axis at 3 
C) has a slope coefficient of 10,000 
D) is a curved line

Question 20

Examples of nonlinear cost functions include all of the following EXCEPT:

Accepted Answer

A) step variable-cost functions 
B) step fixed-cost functions 
C) learning curves 
D) mixed cost functions 
A) step variable-cost functions 
B) step fixed-cost functions 
C) learning curves 
D) mixed cost functions

In estimating a cost function using quantitative analysis, the dependent variable is the factor used to predict the independent variable.

The account analysis method estimates cost functions:

When plotted on a graph, cost functions are usually displayed by having the level of activity (machine hours, etc.)plotted on the horizontal axis (called the x-axis )and the amount of total costs corresponding to (or dependent on)the levels of that activity on the vertical axis (called the y-axis).

The account analysis method of cost estimation classifies account costs as fixed, mixed, or variable using qualitative judgments.

The quantitative analysis method uses a formal mathematical method to identify cause-and-effect relationships among past data observations.

A strength of the high-low method of cost estimation is that the high point and the low point are representative of all data points.

A linear cost function can represent:

A plot of data that results in bunched points with little slope generally indicates:

Gathering cost information through observations and interviews from departments within an organization is known as the:

McGuinness Company employs 8 individuals. They are all paid $14.50 per hour. How would total costs of personnel be classified?

What are the three criteria a company should use to evaluate and choose a cost driver? Briefly explain each of the three criteria.

Individual cost items included in the dependent variable should have the same cost driver or more than one cost function should be estimated.

To implement ABC systems, managers must identify a cost driver for each activity.

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. -What was the variable cost per unit sold for 2011?

The cost function y = 10,000 + 3X:

Examples of nonlinear cost functions include all of the following EXCEPT:

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

In estimating a cost function using quantitative analysis, the dependent variable is the factor used to predict the independent variable.

The account analysis method estimates cost functions:

When plotted on a graph, cost functions are usually displayed by having the level of activity (machine hours, etc.)plotted on the horizontal axis (called the x-axis )and the amount of total costs corresponding to (or dependent on)the levels of that activity on the vertical axis (called the y-axis).

The account analysis method of cost estimation classifies account costs as fixed, mixed, or variable using qualitative judgments.

The quantitative analysis method uses a formal mathematical method to identify cause-and-effect relationships among past data observations.

A strength of the high-low method of cost estimation is that the high point and the low point are representative of all data points.

A linear cost function can represent:

A plot of data that results in bunched points with little slope generally indicates:

Gathering cost information through observations and interviews from departments within an organization is known as the:

McGuinness Company employs 8 individuals. They are all paid $14.50 per hour. How would total costs of personnel be classified?

What are the three criteria a company should use to evaluate and choose a cost driver? Briefly explain each of the three criteria.

Individual cost items included in the dependent variable should have the same cost driver or more than one cost function should be estimated.

To implement ABC systems, managers must identify a cost driver for each activity.

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. -What was the variable cost per unit sold for 2011?

The cost function y = 10,000 + 3X:

Examples of nonlinear cost functions include all of the following EXCEPT:

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