Question 1

Costs of quality include all of the following EXCEPT

Accepted Answer

A) correction costs. 
B) external failure costs. 
C) internal failure costs. 
D) prevention costs. 
E) appraisal costs. 
A) correction costs. 
B) external failure costs. 
C) internal failure costs. 
D) prevention costs. 
E) appraisal costs.

Question 2

For cost estimation purposes data must be collected using both time-series data and cross-sectional data.

Accepted Answer

A) True 
 B)False

Question 3

Brad Henry has just purchased the film studio of a movie company that specializes in action adventures.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.Henry does not like the former movie-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 ti

Question 4

Bank of Bowmanville has variable demand for its counter services.The daily demand ranges from 200 to 250 customers a day and the average banking transaction takes 6 minutes.The average daily demand is 228 customers.The bank currently has 5 staff members serving the counter and operates 7 hours a day.
Required:
a.What is the average customer waiting time in minutes?
b.In an effort to reduce costs,the bank is considering eliminating one of its counter services staff and having a manager fill in during two hours of the day.What would be the effect of this change on wait time? What might the customers' reaction be?

Accepted Answer

a.
Capacity = 5 ∗ 7 ∗ 60 minutes = 2,100

Question 5

Prevention costs include all of the following EXCEPT

Accepted Answer

A) quality training. 
B) design engineering. 
C) product testing. 
D) supplier evaluations. 
E) testing of new materials. 
A) quality training. 
B) design engineering. 
C) product testing. 
D) supplier evaluations. 
E) testing of new materials.

Question 6

Patrick Ross,the president of Ross'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:
   
Required:
Using the high-low method,determine the overhead cost equation.Use machine-hours as your cost driver.

Accepted Answer

@#IMG-DLM& 
Variable cost per MH: $4,000

Question 7

External failure costs include all of the following EXCEPT

Accepted Answer

A) scrap. 
B) customer support. 
C) liability claims. 
D) transportation costs on repaired products. 
E) warranty costs. 
A) scrap. 
B) customer support. 
C) liability claims. 
D) transportation costs on repaired products. 
E) warranty costs.

Question 8

Brandt Cheque Encoders employs 30 individuals.Ten employees are paid $10 per hour for 173 hours a month and the rest are salaried employees paid $6,000 a month.How would total costs of personnel be classified?

Accepted Answer

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

Question 9

At the Christopher Company,the cost of the library and information centre 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 engineers might also be a predictor of personnel costs to be assigned.Total library and information costs are $150,000.
   
Required:
Using the above data,prepare a report that contrasts the different amounts of the library and information centre cost that would be allocated to each of the departments if the cost driver used is:
a.number of employees.
b.the number of engineers.
c.Which cost estimation method is being used by Christopher Company?

Accepted Answer

The answer of At the Christopher Company,the cost of the...

Question 10

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 materials cost is $.75 per kilogram.
b.Direct labour cost is $16.75 per hour.
c.Auto rental has a fixed fee of $75.00 per day plus $.50 per kilometre driven.
d.Machine operating costs include $350 of maintenance per month,and $5.00 of coolant usage costs for each day the machinery is in operation.

Accepted Answer

a.y = $.75X
b.y = $1

Question 11

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.
-Using the high-low method determine the constant at Bradco Restoration?

Accepted Answer

A) $17,500 
B) $13,750 
C) $2,500 
D) $1,250 
E) $750 
A) $17,500 
B) $13,750 
C) $2,500 
D) $1,250 
E) $750

Question 12

Vestor Ltd.has estimated a 90% incremental unit time learning curve applies to labour time to manufacture its new product.The first unit took 18 hours.If Vestor's estimates are correct,how many hours will be used to manufacture 4 total units?

Accepted Answer

A) 14.58 hours 
B) 64.80 hours 
C) 72.00 hours 
D) 64.01 hours 
E) 58.32 hours 
A) 14.58 hours 
B) 64.80 hours 
C) 72.00 hours 
D) 64.01 hours 
E) 58.32 hours

Question 13

Use the information below to answer the following question(s).
Raymaster is a small computer software company which uses the account analysis method and has hired you to perform some management advisory services.The company sold 2,500 high quality payroll programs last year.
  
-What is the predicted indirect manufacturing labour cost if 160 machine-hours are budgeted and 170 are actually worked,assuming the estimated cost function is y = $81.04 + 5.32x?

