Question 1

Quantitative analysis methods estimate cost functions ________.

Accepted Answer

A)  using the time-and-motion studies 
B)  based on analysis and opinions gathered from various departments 
C)  using a formal mathematical method to fit cost functions to past data observations 
D)  using the pooling of knowledge from each value chain function 
A)  using the time-and-motion studies 
B)  based on analysis and opinions gathered from various departments 
C)  using a formal mathematical method to fit cost functions to past data observations 
D)  using the pooling of knowledge from each value chain function

Question 2

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 engineers 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 3

The high-low method relies on only two observations,the highest and lowest,to estimate a linear cost function.

Accepted Answer

A) True 
 B)False

Question 4

A step variable-cost function ________.

Accepted Answer

A)  is fixed over the long run but not over the short run 
B)  is often approximated with a continuous variable-cost function 
C)  remains the same over a wide range of activity 
D)  example includes adding additional warehouse space 
A)  is fixed over the long run but not over the short run 
B)  is often approximated with a continuous variable-cost function 
C)  remains the same over a wide range of activity 
D)  example includes adding additional warehouse space

Question 5

Which of the following is a learning-curve model?

Accepted Answer

A)  the cumulative average-time learning model and the incremental unit-time learning model 
B)  the simple regression model and the multiple regression model 
C)  the multicollinearity learning model and the goodness of fit learning model 
D)  the account analysis learning model and the conference learning method model 
A)  the cumulative average-time learning model and the incremental unit-time learning model 
B)  the simple regression model and the multiple regression model 
C)  the multicollinearity learning model and the goodness of fit learning model 
D)  the account analysis learning model and the conference learning method model

Question 6

Which of the following is the mathematical expression to calculate the coefficient of determination?

Accepted Answer

A)  Coefficient of determination = 1 - (Unexplained variation / Total variation) 
B)  Coefficient of determination = (1 + Total variation ) / Unexplained variation) 
C)  Coefficient of determination = (1 - Unexplained variation ) / Total variation) 
D)  Coefficient of determination = 1 - Unexplained variation + Total variation) 
A)  Coefficient of determination = 1 - (Unexplained variation / Total variation) 
B)  Coefficient of determination = (1 + Total variation ) / Unexplained variation) 
C)  Coefficient of determination = (1 - Unexplained variation ) / Total variation) 
D)  Coefficient of determination = 1 - Unexplained variation + Total variation)

Question 7

Which of the following is a step to overcome problems related to data collection for estimating cost function?

Accepted Answer

A)  The analyst should remove the inflationary effects. 
B)  The analyst should consider fixed costs as variable. 
C)  The analyst should also use extreme values while calculating cost functions. 
D)  The analyst should not use accrual accounting. 
A)  The analyst should remove the inflationary effects. 
B)  The analyst should consider fixed costs as variable. 
C)  The analyst should also use extreme values while calculating cost functions. 
D)  The analyst should not use accrual accounting.

Question 8

A linear cost function can only represent fixed cost behavior.

Accepted Answer

A) True 
 B)False

Question 9

Roger Moon has just purchased the film studio of a movie company that specializes 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 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 10

Jake's Copy Center hires a new employee.Jake knows he has to be patient with the employee until the employee gains enough experience to meet production standards.Jake is unsure of the learning curve in his operation,but he knows the first job by a new employee averages 50 minutes and the second job averages 40 minutes.Assume all jobs to be equal in size.
Required:
a.What is the learning-curve percentage,assuming the cumulative average-time method?
b.What is the time for a new employee to do 32 jobs with this learning curve using the cumulative average-time method? You may use an index of −0.1520.

Accepted Answer

The answer of Jake's Copy Center hires a new employee.Jake...

Question 11

In regression analysis,the term "goodness of fit" indicates the strength of the relationship between the cost driver and the costs.

Accepted Answer

A) True 
 B)False

Question 12

In a cost function y = 18,000,the slope coefficient is zero.

Accepted Answer

A) True 
 B)False

Question 13

The learning-curve models presented in the text examine ________.

Accepted Answer

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

Question 14

The incremental unit-time learning model with a 80% learning curve indicates that if it takes 150 minutes to manufacture the first unit of a new model,then the second unit will take only 120 minutes to manufacture.

Accepted Answer

A) True 
 B)False

Question 15

Midose'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:
$\begin{array}{lrrr}\text { Variable }& \text { Coefficient } & \text { Standard Error } & \text { t-Value }\
\text { Constant } & \$ 1,004.65 & \$ 217.93 & 4.61 \
\text { Independent Variable } & \$ 22.99 & \$ 3.23 & 7.11\
r62=0.56
\end{array}$ Number of horses:
$\begin{array}{lrrr}\text { Variable }& \text { Coefficient } & \text { Standard Error } & \text { t-Value }\
\text { Constant } & \$ 5,240.95 & \$ 1,180.40 & 4.44 \
\text { Independent Variable } & \$ 951.48 & \$ 271.85 & 3.50\
r62=0.63
\end{array}$ What is the estimated total cost for the coming year if 15,000 trainer hours are incurred and the stable has 350 horses to be trained,based upon the best cost driver?

