Question 1

A plot of data that results in bunched points with little slope generally indicates ________.

Accepted Answer

A)  a strong relationship 
B)  a weak relationship 
C)  a positive relationship 
D)  a negative relationship 
A)  a strong relationship 
B)  a weak relationship 
C)  a positive relationship 
D)  a negative relationship

Question 2

Inflation can distort data that are compared over time so purely inflationary effects should be removed.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is a nonlinear cost function?

Accepted Answer

A)  increase in revenues with increase in sales in units 
B)  total fixed cost of $25,000 
C)  variable cost of $5 per unit 
D)  learning curve function 
A)  increase in revenues with increase in sales in units 
B)  total fixed cost of $25,000 
C)  variable cost of $5 per unit 
D)  learning curve function

Question 4

Answer the following questions using the information below:
At the Verill Company, the cost of the library and information center 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 center costs.
 $$\begin{array}{l}
\text { Total library and information center costs are } \$ 200,000 \text {. }\
\begin{array} { l r r r } 
\text { Department } & \text { A } & \text { B } & \text { C } \
\text { Number of employees } & 135 & 530 & 135 \
\text { Number of engineers } & 0 & 80 & 20
\end{array}
\end{array}$$
-Which cost estimation method is being used by Verill Company?

Accepted Answer

A)  the regression analysis method 
B)  the marginal costing method 
C)  the conference method 
D)  the operating costing method 
A)  the regression analysis method 
B)  the marginal costing method 
C)  the conference method 
D)  the operating costing method

Question 5

The cost function y = 10,000 + 3X ________.

Accepted Answer

A)  represents a mixed cost 
B)  will intersect the y-axis at 3 
C)  has a slope coefficient of 10,000 
D)  is a curved line 
A)  represents a mixed cost 
B)  will intersect the y-axis at 3 
C)  has a slope coefficient of 10,000 
D)  is a curved line

Question 6

The conference method and the account analysis method use subjective assessments to choose a cost driver and to estimate the fixed and variable components of the cost function.

Accepted Answer

A) True 
 B)False

Question 7

The cost function y = 150 + 10X ________.

Accepted Answer

A)  has a slope coefficient of 150 
B)  has an intercept of 150 
C)  is a nonlinear 
D)  represents a fixed cost 
A)  has a slope coefficient of 150 
B)  has an intercept of 150 
C)  is a nonlinear 
D)  represents a fixed cost

Question 8

Data collection problems arise when ________.

Accepted Answer

A)  data are recorded electronically rather than manually 
B)  accrual-basis costs are used rather than cash-basis costs 
C)  fixed and variable costs are not separately identified and both are allocated to products on a per unit basis 
D)  purely inflationary price effects are removed 
A)  data are recorded electronically rather than manually 
B)  accrual-basis costs are used rather than cash-basis costs 
C)  fixed and variable costs are not separately identified and both are allocated to products on a per unit basis 
D)  purely inflationary price effects are removed

Question 9

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 10

With a step fixed-cost function ________.

Accepted Answer

A)  the cost varies with the changes in the activity 
B)  fixed cost is often approximated with a continuous variable-cost function 
C)  fixed cost changes proportionally with the level of activity 
D)  the cost remains the same over wide ranges of the activity in each relevant range 
A)  the cost varies with the changes in the activity 
B)  fixed cost is often approximated with a continuous variable-cost function 
C)  fixed cost changes proportionally with the level of activity 
D)  the cost remains the same over wide ranges of the activity in each relevant range

Question 11

Answer the following questions using the information below:
At the Verill Company, the cost of the library and information center 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 center costs.
 $$\begin{array}{l}
\text { Total library and information center costs are } \$ 200,000 \text {. }\
\begin{array} { l r r r } 
\text { Department } & \text { A } & \text { B } & \text { C } \
\text { Number of employees } & 135 & 530 & 135 \
\text { Number of engineers } & 0 & 80 & 20
\end{array}
\end{array}$$
-If the number of employees is considered the cost driver,what amount of library and information center costs will be allocated to Department A?

Accepted Answer

A)  $30,000 
B)  $33,750 
C)  $0 
D)  $66,667 
A)  $30,000 
B)  $33,750 
C)  $0 
D)  $66,667

Question 12

Answer the following questions using the information below:
Flify Manufacturing Inc., incurred total indirect manufacturing labor costs of $500,000. The company is labor intensive. Total labor hours during the period were 5,000. Using qualitative analysis, the manager and the management accountant determine that over the period the indirect manufacturing labor costs are mixed costs with only one cost driver-labor-hours. They separated the total indirect manufacturing labor costs into costs that are fixed ($110,000 based on 8,000 hours of labor) and costs that are variable ($390,000) based on the number of labor-hours used. The company has estimated 7,000 labor hours during the next period.
-Which of the following represents the correct linear cost function?

Accepted Answer

A)  y = $390,000 + $ 48.75X 
B)  y = $110,000 + $100 X 
C)  y = $110,000 + $78 X 
D)  y = $390,000 + $62.50 X 
A)  y = $390,000 + $ 48.75X 
B)  y = $110,000 + $100 X 
C)  y = $110,000 + $78 X 
D)  y = $390,000 + $62.50 X

Question 13

A plot of data that results in one extreme observation most likely indicates that ________.

