Question 1

The quantitative analysis method uses a formal mathematical method to identify cause-and-effect relationships among past data observations.

Accepted Answer

A) True 
 B)False

Question 2

An inaccurate cost function with a slope coefficient that is estimated too low may most likely result in ________.

Accepted Answer

A)  predicting total costs that are too high 
B)  initiating cost cutting measures when they are unnecessary 
C)  evaluating a weak manager as having strong performance 
D)  promoting a product that is actually more profitable than budgeted 
A)  predicting total costs that are too high 
B)  initiating cost cutting measures when they are unnecessary 
C)  evaluating a weak manager as having strong performance 
D)  promoting a product that is actually more profitable than budgeted

Question 3

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 was the variable cost per unit sold for 2015?

Accepted Answer

A)  $8.70 
B)  $160 
C)  $168.70 
D)  $232 
A)  $8.70 
B)  $160 
C)  $168.70 
D)  $232

Question 4

Regression analysis ________.

Accepted Answer

A)  calculates the slope coefficient using only two observed values within the relevant range and their respective costs 
B)  measures the average amount of change in the dependent variable associated with a unit change in one or more independent variables 
C)  estimates the cost functions using the time-and-motion studies 
D)  measures the variability or dispersion in a set of data points 
A)  calculates the slope coefficient using only two observed values within the relevant range and their respective costs 
B)  measures the average amount of change in the dependent variable associated with a unit change in one or more independent variables 
C)  estimates the cost functions using the time-and-motion studies 
D)  measures the variability or dispersion in a set of data points

Question 5

Goodness-of-fit measures how well the predicted values in a cost estimating equation ________.

Accepted Answer

A)  match the cost driver 
B)  determine the level of activity 
C)  match the actual cost observations 
D)  rely on the independent variable 
A)  match the cost driver 
B)  determine the level of activity 
C)  match the actual cost observations 
D)  rely on the independent variable

Question 6

A steeply sloped regression line indicates ________.

Accepted Answer

A)  a strong relationship between the cost driver and costs 
B)  a greater proportion of fixed costs than variable costs 
C)  an increase in number of units produced during the period 
D)  a strong relationship between fixed cost and variable cost 
A)  a strong relationship between the cost driver and costs 
B)  a greater proportion of fixed costs than variable costs 
C)  an increase in number of units produced during the period 
D)  a strong relationship between fixed cost and variable cost

Question 7

The first step in estimating a cost function using quantitative analysis is to plot the data.

Accepted Answer

A) True 
 B)False

Question 8

The high-low method involves choosing the period of highest cost driver activity and the period of lowest cost driver activity.

Accepted Answer

A) True 
 B)False

Question 9

Answer the following questions using the information below:
For Divaxo Company, labor-hours are 30,000 and wages $130,000 at the high point of the relevant range, and labor-hours are 18,000 and wages $85,000 at the low point of the relevant range.
-What is the constant?

Accepted Answer

A)  $17,500 
B)  $45,000 
C)  $7,000 
D)  $4,375 
A)  $17,500 
B)  $45,000 
C)  $7,000 
D)  $4,375

Question 10

Place the following steps in order for estimating a cost function using quantitative analysis. A = Plot the data
B = Collect data on the dependent variable and the cost driver.
C = Choose the dependent variable
D = Identify the independent variable,or cost driver
E = Estimate the cost function

Accepted Answer

A)  D C E A B 
B)  C D B A E 
C)  A D C E B 
D)  E D C B A 
A)  D C E A B 
B)  C D B A E 
C)  A D C E B 
D)  E D C B A

Question 11

Which cost estimation method analyzes accounts in the subsidiary ledger as variable,fixed,or mixed using qualitative methods?

Accepted Answer

A)  the account analysis method 
B)  the conference method 
C)  the marginal costing method 
D)  the incremental costing method 
A)  the account analysis method 
B)  the conference method 
C)  the marginal costing method 
D)  the incremental costing method

Question 12

The account analysis method of cost estimation classifies account costs as fixed,mixed,or variable using qualitative judgments.

Accepted Answer

A) True 
 B)False

Question 13

Misinterpretation of data can arise when fixed costs are reported on a per unit basis.

Accepted Answer

A) True 
 B)False

Question 14

Crimson Services,Inc.,employs 8 individuals.They are all paid $16.50 per hour.How would total costs of personnel be classified?

Accepted Answer

A)  variable cost 
B)  mixed cost 
C)  irrelevant cost 
D)  fixed cost 
A)  variable cost 
B)  mixed cost 
C)  irrelevant cost 
D)  fixed cost

Question 15

The larger the vertical difference between actual costs and predicted costs the better the goodness of fit.

Accepted Answer

A) True 
 B)False

Question 16

To complete the first setup on a new machine took an employee 100 minutes.Using an 80% incremental unit-time learning model indicates that the second setup on the new machine is expected to take ________.

