Question 1

It can be inferred that when there is a high correlation between two variables,one is the cause of the other.

Accepted Answer

A) True 
 B)False

Question 2

The learning-curve models presented in the text examine:

Accepted Answer

A) how efficiency increases as more units are produced. 
B) the change in variable costs when quantity discounts are available. 
C) how quality increases over time. 
D) how set-up costs decline as more workers are added. 
A) how efficiency increases as more units are produced. 
B) the change in variable costs when quantity discounts are available. 
C) how quality increases over time. 
D) how set-up costs decline as more workers are added.

Question 3

'Quantitative analysis methods' estimate cost functions:

Accepted Answer

A) based on analysis and opinions gathered from various departments. 
B) which depend on the experience and judgement of the analyst for accuracy. 
C) using the pooling of knowledge from each value chain function. 
D) using significant amounts of historical data. 
A) based on analysis and opinions gathered from various departments. 
B) which depend on the experience and judgement of the analyst for accuracy. 
C) using the pooling of knowledge from each value chain function. 
D) using significant amounts of historical data.

Question 4

A steeply sloped regression line indicates:

Accepted Answer

A) a strong relationship between the cost driver and costs. 
B) an economically plausible relationship exists. 
C) a greater proportion of fixed costs than variable costs. 
D) management should cut costs. 
A) a strong relationship between the cost driver and costs. 
B) an economically plausible relationship exists. 
C) a greater proportion of fixed costs than variable costs. 
D) management should cut costs.

Question 5

Multicollinearity,a major concern that arises with multiple regressions,exists when in:

Accepted Answer

A) multiple regressions,when the R2 statistic is low. 
B) simple regression,when the dependent variable is not normally distributed. 
C) simple regression,when the R2 statistic is low. 
D) multiple regressions,when two or more independent variables are correlated with one another. 
A) multiple regressions,when the R2 statistic is low. 
B) simple regression,when the dependent variable is not normally distributed. 
C) simple regression,when the R2 statistic is low. 
D) multiple regressions,when two or more independent variables are correlated with one another.

Question 6

Each indirect-cost pool of a manufacturing firm:

Accepted Answer

A) relates to one cost object. 
B) utilises a separate cost-allocation rate. 
C) is a subset of total indirect costs. 
D) All of these answers are correct. 
A) relates to one cost object. 
B) utilises a separate cost-allocation rate. 
C) is a subset of total indirect costs. 
D) All of these answers are correct.

Question 7

Multicollinearity is NOT a concern in simple regression.

Accepted Answer

A) True 
 B)False

Question 8

As part of his job as cost analyst,Max Thompson collected the following information concerning the operations of the Machining Department:
 $$\begin{array} { l c c } 
\text { Observation } & \text { Machine-hours } & \text { Total Operating Costs } \
\text { January } & 4000 & \$ 45000 \
\text { February } & 4600 & 49500 \
\text { March } & 3800 & 45750 \
\text { April } & 4400 & 48000 \
\text { May } & 4500 & 49800
\end{array}$$ 
Required:
a.Use the high-low method to determine the estimating cost function with machine-hours as the cost driver.
b.If June's estimated machine-hours total 4200,what are the total estimated costs of the Machining Department?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

a.Slope coefficient = ($49 500 - $45 750

Question 9

Answer the following questions using the information below:
For Echuca Company,labour-hours are 50 000 and wages $188 000 at the high point of the relevant range,and labour-hours are 30 000 and wages $140 000 at the low point of the relevant range.
-What is the estimate of total labour costs at Echuca Company when 40 000 labour-hours are used?

Accepted Answer

A) $208 000 
B) $164 000 
C) $68 000 
D) $184 668 
A) $208 000 
B) $164 000 
C) $68 000 
D) $184 668

Question 10

With regression analysis the smaller the vertical difference between actual costs and predicted costs the better the goodness of fit.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

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

Question 12

Answer the following questions using the information below:
At the Gregan Company,the cost of the personnel department has always been charged to production departments based upon number of employees.Recently,opinions gathered from the department managers indicate that the number of new hires might be a better predictor of personnel costs.
Total personnel department costs are $320 000.
 $$\begin{array} { l r r r } 
\text { Department } & \underline { \mathbf { A } } & \underline { \mathbf { B } } & \underline { \mathrm { C } } \
\text { Number of employees } & 30 & 270 & 100 \
\text { The number of new hires } & 8 & 12 & 5
\end{array}$$
-If the number of new hires is considered the cost driver,what amount of personnel costs will be allocated to Department A?

