Question 1

A step fixed-cost function:

Accepted Answer

A) example includes set-up costs. 
B) is often approximated with a continuous variable-cost function. 
C) is fixed over the short run but not over the long run. 
D) remains the same over a narrow range of activity. 
A) example includes set-up costs. 
B) is often approximated with a continuous variable-cost function. 
C) is fixed over the short run but not over the long run. 
D) remains the same over a narrow range of activity.

Question 2

Answer the following questions using the information below:
The Mildura Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable.Mildura Company has heard about a method of measuring cost functions called the 'high-low method' and has decided to use it in this situation.
 $$\begin{array} { r r } 
\text { Cost } & \text { Hours } \
\$ 24900 & 5250 \
24000 & 5500 \
36400 & 7500 \
44160 & 9750 \
45000 & 9500
\end{array}$$
-What is the cost function?

Accepted Answer

A) y = $4875 + $5.25X 
B) y = $43 191 + $0.19X 
C) y = $41 900 + $0.23X 
D) y = $2430 + $4.28X 
A) y = $4875 + $5.25X 
B) y = $43 191 + $0.19X 
C) y = $41 900 + $0.23X 
D) y = $2430 + $4.28X

Question 3

The cost function y = 8000 + 4X:

Accepted Answer

A) has a slope coefficient of 8000. 
B) is a curved line. 
C) will intersect the y-axis at 4. 
D) represents a mixed cost. 
A) has a slope coefficient of 8000. 
B) is a curved line. 
C) will intersect the y-axis at 4. 
D) represents a mixed cost.

Question 4

Plotting learning curve observations is helpful in selecting the appropriate learning curve model.

Accepted Answer

A) True 
 B)False

Question 5

An inaccurate cost function with a constant that is estimated too high may MOST likely result in:

Accepted Answer

A) replicating processes that are truly cost saving. 
B) predicting total costs that are too low. 
C) promoting a product that is actually less profitable than budgeted. 
D) evaluating a weak manager as providing strong performance. 
A) replicating processes that are truly cost saving. 
B) predicting total costs that are too low. 
C) promoting a product that is actually less profitable than budgeted. 
D) evaluating a weak manager as providing strong performance.

Question 6

A linear cost function can represent:

Accepted Answer

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

Question 7

The 'high-low method' is more accurate than the 'regression method' of estimating a cost function.

Accepted Answer

A) True 
 B)False

Question 8

Place the following steps in order for estimating a cost function using quantitative analysis:
A = Plot the data
B = Estimate the cost function
C = Choose the dependent variable
D = Identify the cost driver

Accepted Answer

A) D C A B 
B) D C B A 
C) A D C B 
D) C D A B 
A) D C A B 
B) D C B A 
C) A D C B 
D) C D A B

Question 9

Which of the following is an equation of a variable cost function?

Accepted Answer

A) y = a 
B) y = a + bX 
C) y = bX 
D) y = b 
A) y = a 
B) y = a + bX 
C) y = bX 
D) y = b

Question 10

Answer the following questions using the information below:
The Nowra Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable.Nowra Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation.
 $$\begin{array} { l r r } 
\text { Month } & \text { Cost } & \text { Hours } \
\text { January } & \$ 40000 & 3500 \
\text { February } & 24400 & 2000 \
\text { March } & 31280 & 2450 \
\text { April } & 36400 & 3000 \
\text { May } & 44160 & 3900 \
\text { June } & 42400 & 3740
\end{array}$$
-The coefficient of determination is important in explaining variances in estimating equations.For a certain estimating equation,the unexplained variation was given as 51 900.The total variation was given as 115 333.What is the coefficient of determination for the equation?

Accepted Answer

A) 0.66 
B) 0.55 
C) 0.57 
D) 0.45 
A) 0.66 
B) 0.55 
C) 0.57 
D) 0.45

Question 11

The cost to be predicted is referred to as the:

Accepted Answer

A) regression. 
B) dependent variable. 
C) cost driver. 
D) independent variable. 
A) regression. 
B) dependent variable. 
C) cost driver. 
D) independent variable.

Question 12

Outside of the relevant range,variable and fixed cost-behaviour patterns may change.

Accepted Answer

A) True 
 B)False

Question 13

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 14

The coefficient of determination (r2)measures the percentage of variation in Y explained by X (the independent variable).

Accepted Answer

A) True 
 B)False

Question 15

Put the following steps in order for using the high-low method of estimating a cost function:
A = Identify the cost function
B = Calculate the constant
C = Calculate the slope coefficient
D = Identify the highest and lowest observed values

Accepted Answer

A) C D A B 
B) D C A B 
C) A D C B 
D) D C B A 
A) C D A B 
B) D C A B 
C) A D C B 
D) D C B A

Question 16

When using activity-based costing all of the following are true EXCEPT that:

Accepted Answer

A) all cost drivers should be output unit-level cost drivers. 
B) there are a great number and variety of cost drivers and cost pools. 
C) the more cost pools,the greater the chance of estimation error. 
D) industrial engineering,conference,and regression analysis can be used to estimate slope coefficients. 
A) all cost drivers should be output unit-level cost drivers. 
B) there are a great number and variety of cost drivers and cost pools. 
C) the more cost pools,the greater the chance of estimation error. 
D) industrial engineering,conference,and regression analysis can be used to estimate slope coefficients.

