Question 1

________ arise as a result of strategic decisions about the scale and scope of an organization's activities.

Accepted Answer

A)  Capacity costs 
B)  Discretionary fixed costs 
C)  Mixed costs 
D)  Committed fixed costs 
A)  Capacity costs 
B)  Discretionary fixed costs 
C)  Mixed costs 
D)  Committed fixed costs

Question 2

Least-squares regression provides statistical information about the reliability of its cost estimates.

Accepted Answer

A) True 
 B)False

Question 3

To approximate cost functions for a particular manufacturing process,engineering analysis relies on ________.

Accepted Answer

A)  statistical analysis 
B)  mathematical analysis 
C)  graphs 
D)  actual observations of the ongoing process 
A)  statistical analysis 
B)  mathematical analysis 
C)  graphs 
D)  actual observations of the ongoing process

Question 4

Leno Company used regression analysis to predict the annual cost of indirect materials.The results were as follows:
$\begin{array}{ll}&\text { Indirect Materials Cost }\
&\text { Explained by Units Produced }\
\text { Constant } & 14,885 \
\text { Standard error of } Y \text { estimate } & 9,960 \
\text { R-Squared } & 0.7832 \
\text { No. of observations } & 22 \
\text { Degrees of freedom } & 20 \
\text { X Coefficient } & 11.75 \
\text { Standarderror of coefficient } & 2.1876
\end{array}$
The linear cost function is ________ where Y = Total indirect materials cost and X = Number of units produced.

Accepted Answer

A)  Y = $2.1876 + $9,960X 
B)  Y = $11.75 + $14,885X 
C)  Y= $9,960 + $14,885X 
D)  Y = $14,885 + 11.75X 
A)  Y = $2.1876 + $9,960X 
B)  Y = $11.75 + $14,885X 
C)  Y= $9,960 + $14,885X 
D)  Y = $14,885 + 11.75X

Question 5

Which statement is TRUE regarding the high-low method to approximate a linear cost function?

Accepted Answer

A)  The second step in the high-low method is to plot the historical data points on a graph. 
B)  Outliers should not be removed from the analysis. 
C)  Draw a line through all the data points using judgment to fit the line as close as possible to all the plotted points. 
D)  The point at which the line intersects the Y-axis is the estimate of fixed costs. 
A)  The second step in the high-low method is to plot the historical data points on a graph. 
B)  Outliers should not be removed from the analysis. 
C)  Draw a line through all the data points using judgment to fit the line as close as possible to all the plotted points. 
D)  The point at which the line intersects the Y-axis is the estimate of fixed costs.

Question 6

In a graph of a mixed cost function,the y-axis is ________ and the x-axis is ________.

Accepted Answer

A)  fixed cost; cost driver activity 
B)  fixed cost; variable cost per unit 
C)  mixed cost; volume in units 
D)  cost; cost driver activity 
A)  fixed cost; cost driver activity 
B)  fixed cost; variable cost per unit 
C)  mixed cost; volume in units 
D)  cost; cost driver activity

Question 7

A cause and effect relationship between a ________ and a ________ is desirable in order to obtain accurate and useful cost functions.

Accepted Answer

A)  cost driver; cost function 
B)  cost function; resource cost 
C)  cost driver; resource cost 
D)  step cost; capacity cost 
A)  cost driver; cost function 
B)  cost function; resource cost 
C)  cost driver; resource cost 
D)  step cost; capacity cost

Question 8

When performing an engineering analysis,one must consider that the observed time period may be abnormal.

Accepted Answer

A) True 
 B)False

Question 9

Managers can eliminate ________ costs entirely for a given year in dire times such as a major recession.However,managers cannot eliminate ________ costs.

Accepted Answer

A)  discretionary variable costs; committed variable costs 
B)  discretionary fixed costs; committed fixed costs 
C)  discretionary variable costs; committed fixed costs 
D)  committed fixed costs; committed variable costs 
A)  discretionary variable costs; committed variable costs 
B)  discretionary fixed costs; committed fixed costs 
C)  discretionary variable costs; committed fixed costs 
D)  committed fixed costs; committed variable costs

Question 10

A measure of how much of the fluctuation of a cost is explained by changes in the cost driver is ________.

Accepted Answer

A)  least squares regression analysis 
B)  standard error of coefficient 
C)  standard error of constant 
D)  coefficient of determination 
A)  least squares regression analysis 
B)  standard error of coefficient 
C)  standard error of constant 
D)  coefficient of determination

Question 11

If a company eliminates all discretionary costs due to a severe recession,this could ________.

Accepted Answer

A)  ensure that the company reports a net loss 
B)  ensure that the company reports a net profit 
C)  reestablish a company's competitive position in an industry 
D)  impair a company's competitive position in an industry 
A)  ensure that the company reports a net loss 
B)  ensure that the company reports a net profit 
C)  reestablish a company's competitive position in an industry 
D)  impair a company's competitive position in an industry

Question 12

When evaluating a cost function estimated by least squares regression,it is important to see if the estimated cost function makes economic sense.This is assessed by ________.