Accepted Answer

A) $24 000 
B) $40 000 
C) $102 400 
D) $10 666 
A) $24 000 
B) $40 000 
C) $102 400 
D) $10 666

Question 13

All individual cost items included in the dependent variable should have:

Accepted Answer

A) an economically plausible relationship with the independent variable. 
B) the same cost driver. 
C) a cause-and-effect relationship with the independent variable. 
D) All of these answers are correct. 
A) an economically plausible relationship with the independent variable. 
B) the same cost driver. 
C) a cause-and-effect relationship with the independent variable. 
D) All of these answers are correct.

Question 14

Answer the following questions using the information below:
The Yeppoon Company uses the high-low method to estimate its cost function.The information for 2018 is provided below:
 $$\begin{array} { l c c } 
& \text { Machine-hours } & \text { Costs } \
\text { Highest observation of cost driver } & 2000 & \$ 225000 \
\text { Lowest observation of cost driver } & 1000 & \$ 125000
\end{array}$$
-What is the estimate of the total cost when 1100 machine-hours are used?

Accepted Answer

A) $150 000 
B) $135 000 
C) $200 000 
D) $125 000 
A) $150 000 
B) $135 000 
C) $200 000 
D) $125 000

Question 15

Answer the following questions using the information below:
The Tamworth Company uses the high-low method to estimate the cost function.The information for 2018 is provided below:
 $$\begin{array} { l c c } 
& \text { Machine-hours } & \text { Labour Costs } \
\text { Highest observation of cost driver } & 800 & \$ 20000 \
\text { Lowest observation of cost driver } & 480 & \$ 13600
\end{array}$$
-What is the slope coefficient per machine-hour?

Accepted Answer

A) $28.33 
B) $25.00 
C) $20.00 
D) $0.05 
A) $28.33 
B) $25.00 
C) $20.00 
D) $0.05

Question 16

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

Accepted Answer

A) multicollinearity. 
B) heteroscedasticity. 
C) homoscedasticity. 
D) auto-correlation. 
A) multicollinearity. 
B) heteroscedasticity. 
C) homoscedasticity. 
D) auto-correlation.

Question 17

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

Accepted Answer

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

Question 18

Which cost estimation method analyses accounts in the subsidiary ledger as variable,fixed,or mixed using qualitative methods?

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 19

Trevor Chappelli,the CEO of Chappelli's Wild Game Company,has asked for information about the cost behaviour 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:
 $$\begin{array} { l c c } 
\text { Month } & \text { Machine-hours } & \text { Overhead Costs } \
\text { February } & 1700 & \$ 20500 \
\text { March } & 2800 & 22250 \
\text { April } & 1000 & 19950 \
\text { May } & 2500 & 21500 \
\text { June } & 3500 & 23950
\end{array}$$ 
Required:
Using the high-low method,determine the overhead cost equation.Use machine-hours as your cost driver.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

@#IMG-DLM& Overhead cost equat

Question 20

Answer the following questions using the information below:
The Tamworth Company uses the high-low method to estimate the cost function.The information for 2018 is provided below:
 $$\begin{array} { l c c } 
& \text { Machine-hours } & \text { Labour Costs } \
\text { Highest observation of cost driver } & 800 & \$ 20000 \
\text { Lowest observation of cost driver } & 480 & \$ 13600
\end{array}$$
-What is the estimate of the total cost when 600 machine-hours are used?

Accepted Answer

A) $4000 
B) $8000 
C) $12 000 
D) $16 000 
A) $4000 
B) $8000 
C) $12 000 
D) $16 000

It can be inferred that when there is a high correlation between two variables,one is the cause of the other.

The learning-curve models presented in the text examine:

'Quantitative analysis methods' estimate cost functions:

A steeply sloped regression line indicates:

Multicollinearity,a major concern that arises with multiple regressions,exists when in:

Each indirect-cost pool of a manufacturing firm:

Multicollinearity is NOT a concern in simple regression.

With regression analysis the smaller the vertical difference between actual costs and predicted costs the better the goodness of fit.

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

All individual cost items included in the dependent variable should have:

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

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

Which cost estimation method analyses accounts in the subsidiary ledger as variable,fixed,or mixed using qualitative methods?

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

It can be inferred that when there is a high correlation between two variables,one is the cause of the other.

The learning-curve models presented in the text examine:

'Quantitative analysis methods' estimate cost functions:

A steeply sloped regression line indicates:

Multicollinearity,a major concern that arises with multiple regressions,exists when in:

Each indirect-cost pool of a manufacturing firm:

Multicollinearity is NOT a concern in simple regression.

With regression analysis the smaller the vertical difference between actual costs and predicted costs the better the goodness of fit.

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

All individual cost items included in the dependent variable should have:

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

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

Which cost estimation method analyses accounts in the subsidiary ledger as variable,fixed,or mixed using qualitative methods?

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