Question 1

A flat or slightly sloped regression line indicates a strong relationship between the cost driver and costs.

Accepted Answer

A) True 
 B)False

Question 2

All cost functions are linear.

Accepted Answer

A) True 
 B)False

Question 3

Degen Company used least squares regression analysis to obtain the following output:
 Payroll Department Cost
Explained by Number of Employees
$\begin{array}{lr}
\text { Constant } & \$ 7,540 \
\text { Standard error of } Y \text { estimate } & 819 \
\mathrm{r}^{2} & 0.8924 \
\text { Number of obærvations } & 20 \
\text { X coefficient(s) } & \$ 2.473 \
\text { Standard error of coefficient(s) } & 0.0966
\end{array}$ Required:
a.What is the total fixed cost?
b.What is the variable cost per employee?
c.Prepare the linear cost function.
d.What is the coefficient of determination? Comment on the goodness of fit.

Accepted Answer

a.The constant or intercept is the total

Question 4

A learning curve is a function that measures how labor-hours per unit decrease,as units of production decrease.

Accepted Answer

A) True 
 B)False

Question 5

The Bover Company has provided the following information:
 $\begin{array}{lrr}\text { Units of Output } & 33,000 \text { Units } &46,200 \text { Units }\
\text { Direct materials } & \$ 316,800 & \$ 443,520 \
\text { Workers' wages } & 1,188,000 & 1,663,200 \
\text { Supervisors' salaries } & 343,200 & 343,200 \
\text { Equipment depreciation } & 166,320 & 166,320 \
\text { Maintenance } & 89,760 & 121,440 \
\text { Utilities } & 422,400 & 580,800 \
\text { Total } & \$ 2,526,480 & \$ 3,318,480
\end{array}$ Using the high-low method and the information provided above,
a.identify the linear cost function equation and
b.estimate the total cost at 38,000 units of output.

Accepted Answer

The answer of The Bover Company has provided the following...

Question 6

y = a + bX,y = a,and y = bX are the three basic types of linear cost functions.

Accepted Answer

A) True 
 B)False

Question 7

It is appropriate to incorporate expected learning-curve efficiencies when evaluating performance.

Accepted Answer

A) True 
 B)False

Question 8

Answer the following questions using the information below:
Genend's Good Value Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2015 operations.
 $\begin{array}{lr}
\text { Sales ( } 6,000 \text { microwave ovens) } & \$ 1,740,000 \
\text { Cost of goods sold } & 960,000 \
\text { Store manager's salary per year } & 100,000 \
\text { Operating costs per year } & 250,000 \
\text { Advertising and promotion per year } & 30,000 \
\text { Commissions (3\% of sales) } & 52,200
\end{array}$
-What were the total fixed costs for 2015?

Accepted Answer

A)  $1,392,200 
B)  $380,000 
C)  $350,000 
D)  $1,012,200 
A)  $1,392,200 
B)  $380,000 
C)  $350,000 
D)  $1,012,200

Question 9

As a result of learning curve,________.

Accepted Answer

A)  unit costs increase as productivity increases and the unit-cost function behaves nonlinearly 
B)  unit costs decrease as productivity increases and the unit-cost function behaves nonlinearly 
C)  unit costs increase as productivity increases and the unit-cost function behaves linearly 
D)  unit costs decrease as productivity increases and the unit-cost function behaves linearly 
A)  unit costs increase as productivity increases and the unit-cost function behaves nonlinearly 
B)  unit costs decrease as productivity increases and the unit-cost function behaves nonlinearly 
C)  unit costs increase as productivity increases and the unit-cost function behaves linearly 
D)  unit costs decrease as productivity increases and the unit-cost function behaves linearly

Question 10

Answer the following questions using the information below:
Genend's Good Value Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2015 operations.
 $\begin{array}{lr}
\text { Sales ( } 6,000 \text { microwave ovens) } & \$ 1,740,000 \
\text { Cost of goods sold } & 960,000 \
\text { Store manager's salary per year } & 100,000 \
\text { Operating costs per year } & 250,000 \
\text { Advertising and promotion per year } & 30,000 \
\text { Commissions (3\% of sales) } & 52,200
\end{array}$
-What are the estimated total costs if Genend's store expects to sell 8,000 units next year?

Accepted Answer

A)  $812,117 
B)  $1,729,600 
C)  $1,952,200 
D)  $380,450 
A)  $812,117 
B)  $1,729,600 
C)  $1,952,200 
D)  $380,450

Question 11

When estimating a cost function,cost behavior can be approximated by a linear cost function within the relevant range.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is an equation of a fixed cost function?

Accepted Answer

A)  y = (a + b)X 
B)  y = a + bX 
C)  y = bX 
D)  y = a 
A)  y = (a + b)X 
B)  y = a + bX 
C)  y = bX 
D)  y = a

Question 13

An inaccurate cost function with a constant that is estimated too high may most likely result in ________.