Accepted Answer

A)  more than one cost pool should be used 
B)  an unusual event such as a plant shutdown occurred during that month 
C)  the cost-allocation base has been incorrectly identified 
D)  individual cost items do not have the same cost driver 
A)  more than one cost pool should be used 
B)  an unusual event such as a plant shutdown occurred during that month 
C)  the cost-allocation base has been incorrectly identified 
D)  individual cost items do not have the same cost driver

Question 14

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

Accepted Answer

A)  cost driver 
B)  fixed cost component 
C)  slope coefficient 
D)  direct cost 
A)  cost driver 
B)  fixed cost component 
C)  slope coefficient 
D)  direct cost

Question 15

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 Vertise Company.
 $$\begin{array} { l r r } 
\text { Month } & \text { Cost } & \text { Units } \
\text { January } & \$ 4,890 & 4,100 \
\text { February } & 4,426 & 3,520 \
\text { March } & 6,730 & 5,200 \
\text { April } & 9,724 & 8,250 \
\text { May } & 5,900 & 4,900 \
\text { June } & 7,336 & 6,600
\end{array}$$ Vertise Company uses the high-low method to analyze mixed costs.
-How would the cost function be stated?

Accepted Answer

A)  y = $484 + $1.12X 
B)  y = $5,298 + $1.19X 
C)  y = $2,388 + $1.12 
D)  y = $7,850 + $1.18X 
A)  y = $484 + $1.12X 
B)  y = $5,298 + $1.19X 
C)  y = $2,388 + $1.12 
D)  y = $7,850 + $1.18X

Question 16

List and briefly describe the six steps in estimating a cost function under quantitative analysis.

Accepted Answer

The first step is to select the dependen

Question 17

Machine-hours is a more economically plausible cost driver of machine maintenance than number of direct manufacturing labor-hours.

Accepted Answer

A) True 
 B)False

Question 18

An experience curve is a function that measures the decline in cost per unit in various business functions of the value chain as the amount of these activities increases.

Accepted Answer

A) True 
 B)False

Question 19

Answer the following questions using the information below:
The Bovise Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Bovise Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation.
 $$\begin{array} { l r r } 
\text { Month } & \text { Cost } & \text { Hours } \
\text { January } & \$ 40,000 & 3,600 \
\text { February } & 38,500 & 3,000 \
\text { March } & 36,280 & 3,300 \
\text { April } & 38,000 & 3,500 \
\text { May } & 69,850 & 5,850 \
\text { June } & 45,000 & 4,250
\end{array}$$
-How is the cost function stated?

Accepted Answer

A)  y = $26,672 + $11.94X 
B)  y = $1,360 + $11.37 
C)  y = $31,350 + $12.83X 
D)  y = $5,500 + $11X 
A)  y = $26,672 + $11.94X 
B)  y = $1,360 + $11.37 
C)  y = $31,350 + $12.83X 
D)  y = $5,500 + $11X

Question 20

The coefficient of determination is important in explaining variances in estimating equations.For a certain estimating equation,the unexplained variation was given as 22,506.The total variation was given as 51,150.What is the coefficient of determination for the equation?

Accepted Answer

A)  0.34 
B)  0.43 
C)  0.56 
D)  0.75 
A)  0.34 
B)  0.43 
C)  0.56 
D)  0.75

A plot of data that results in bunched points with little slope generally indicates ________.

Inflation can distort data that are compared over time so purely inflationary effects should be removed.

Which of the following is a nonlinear cost function?

The cost function y = 10,000 + 3X ________.

The conference method and the account analysis method use subjective assessments to choose a cost driver and to estimate the fixed and variable components of the cost function.

The cost function y = 150 + 10X ________.

Data collection problems arise when ________.

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.

With a step fixed-cost function ________.

A plot of data that results in one extreme observation most likely indicates that ________.

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

List and briefly describe the six steps in estimating a cost function under quantitative analysis.

Machine-hours is a more economically plausible cost driver of machine maintenance than number of direct manufacturing labor-hours.

An experience curve is a function that measures the decline in cost per unit in various business functions of the value chain as the amount of these activities increases.

The coefficient of determination is important in explaining variances in estimating equations.For a certain estimating equation,the unexplained variation was given as 22,506.The total variation was given as 51,150.What is the coefficient of determination for the equation?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, direct-Cost Variances, and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

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

Filters

Exam 10: Determining How Costs Behave

A plot of data that results in bunched points with little slope generally indicates ________.

Inflation can distort data that are compared over time so purely inflationary effects should be removed.

Which of the following is a nonlinear cost function?

The cost function y = 10,000 + 3X ________.

The conference method and the account analysis method use subjective assessments to choose a cost driver and to estimate the fixed and variable components of the cost function.

The cost function y = 150 + 10X ________.

Data collection problems arise when ________.

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.

With a step fixed-cost function ________.

A plot of data that results in one extreme observation most likely indicates that ________.

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

List and briefly describe the six steps in estimating a cost function under quantitative analysis.

Machine-hours is a more economically plausible cost driver of machine maintenance than number of direct manufacturing labor-hours.

An experience curve is a function that measures the decline in cost per unit in various business functions of the value chain as the amount of these activities increases.

The coefficient of determination is important in explaining variances in estimating equations.For a certain estimating equation,the unexplained variation was given as 22,506.The total variation was given as 51,150.What is the coefficient of determination for the equation?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, direct-Cost Variances, and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

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

Filters