Question 1

For a fast-food restaurant the average waiting time might be formulated as which of the following equations?

Accepted Answer

A)    
B) [(average number of customers)× (average serving time)]/capacity 
C)    
D)    
E) [(average number of employees)× (average serving time)]/serving time 
A)    
B) [(average number of customers)× (average serving time)]/capacity 
C)    
D)    
E) [(average number of employees)× (average serving time)]/serving time

Question 2

Answer the following question(s)using the information below:
At the Todd Company,the cost of the personnel department has always been charged to the various departments based upon the number of employees.Recently,opinions gathered from the department managers indicated that the number of new hires might also be a predictor of personnel costs to be assigned.Total personnel costs are $320,000.
  
-If the number of employees is considered the cost driver,what amount of personnel costs will be allocated to Department A?

Accepted Answer

A) $24,000 
B) $10,667 
C) $102,400 
D) $40,000 
E) $50,000 
A) $24,000 
B) $10,667 
C) $102,400 
D) $40,000 
E) $50,000

Question 3

Use the information below to answer the following question(s).
At the high point of the relevant range,labour hours at Bradco Restoration were 10,000 and wages were $22,500.At the low point of the relevant range,labour hours were 7,500 and wages were $17,500.
-When using the high-low method,the denominator in the equation that determines the slope is the

Accepted Answer

A) dependent variable. 
B) independent variable. 
C) difference between the high and low observations of the cost driver. 
D) difference between the high and low observations of the dependent variables. 
E) the intercept. 
A) dependent variable. 
B) independent variable. 
C) difference between the high and low observations of the cost driver. 
D) difference between the high and low observations of the dependent variables. 
E) the intercept.

Question 4

The advantage of the high-low method when compared to regression analysis is that it considers multiple data points.

Accepted Answer

A) True 
 B)False

Question 5

Managers should use past data to create a cost function and then use the exact information provided by that cost function to create the budgetary forecast for the next year.

Accepted Answer

A) True 
 B)False

Question 6

Craig's Cola was to manufacture 1,000 cases of cola next week.The accountant provided the following analysis of total manufacturing costs.
 
R2 = 0.82
What is the estimated cost of producing the 1,000 cases of cola?

Accepted Answer

A) $200,100 
B) $72,032 
C) $100,200 
D) $9,000 
E) $91,812 
A) $200,100 
B) $72,032 
C) $100,200 
D) $9,000 
E) $91,812

Question 7

LaCrosse Products has a budget of $900,000 in 2016 for prevention costs.If it decides to automate a portion of its prevention activities,it will save $80,000 in variable costs.The new method will require $40,000 in training costs and $100,000 in annual equipment costs.Management is willing to adjust the budget for an amount up to the cost of the new equipment.The budgeted production level is 150,000 units.
Appraisal costs for the year are budgeted at $600,000.The new prevention procedures will save appraisal costs of $50,000.Internal failure costs average $15 per failed unit of finished goods.The internal failure rate is expected to be 3% of all completed items.The proposed changes will cut the internal failure rate by one-third.Internal failure units are destroyed.External failure costs average $54 per failed unit.The company's average external failures average 3% of units sold.The new proposal will reduce this rate by 50%.Assume all units produced are sold and there are no ending inventories.
Required:
a.What is the net change in the budget of prevention costs if the procedures are automated in 2016? Will management agree with the changes?
b.How much will internal failure costs change if the internal product failures are reduced by 1/3 with the new procedures?
c.How much do external failure costs change if all changes are as anticipated with the new prevention procedures? Assume all units produced are sold and there are no ending inventories.

Accepted Answer

The answer of LaCrosse Products has a budget of $900,000...

Question 8

To complete the first setup on a new machine took an employee 200 minutes.Using an 80% cumulative average-time learning curve 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. 
E) 128 minutes. 
A) 160 minutes. 
B) 120 minutes. 
C) 80 minutes. 
D) 60 minutes. 
E) 128 minutes.