Accepted Answer

A)  evaluating a weak manager as providing strong performance 
B)  promoting a product that is actually less profitable than budgeted 
C)  predicting total costs that are too low 
D)  replicating processes that are truly cost saving 
A)  evaluating a weak manager as providing strong performance 
B)  promoting a product that is actually less profitable than budgeted 
C)  predicting total costs that are too low 
D)  replicating processes that are truly cost saving

Question 14

It can be inferred that when there is a high correlation between two variables,one is the cause of the other.

Accepted Answer

A) True 
 B)False

Question 15

Answer the following questions using the information below:
Uninder Company uses the high-low method to estimate the cost function. The information for 2015 is provided below:
 $\begin{array}{lll}&\text { Machine-hours } & \text { Labor Costs }\
\text { Highest observation of cost driver } & 550 & \$ 22,000 \
\text { Lowest observation of cost driver } & 250 & \$ 13,000
\end{array}$
-What is the constant for the estimated cost equation?

Accepted Answer

A)  $5,500 
B)  $13,000 
C)  $16,500 
D)  $22,000 
A)  $5,500 
B)  $13,000 
C)  $16,500 
D)  $22,000

Question 16

A particular cost item could be variable for one cost object and fixed for another cost object.

Accepted Answer

A) True 
 B)False

Question 17

If the total cost function is y = 5,000 + 7X,calculate the variable cost for 4,000 units.

Accepted Answer

A)  $33,000 
B)  $28,000 
C)  $20,000 
D)  $5,000 
A)  $33,000 
B)  $28,000 
C)  $20,000 
D)  $5,000

Question 18

Time-series data analysis includes ________.

Accepted Answer

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

Question 19

The Perize Corporation used regression analysis to predict the annual cost of indirect materials.The results were as follows: $\begin{array}{lr}\text { Indirect Materials Cost Explained by Units Produced }\
\text { Constant } & \$ 15,685 \
\text { Standard error of } Y \text { estimate } & \$ 3,500 \
\mathrm{r}^{2} & 0.7832 \
\text { Number of observations } & 20 \
X \text { coefficient(s) } & 10.25 \
\text { Standard error of coefficient(s) } & 2.1876
\end{array}$

Accepted Answer

A)  Y = $15,685 + $10.25X 
B)  Y = $3,500 + $5.15X 
C)  Y = $19,185 + $4.48X 
D)  Y = $12,285 + $10.25X 
A)  Y = $15,685 + $10.25X 
B)  Y = $3,500 + $5.15X 
C)  Y = $19,185 + $4.48X 
D)  Y = $12,285 + $10.25X

Question 20

Which of the following functions represents the least total cost assuming the number of units is equal in each case?

Accepted Answer

A)  y = 180 + 7X 
B)  y = 90 + 6X 
C)  y = 90 + 7X 
D)  y = 180 + 6X 
A)  y = 180 + 7X 
B)  y = 90 + 6X 
C)  y = 90 + 7X 
D)  y = 180 + 6X

A flat or slightly sloped regression line indicates a strong relationship between the cost driver and costs.

All cost functions are linear.

A learning curve is a function that measures how labor-hours per unit decrease,as units of production decrease.

y = a + bX,y = a,and y = bX are the three basic types of linear cost functions.

It is appropriate to incorporate expected learning-curve efficiencies when evaluating performance.

As a result of learning curve,________.

When estimating a cost function,cost behavior can be approximated by a linear cost function within the relevant range.

Which of the following is an equation of a fixed cost function?

An inaccurate cost function with a constant that is estimated too high may most likely result in ________.

It can be inferred that when there is a high correlation between two variables,one is the cause of the other.

A particular cost item could be variable for one cost object and fixed for another cost object.

If the total cost function is y = 5,000 + 7X,calculate the variable cost for 4,000 units.

Time-series data analysis includes ________.

Which of the following functions represents the least total cost assuming the number of units is equal in each case?

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 flat or slightly sloped regression line indicates a strong relationship between the cost driver and costs.

All cost functions are linear.

A learning curve is a function that measures how labor-hours per unit decrease,as units of production decrease.

y = a + bX,y = a,and y = bX are the three basic types of linear cost functions.

It is appropriate to incorporate expected learning-curve efficiencies when evaluating performance.

As a result of learning curve,________.

When estimating a cost function,cost behavior can be approximated by a linear cost function within the relevant range.

Which of the following is an equation of a fixed cost function?

An inaccurate cost function with a constant that is estimated too high may most likely result in ________.

It can be inferred that when there is a high correlation between two variables,one is the cause of the other.

A particular cost item could be variable for one cost object and fixed for another cost object.

If the total cost function is y = 5,000 + 7X,calculate the variable cost for 4,000 units.

Time-series data analysis includes ________.

Which of the following functions represents the least total cost assuming the number of units is equal in each case?

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