Question 17

All cost functions are linear.

Accepted Answer

A) True 
 B)False

Question 18

Time-series data analysis includes:

Accepted Answer

A) using the highest and lowest observation. 
B) comparing information in different cost pools. 
C) observing different entities during the same time period. 
D) using a variety of time periods to measure the dependent variable. 
A) using the highest and lowest observation. 
B) comparing information in different cost pools. 
C) observing different entities during the same time period. 
D) using a variety of time periods to measure the dependent variable.

Question 19

Which cost estimation method uses a formal mathematical method to develop cost functions based on past data?

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 20

The cost function y = 1000 + 5X:

Accepted Answer

A) is a straight line. 
B) has a slope coefficient of 1000. 
C) has an intercept of 5. 
D) represents a fixed cost. 
A) is a straight line. 
B) has a slope coefficient of 1000. 
C) has an intercept of 5. 
D) represents a fixed cost.

A step fixed-cost function:

The cost function y = 8000 + 4X:

Plotting learning curve observations is helpful in selecting the appropriate learning curve model.

An inaccurate cost function with a constant that is estimated too high may MOST likely result in:

A linear cost function can represent:

The 'high-low method' is more accurate than the 'regression method' of estimating a cost function.

Place the following steps in order for estimating a cost function using quantitative analysis: A = Plot the data B = Estimate the cost function C = Choose the dependent variable D = Identify the cost driver

Which of the following is an equation of a variable cost function?

The cost to be predicted is referred to as the:

Outside of the relevant range,variable and fixed cost-behaviour patterns may change.

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

The coefficient of determination (r²)measures the percentage of variation in Y explained by X (the independent variable).

Put the following steps in order for using the high-low method of estimating a cost function: A = Identify the cost function B = Calculate the constant C = Calculate the slope coefficient D = Identify the highest and lowest observed values

When using activity-based costing all of the following are true EXCEPT that:

All cost functions are linear.

Time-series data analysis includes:

Which cost estimation method uses a formal mathematical method to develop cost functions based on past data?

The cost function y = 1000 + 5X:

Management Accounting in Context

Different Costs for Different Purposes

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Estimating the Costs of Products and Inventory

Target Costing, Managing Activities and Managing Capacity

Activity-Based Management and Activity-Based Costing

Pricing and Customer Profitability

Decision Making and Relevant Information

Budgeting, Management Control and Responsibility Accounting

Flexible Budgets, Direct Cost Variances and Management Control

Flexible Budgets, Overhead Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Quality, Time and the Balanced Scorecard

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

Measuring and Reporting Sustainability

Filters

Exam 3: Determining How Costs Behave

A step fixed-cost function:

The cost function y = 8000 + 4X:

Plotting learning curve observations is helpful in selecting the appropriate learning curve model.

An inaccurate cost function with a constant that is estimated too high may MOST likely result in:

A linear cost function can represent:

The 'high-low method' is more accurate than the 'regression method' of estimating a cost function.

Place the following steps in order for estimating a cost function using quantitative analysis: A = Plot the data B = Estimate the cost function C = Choose the dependent variable D = Identify the cost driver

Which of the following is an equation of a variable cost function?

The cost to be predicted is referred to as the:

Outside of the relevant range,variable and fixed cost-behaviour patterns may change.

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

The coefficient of determination (r2)measures the percentage of variation in Y explained by X (the independent variable).

Put the following steps in order for using the high-low method of estimating a cost function: A = Identify the cost function B = Calculate the constant C = Calculate the slope coefficient D = Identify the highest and lowest observed values

When using activity-based costing all of the following are true EXCEPT that:

All cost functions are linear.

Time-series data analysis includes:

Which cost estimation method uses a formal mathematical method to develop cost functions based on past data?

The cost function y = 1000 + 5X:

Management Accounting in Context

Different Costs for Different Purposes

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Estimating the Costs of Products and Inventory

Target Costing, Managing Activities and Managing Capacity

Activity-Based Management and Activity-Based Costing

Pricing and Customer Profitability

Decision Making and Relevant Information

Budgeting, Management Control and Responsibility Accounting

Flexible Budgets, Direct Cost Variances and Management Control

Flexible Budgets, Overhead Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Quality, Time and the Balanced Scorecard

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

Measuring and Reporting Sustainability

Filters

The coefficient of determination (r²)measures the percentage of variation in Y explained by X (the independent variable).