Question 9

The cost function y = 1,000 + 5X

Accepted Answer

A) has a slope coefficient of 1,000. 
B) is curvilinear because of the 5X. 
C) is a straight line. 
D) represents a fixed cost. 
E) is missing the slope coefficient. 
A) has a slope coefficient of 1,000. 
B) is curvilinear because of the 5X. 
C) is a straight line. 
D) represents a fixed cost. 
E) is missing the slope coefficient.

Question 10

Wilson's Language School manufactures CDs and DVDs to teach English as a Second Language.Wilson has just prepared a Cost of Quality Report,and the staff has noticed a decline in prevention costs as a percentage of total sales over a three-year period.What changes might Wilson expect to see in appraisal costs as a percentage of sales,internal failure costs as a percentage of sales,and external failure costs as a percentage of sales given this trend?

Accepted Answer

Most likely,the decline in prevention co

Question 11

The industrial-engineering method is

Accepted Answer

A) for analyzing relationships between inputs and outputs in physical terms. 
B) for significant costs which cannot be easily traced. 
C) used only for governmental contracts which are cost plus based. 
D) used with qualitative rather than quantitative information. 
E) used with both qualitative and quantitative information. 
A) for analyzing relationships between inputs and outputs in physical terms. 
B) for significant costs which cannot be easily traced. 
C) used only for governmental contracts which are cost plus based. 
D) used with qualitative rather than quantitative information. 
E) used with both qualitative and quantitative information.

Question 12

Write a linear cost function equation for each of the following conditions.Use y for estimated costs and X for activity of the cost driver.
a.Direct manufacturing labour is $10 per hour.
b.Direct materials cost $9.20 per cubic yard.
c.Utilities have a minimum charge of $1,000,plus a charge of $0.05 per kilowatt-hour.
d.Machine operating costs include $200,000 of machine depreciation per year,plus $75 of utility costs for each day the machinery is in operation.

Accepted Answer

a.y = $10X
b.y = $9.

Question 13

Norton's Convenience store has a variable demand.The daily demand ranges from 270 to 330 customers a day who average purchasing 5 items each.The average daily demand is 300 customers.The convenience store currently operates 12 hours a day.Each order takes approximately 2 minutes.
Required:
a.What is the average customer waiting time,in minutes?
b.What is the cycle time for an order?
c.What is the waiting time if the average daily demand remains at 300 customers?

Accepted Answer

a.Waiting minutes = [300 × (2)²]/{2 × [72

Question 14

Pam's Stables used two different independent variables (trainer hours and number of horses)in two different equations to evaluate the cost of training horses.The most recent results of the two regressions are as follows:
Trainer's hours:
 
R2 = 0.56
Number of horses:
 
R2 = 0.63
What is the estimated total cost for the coming year if 16,000 trainer hours are incurred and the stable has 400 horses to be trained,based on the best cost driver?

Accepted Answer

A) $99,929.09 
B) $350,756.50 
C) $335,313.32 
D) $84,233.50 
E) $47,238.12 
A) $99,929.09 
B) $350,756.50 
C) $335,313.32 
D) $84,233.50 
E) $47,238.12

Question 15

Correctly identifying the cost driver and separating fixed from variable costs are important inputs for many management decisions.

Accepted Answer

A) True 
 B)False

Question 16

Internal failure costs include

Accepted Answer

A) field repairs. 
B) rework. 
C) liability claims 
D) warranty expenses. 
E) supplier evaluations. 
A) field repairs. 
B) rework. 
C) liability claims 
D) warranty expenses. 
E) supplier evaluations.

Question 17

Use the information below to answer the following question(s).
Presented below is the production data for the last six months of the year for the mixed costs incurred by Wagner Company.
  
-The total cost at an operating level of 10,000 units would be

Accepted Answer

A) $31,136. 
B) $30,200. 
C) $21,416. 
D) $42,550. 
E) $46,625. 
A) $31,136. 
B) $30,200. 
C) $21,416. 
D) $42,550. 
E) $46,625.