Accepted Answer

A) $985.44 
B) $932.24 
C) $904.40 
D) $851.20 
E) $81.04 
A) $985.44 
B) $932.24 
C) $904.40 
D) $851.20 
E) $81.04

Question 14

Answer the following question(s)using the information below.
The Taranto Company uses the high-low method to estimate it's cost function.The information for the current year is provided below:
  
-What is the constant for the estimating cost equation?

Accepted Answer

A) $125,000 
B) $225,000 
C) $25,000 
D) $0 
E) $12,500 
A) $125,000 
B) $225,000 
C) $25,000 
D) $0 
E) $12,500

Question 15

An example of a nonfinancial balanced scorecard measure concerning internal business processes would be the percentage of products that fail soon after delivery.

Accepted Answer

A) True 
 B)False

Question 16

Cross-sectional data pertain to the same entity over successive past periods.

Accepted Answer

A) True 
 B)False

Question 17

Cari and Jereme just bought a bed and breakfast inn at a very attractive price.The business had been doing poorly.Before they reopened the inn for business,they attended a seminar on operating a high quality business.Now that they are ready to open the inn,they need some advice on quality costs and management.
Required:
Identify four categories of quality costs.In addition,identify three items that would be classified in each of the categories.

Accepted Answer

Prevention:
Hiring employees with good r

Question 18

Which of the following statements related to assumptions about estimating linear cost functions is TRUE?

Accepted Answer

A) Variations in a single cost driver explain variations in total costs. 
B) A cost object is anything for which a separate measurement of costs is desired. 
C) A linear function approximates cost behaviour at all ranges of production. 
D) Correlation refers to the relationship between fixed and variable costs. 
E) The graph of total costs does not form a straight line within the relevant range because of variable costs. 
A) Variations in a single cost driver explain variations in total costs. 
B) A cost object is anything for which a separate measurement of costs is desired. 
C) A linear function approximates cost behaviour at all ranges of production. 
D) Correlation refers to the relationship between fixed and variable costs. 
E) The graph of total costs does not form a straight line within the relevant range because of variable costs.

Question 19

A cost analyst collected the following information for the Machining Department:
   
Required:
a.Determine the estimating cost function with machine-hours as the cost driver using the high-low method.
b.If December's estimated machine-hours total 8,400,what is the estimated cost of the Machining Department?

Accepted Answer

a.Slope coefficient = ($66,000 - $61,000

Question 20

There is poor goodness of fit if the predicted values do not match actual cost observation.

Accepted Answer

A) True 
 B)False

Costs of quality include all of the following EXCEPT

For cost estimation purposes data must be collected using both time-series data and cross-sectional data.

Prevention costs include all of the following EXCEPT

External failure costs include all of the following EXCEPT

Brandt Cheque Encoders employs 30 individuals.Ten employees are paid $10 per hour for 173 hours a month and the rest are salaried employees paid $6,000 a month.How would total costs of personnel be classified?

Vestor Ltd.has estimated a 90% incremental unit time learning curve applies to labour time to manufacture its new product.The first unit took 18 hours.If Vestor's estimates are correct,how many hours will be used to manufacture 4 total units?

Answer the following question(s)using the information below. The Taranto Company uses the high-low method to estimate it's cost function.The information for the current year is provided below: -What is the constant for the estimating cost equation?

An example of a nonfinancial balanced scorecard measure concerning internal business processes would be the percentage of products that fail soon after delivery.

Cross-sectional data pertain to the same entity over successive past periods.

Which of the following statements related to assumptions about estimating linear cost functions is TRUE?

There is poor goodness of fit if the predicted values do not match actual cost observation.

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

Costs of quality include all of the following EXCEPT

For cost estimation purposes data must be collected using both time-series data and cross-sectional data.

Prevention costs include all of the following EXCEPT

External failure costs include all of the following EXCEPT

Brandt Cheque Encoders employs 30 individuals.Ten employees are paid $10 per hour for 173 hours a month and the rest are salaried employees paid $6,000 a month.How would total costs of personnel be classified?

Vestor Ltd.has estimated a 90% incremental unit time learning curve applies to labour time to manufacture its new product.The first unit took 18 hours.If Vestor's estimates are correct,how many hours will be used to manufacture 4 total units?

Answer the following question(s)using the information below. The Taranto Company uses the high-low method to estimate it's cost function.The information for the current year is provided below: -What is the constant for the estimating cost equation?

An example of a nonfinancial balanced scorecard measure concerning internal business processes would be the percentage of products that fail soon after delivery.

Cross-sectional data pertain to the same entity over successive past periods.

Which of the following statements related to assumptions about estimating linear cost functions is TRUE?

There is poor goodness of fit if the predicted values do not match actual cost observation.

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