Accepted Answer

A)  $96,327.90 
B)  $338,258.95 
C)  $345,854.65 
D)  $14,277,440.95 
A)  $96,327.90 
B)  $338,258.95 
C)  $345,854.65 
D)  $14,277,440.95

Question 16

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 labor is $10 per hour.
b.Direct materials cost $15.60 per cubic yard.
c.Utilities have a minimum charge of $5,000,plus a charge of $0.30 per kilowatt-hour.
d.Machine operating costs include $300,000 of machine depreciation per year,plus $100 of utility costs for each day the machinery is in operation.

Accepted Answer

a.y = $10X
b.y = $15

Question 17

A cost function is a ________.

Accepted Answer

A)  process of calculating present value of projected cash flows 
B)  process of allocating costs to cost centers or cost objects 
C)  mathematical description of how a cost changes with changes in the level of an activity relating to that cost 
D)  is a very thorough and detailed way to identifying a cost object when there is a physical relationship between inputs and outputs 
A)  process of calculating present value of projected cash flows 
B)  process of allocating costs to cost centers or cost objects 
C)  mathematical description of how a cost changes with changes in the level of an activity relating to that cost 
D)  is a very thorough and detailed way to identifying a cost object when there is a physical relationship between inputs and outputs

Question 18

Isondo's TV and Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2015 operations.
 $$\begin{array} { l r } 
\text { Sales (1,200 televisions) } & \$ 1,200,000 \
\text { Cost of goods sold } & 540,000 \
\text { Store manager's salary per year } & 108,000 \
\text { Operating costs per year } & 216,000 \
\text { Advertising and promotion per year } & 24,000 \
\text { Commissions ( } 3 \% \text { of sales) } & 36,000
\end{array}$$
-What was the variable cost per unit sold for 2015?

Accepted Answer

A)  $30 
B)  $480 
C)  $770 
D)  $450 
A)  $30 
B)  $480 
C)  $770 
D)  $450

Question 19

The coefficient of determination (r2)measures the percentage of variation in X (the independent variable)explained by Y (the dependent variable).

Accepted Answer

A) True 
 B)False

Question 20

The cost function y = 2,000 + 6X ________.

Accepted Answer

A)  has a slope coefficient of 2,000 
B)  has an intercept of 6 
C)  is a straight line 
D)  represents a fixed cost 
A)  has a slope coefficient of 2,000 
B)  has an intercept of 6 
C)  is a straight line 
D)  represents a fixed cost

Quantitative analysis methods estimate cost functions ________.

The high-low method relies on only two observations,the highest and lowest,to estimate a linear cost function.

A step variable-cost function ________.

Which of the following is a learning-curve model?

Which of the following is the mathematical expression to calculate the coefficient of determination?

Which of the following is a step to overcome problems related to data collection for estimating cost function?

A linear cost function can only represent fixed cost behavior.

In regression analysis,the term "goodness of fit" indicates the strength of the relationship between the cost driver and the costs.

In a cost function y = 18,000,the slope coefficient is zero.

The learning-curve models presented in the text examine ________.

The incremental unit-time learning model with a 80% learning curve indicates that if it takes 150 minutes to manufacture the first unit of a new model,then the second unit will take only 120 minutes to manufacture.

A cost function is a ________.

The coefficient of determination (r²)measures the percentage of variation in X (the independent variable)explained by Y (the dependent variable).

The cost function y = 2,000 + 6X ________.

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

Quantitative analysis methods estimate cost functions ________.

The high-low method relies on only two observations,the highest and lowest,to estimate a linear cost function.

A step variable-cost function ________.

Which of the following is a learning-curve model?

Which of the following is the mathematical expression to calculate the coefficient of determination?

Which of the following is a step to overcome problems related to data collection for estimating cost function?

A linear cost function can only represent fixed cost behavior.

In regression analysis,the term "goodness of fit" indicates the strength of the relationship between the cost driver and the costs.

In a cost function y = 18,000,the slope coefficient is zero.

The learning-curve models presented in the text examine ________.

The incremental unit-time learning model with a 80% learning curve indicates that if it takes 150 minutes to manufacture the first unit of a new model,then the second unit will take only 120 minutes to manufacture.

A cost function is a ________.

The coefficient of determination (r2)measures the percentage of variation in X (the independent variable)explained by Y (the dependent variable).

The cost function y = 2,000 + 6X ________.

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

The coefficient of determination (r²)measures the percentage of variation in X (the independent variable)explained by Y (the dependent variable).