Question 1

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 2

Gathering cost information through observations and interviews from departments within an organisation 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 3

The first set-up on a new machine took an employee 200 minutes to complete.Using an 85% incremental unit-time learning model indicates that the second set-up on the new machine is expected to take:

Accepted Answer

A) 170 minutes. 
B) 60 minutes. 
C) 85 minutes. 
D) 120 minutes. 
A) 170 minutes. 
B) 60 minutes. 
C) 85 minutes. 
D) 120 minutes.

Question 4

The 'account analysis method' estimates cost functions:

Accepted Answer

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

Question 5

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 estimated total cost at an operating level of 8000 hours?

Accepted Answer

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

Question 6

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 constant?

Accepted Answer

A) $68 000 
B) $20 000 
C) $167 000 
D) $48 000 
A) $68 000 
B) $20 000 
C) $167 000 
D) $48 000

Question 7

Which of the following does NOT represent a cause-and-effect relationship?

Accepted Answer

A) A company is charged 40 cents for each brochure printed and mailed. 
B) Utility costs increase at the same time that insurance costs increase. 
C) Material costs increase as the number of units produced increases. 
D) It makes sense that if a complex product has a large number of parts it will take longer to assemble than a simple product with fewer parts. 
A) A company is charged 40 cents for each brochure printed and mailed. 
B) Utility costs increase at the same time that insurance costs increase. 
C) Material costs increase as the number of units produced increases. 
D) It makes sense that if a complex product has a large number of parts it will take longer to assemble than a simple product with fewer parts.

Question 8

Cross-sectional data analysis includes:

Accepted Answer

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

Question 9

Roger Moon has just purchased the film studio of a movie company that specialises 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 this 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 t

Question 10

Because of its accuracy,activity-based costing systems use the quantitative analysis method exclusively for cost estimation.

Accepted Answer

A) True 
 B)False

Question 11

Answer the following questions using the information below:
At the Holden Company,the cost of the library and information centre has always been charged to the various departments based upon number of employees.Recently,opinions gathered from the department managers indicate that the number of engineers within a department might be a better predictor of library and information centre costs.
Total library and information centre costs are $75 000.
 $\begin{array}{lrrr}
\text { Department } & \underline{\mathbf{A}} & \underline{\mathbf{B}} & \mathbf{C} \
\text { Number of employees } & 125 & 500 & 125 \
\text { Number of engineers } & 0 & 75 & 25
\end{array}$
-If the number of employees is considered the cost driver,what amount of library and information centre costs will be allocated to Department A?

Accepted Answer

A) $56 250 
B) $12 500 
C) $0 
D) $50 000 
A) $56 250 
B) $12 500 
C) $0 
D) $50 000

Question 12

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 13

A ________ is a grouping of individual indirect cost items.

Accepted Answer

A) cost pool 
B) cost assignment 
C) job-costing system 
D) cost allocation base 
A) cost pool 
B) cost assignment 
C) job-costing system 
D) cost allocation base

Question 14

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 15

The 'high-low method' involves choosing the period of highest cost driver activity and the period of lowest cost driver activity.

Accepted Answer

A) True 
 B)False

Question 16

y = a + bX represents the general form of the linear cost function.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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 Benalla Company.
 $$\begin{array} { l r r } 
\text { Month } & \text { Cost } & \text { Units } \
\text { January } & \$ 4890 & 4100 \
\text { February } & 4024 & 3200 \
\text { March } & 6480 & 5300 \
\text { April } & 8840 & 7500 \
\text { May } & 5800 & 4800 \
\text { June } & 7336 & 6600
\end{array}$$ Benalla Company uses the 'high-low method' to analyse mixed costs.
-What is the estimated total cost at an operating level of 5000 units?

Accepted Answer

A) $6227.20 
B) $6040.00 
C) $8510.00 
D) $4283.20 
A) $6227.20 
B) $6040.00 
C) $8510.00 
D) $4283.20

Question 19

The ideal database contains:

Accepted Answer

A) cost driver observations spanning a wide range. 
B) numerous cost driver observations. 
C) reliably measured observations. 
D) All of these answers are correct. 
A) cost driver observations spanning a wide range. 
B) numerous cost driver observations. 
C) reliably measured observations. 
D) All of these answers are correct.

Question 20

An example of a step variable-cost function is the cost of material-handling labour when inputs are acquired in discrete quantities.

Accepted Answer

A) True 
 B)False

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

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

The first set-up on a new machine took an employee 200 minutes to complete.Using an 85% incremental unit-time learning model indicates that the second set-up on the new machine is expected to take:

The 'account analysis method' estimates cost functions:

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 constant?

Which of the following does NOT represent a cause-and-effect relationship?

Cross-sectional data analysis includes:

Because of its accuracy,activity-based costing systems use the quantitative analysis method exclusively for cost estimation.

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

A ________ is a grouping of individual indirect cost items.

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.

The 'high-low method' involves choosing the period of highest cost driver activity and the period of lowest cost driver activity.

y = a + bX represents the general form of the linear cost function.

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

The ideal database contains:

An example of a step variable-cost function is the cost of material-handling labour when inputs are acquired in discrete quantities.

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

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

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

The first set-up on a new machine took an employee 200 minutes to complete.Using an 85% incremental unit-time learning model indicates that the second set-up on the new machine is expected to take:

The 'account analysis method' estimates cost functions:

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 constant?

Which of the following does NOT represent a cause-and-effect relationship?

Cross-sectional data analysis includes:

Because of its accuracy,activity-based costing systems use the quantitative analysis method exclusively for cost estimation.

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

A ________ is a grouping of individual indirect cost items.

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.

The 'high-low method' involves choosing the period of highest cost driver activity and the period of lowest cost driver activity.

y = a + bX represents the general form of the linear cost function.

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

The ideal database contains:

An example of a step variable-cost function is the cost of material-handling labour when inputs are acquired in discrete quantities.

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