Question 18

Tri-State Manufacturing expects to spend $800,000 in 2016 in appraisal costs if it does not change its incoming materials inspection method.If it decides to implement a new receiving method,it will save $80,000 in fixed appraisal costs and variable costs of $0.40 per unit of finished product.The new method involves $120,000 in training costs and an additional $160,000 in annual equipment rental.It takes two units of material for each finished product.
Internal failure costs average $160 per failed unit of finished goods.During 2011,5% of all completed items had to be reworked.External failure costs average $400 per failed unit.The company's average external failures are 1% of units sold.The company carries no ending inventories,because all jobs are on a per order basis and a just-in-time inventory ordering method is used.
Required:
a.What is the net effect on appraisal costs for 2016,assuming the new receiving method is implemented and that 800,000 material units are received?
b.How much will internal failure costs change,assuming 800,000 units of materials are received and that the new receiving method reduces the amount of UNACCEPTABLE product units in the manufacturing process by 10%?

Accepted Answer

The answer of Tri-State Manufacturing expects to spend $800,000 in...

Question 19

In regression analysis,the term independence of residuals means

Accepted Answer

A) the residual term for any one observation is not related to the residual term of any other observation. 
B) the data exhibit serial correlation. 
C) the data exhibit autocorrelation. 
D) there is a systematic pattern of positive residuals. 
E) there is a systematic pattern of either only positive or only negative residuals. 
A) the residual term for any one observation is not related to the residual term of any other observation. 
B) the data exhibit serial correlation. 
C) the data exhibit autocorrelation. 
D) there is a systematic pattern of positive residuals. 
E) there is a systematic pattern of either only positive or only negative residuals.

Question 20

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

Accepted Answer

A) Material costs increase as the number of units produced increases. 
B) A company is charged 40 cents for each brochure printed and mailed. 
C) Utility costs increase at the same time that insurance costs increase. 
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. 
E) The amount of direct labour used. 
A) Material costs increase as the number of units produced increases. 
B) A company is charged 40 cents for each brochure printed and mailed. 
C) Utility costs increase at the same time that insurance costs increase. 
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. 
E) The amount of direct labour used.

For a fast-food restaurant the average waiting time might be formulated as which of the following equations?

The advantage of the high-low method when compared to regression analysis is that it considers multiple data points.

Managers should use past data to create a cost function and then use the exact information provided by that cost function to create the budgetary forecast for the next year.

Craig's Cola was to manufacture 1,000 cases of cola next week.The accountant provided the following analysis of total manufacturing costs. R² = 0.82 What is the estimated cost of producing the 1,000 cases of cola?

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

The cost function y = 1,000 + 5X

The industrial-engineering method is

Correctly identifying the cost driver and separating fixed from variable costs are important inputs for many management decisions.

Internal failure costs include

Use the information below to answer the following question(s). Presented below is the production data for the last six months of the year for the mixed costs incurred by Wagner Company. -The total cost at an operating level of 10,000 units would be

In regression analysis,the term independence of residuals means

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

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets,variances,and Management Control: I

Flexible Budgets,variances,and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Decision Making and Relevant Information

Pricing Decisions, product Profitability Decisions, and Cost Management

Strategy,balanced Scorecard,and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 10: Analysis of Cost Behaviour

For a fast-food restaurant the average waiting time might be formulated as which of the following equations?

The advantage of the high-low method when compared to regression analysis is that it considers multiple data points.

Managers should use past data to create a cost function and then use the exact information provided by that cost function to create the budgetary forecast for the next year.

Craig's Cola was to manufacture 1,000 cases of cola next week.The accountant provided the following analysis of total manufacturing costs. R2 = 0.82 What is the estimated cost of producing the 1,000 cases of cola?

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

The cost function y = 1,000 + 5X

The industrial-engineering method is

Correctly identifying the cost driver and separating fixed from variable costs are important inputs for many management decisions.

Internal failure costs include

Use the information below to answer the following question(s). Presented below is the production data for the last six months of the year for the mixed costs incurred by Wagner Company. -The total cost at an operating level of 10,000 units would be

In regression analysis,the term independence of residuals means

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

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets,variances,and Management Control: I

Flexible Budgets,variances,and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Decision Making and Relevant Information

Pricing Decisions, product Profitability Decisions, and Cost Management

Strategy,balanced Scorecard,and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Craig's Cola was to manufacture 1,000 cases of cola next week.The accountant provided the following analysis of total manufacturing costs. R² = 0.82 What is the estimated cost of producing the 1,000 cases of cola?