Accepted Answer

A)  80 minutes 
B)  120 minutes 
C)  70 minutes 
D)  60 minutes 
A)  80 minutes 
B)  120 minutes 
C)  70 minutes 
D)  60 minutes

Question 17

Answer the following questions using the information below:
For Divaxo Company, labor-hours are 30,000 and wages $130,000 at the high point of the relevant range, and labor-hours are 18,000 and wages $85,000 at the low point of the relevant range.
-What is the slope coefficient?

Accepted Answer

A)  $4.45 
B)  $3.75 
C)  $4.33 
D)  $4.72 
A)  $4.45 
B)  $3.75 
C)  $4.33 
D)  $4.72

Question 18

The ideal database for estimating cost functions contains ________.

Accepted Answer

A)  numerous cost driver observations 
B)  only the independent variable and not the dependent variable 
C)  cost driver observations spanning a narrow range 
D)  a few values of the cost driver that are grouped closely together 
A)  numerous cost driver observations 
B)  only the independent variable and not the dependent variable 
C)  cost driver observations spanning a narrow range 
D)  a few values of the cost driver that are grouped closely together

Question 19

Which of the following statements shows a difference between simple regression and multiple regression?

Accepted Answer

A)  Simple regression uses more than one dependent and independent variables, whereas multiple regression uses only one dependent and independent variable. 
B)  Simple regression uses only the independent variables, whereas multiple regression uses only dependent variables. 
C)  Simple regression uses only one dependent and one independent variable, whereas multiple regression uses one dependent and more than one independent variable. 
D)  Simple regression uses only one dependent variable and more than one independent variables, whereas multiple regression uses more than one dependent variable and only one independent variable. 
A)  Simple regression uses more than one dependent and independent variables, whereas multiple regression uses only one dependent and independent variable. 
B)  Simple regression uses only the independent variables, whereas multiple regression uses only dependent variables. 
C)  Simple regression uses only one dependent and one independent variable, whereas multiple regression uses one dependent and more than one independent variable. 
D)  Simple regression uses only one dependent variable and more than one independent variables, whereas multiple regression uses more than one dependent variable and only one independent variable.

Question 20

When using the high-low method,the numerator of the equation that determines the slope is the ________.

Accepted Answer

A)  difference between the positive and negative values of dependent and independent variables 
B)  difference between the fixed cost and variable cost associated with the cost driver 
C)  difference between the high and low observations of the cost driver 
D)  difference between the costs associated with highest and lowest observations of the cost driver 
A)  difference between the positive and negative values of dependent and independent variables 
B)  difference between the fixed cost and variable cost associated with the cost driver 
C)  difference between the high and low observations of the cost driver 
D)  difference between the costs associated with highest and lowest observations of the cost driver

Exam 10: Determining How Costs Behave

The quantitative analysis method uses a formal mathematical method to identify cause-and-effect relationships among past data observations.

An inaccurate cost function with a slope coefficient that is estimated too low may most likely result in ________.

Regression analysis ________.

Goodness-of-fit measures how well the predicted values in a cost estimating equation ________.

A steeply sloped regression line indicates ________.

The first step in estimating a cost function using quantitative analysis is to plot the data.

The high-low method involves choosing the period of highest cost driver activity and the period of lowest cost driver activity.

Answer the following questions using the information below: For Divaxo Company, labor-hours are 30,000 and wages $130,000 at the high point of the relevant range, and labor-hours are 18,000 and wages $85,000 at the low point of the relevant range. -What is the constant?

Place the following steps in order for estimating a cost function using quantitative analysis. A = Plot the data B = Collect data on the dependent variable and the cost driver. C = Choose the dependent variable D = Identify the independent variable,or cost driver E = Estimate the cost function

Which cost estimation method analyzes accounts in the subsidiary ledger as variable,fixed,or mixed using qualitative methods?

The account analysis method of cost estimation classifies account costs as fixed,mixed,or variable using qualitative judgments.

Misinterpretation of data can arise when fixed costs are reported on a per unit basis.

Crimson Services,Inc.,employs 8 individuals.They are all paid $16.50 per hour.How would total costs of personnel be classified?

The larger the vertical difference between actual costs and predicted costs the better the goodness of fit.

To complete the first setup on a new machine took an employee 100 minutes.Using an 80% incremental unit-time learning model indicates that the second setup on the new machine is expected to take ________.

Answer the following questions using the information below: For Divaxo Company, labor-hours are 30,000 and wages $130,000 at the high point of the relevant range, and labor-hours are 18,000 and wages $85,000 at the low point of the relevant range. -What is the slope coefficient?

The ideal database for estimating cost functions contains ________.

Which of the following statements shows a difference between simple regression and multiple regression?

When using the high-low method,the numerator of the equation that determines the slope is the ________.

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

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