Accepted Answer

A)  examining the sign of the coefficient of determination 
B)  examining the sign of the fixed cost estimate 
C)  examining the sign of the variable cost estimate 
D)  examining the standard deviation of the cost driver 
A)  examining the sign of the coefficient of determination 
B)  examining the sign of the fixed cost estimate 
C)  examining the sign of the variable cost estimate 
D)  examining the standard deviation of the cost driver

Question 13

Jayson Company used regression analysis to predict the annual cost of indirect materials.The results were as follows:
$\begin{array}{ll}&\text { Indirect Materials Cost }\
&\text { Explained by Units Produced }\
\text { Constant } & 14,885 \
\text { Standard error of } Y \text { estimate } & 0.90 \
\text { R-Squared } & 0.60 \
\text { No. of observations } & 22 \
\text { Degrees of freedom } & 20 \
\text { X Coefficient } & 0.70 \
\text { Standard error of coefficient } & 2.1876
\end{array}$
The coefficient of determination is ________.

Accepted Answer

A)  0.60 
B)  0.70 
C)  0.90 
D)  1.10 
A)  0.60 
B)  0.70 
C)  0.90 
D)  1.10

Question 14

Costs arising from the possession of facilities,equipment and a basic organizational structure are ________.

Accepted Answer

A)  capacity costs 
B)  discretionary costs 
C)  committed fixed costs 
D)  engineered costs 
A)  capacity costs 
B)  discretionary costs 
C)  committed fixed costs 
D)  engineered costs

Question 15

When developing cost functions,which of the following statements is FALSE?

Accepted Answer

A)  The cost function must be believable. 
B)  The cost function should explain past cost behavior. 
C)  Personal observations of costs and activities provide the best evidence of a plausible relationship between a cost and its cost driver. 
D)  The cost function does not have to be plausible. 
A)  The cost function must be believable. 
B)  The cost function should explain past cost behavior. 
C)  Personal observations of costs and activities provide the best evidence of a plausible relationship between a cost and its cost driver. 
D)  The cost function does not have to be plausible.

Question 16

When estimating the cost of the maintenance department in a hospital for a month,what cost driver should be used?

Accepted Answer

A)  number of patients per month 
B)  number of nurses working per month 
C)  number of operations per month 
D)  number of patients per month times the length of stay per patient 
A)  number of patients per month 
B)  number of nurses working per month 
C)  number of operations per month 
D)  number of patients per month times the length of stay per patient

Question 17

A linear cost function is estimated over the relevant range of 0 to 1,000 orders.The equation estimated is: Y = $25,000 + $89X where Y equals the total order-processing cost and X equals the number of orders.If the number of orders increases to 1,800,what is the predicted total order-processing cost?

Accepted Answer

A)  $25,000 
B)  $160,200 
C)  $185,200 
D)  cannot be determined 
A)  $25,000 
B)  $160,200 
C)  $185,200 
D)  cannot be determined

Question 18

When examining the output from regression analysis,the fixed cost measure is labeled the ________ by most computer programs.

Accepted Answer

A)  coefficient of determination 
B)  X coefficient 
C)  standard error of estimate 
D)  constant or intercept 
A)  coefficient of determination 
B)  X coefficient 
C)  standard error of estimate 
D)  constant or intercept

Question 19

Capacity costs are variable costs related to a desired level of production or service.

Accepted Answer

A) True 
 B)False

Question 20

The following data has been assembled for Arnold Company.Use the high-low method.
$\begin{array}{lll}
\text { Month }&\text { Cost }&\text { Hours: }\
\text { January } & \$ 24,000 & 2,000 \
\text { February } & \$ 39,000 & 2,200 \
\text { March } & \$ 35,280 & 2,750 \
\text { April } & \$ 36,400 & 3,500 \
\text { May } & \$ 40,000 & 4,000
\end{array}$
The total fixed cost is ________.

Accepted Answer

A)  $3,600 
B)  $8,000 
C)  $21,360 
D)  $26,672 
A)  $3,600 
B)  $8,000 
C)  $21,360 
D)  $26,672

________ arise as a result of strategic decisions about the scale and scope of an organization's activities.

Least-squares regression provides statistical information about the reliability of its cost estimates.

To approximate cost functions for a particular manufacturing process,engineering analysis relies on ________.

Which statement is TRUE regarding the high-low method to approximate a linear cost function?

In a graph of a mixed cost function,the y-axis is and the x-axis is .

A cause and effect relationship between a and a is desirable in order to obtain accurate and useful cost functions.

When performing an engineering analysis,one must consider that the observed time period may be abnormal.

Managers can eliminate costs entirely for a given year in dire times such as a major recession.However,managers cannot eliminate costs.

A measure of how much of the fluctuation of a cost is explained by changes in the cost driver is ________.

If a company eliminates all discretionary costs due to a severe recession,this could ________.

When evaluating a cost function estimated by least squares regression,it is important to see if the estimated cost function makes economic sense.This is assessed by ________.

Costs arising from the possession of facilities,equipment and a basic organizational structure are ________.

When developing cost functions,which of the following statements is FALSE?

When estimating the cost of the maintenance department in a hospital for a month,what cost driver should be used?

When examining the output from regression analysis,the fixed cost measure is labeled the ________ by most computer programs.

Capacity costs are variable costs related to a desired level of production or service.

The following data has been assembled for Arnold Company.Use the high-low method. Month Cost Hours: January \ 24,000 2,000 February \ 39,000 2,200 March \ 35,280 2,750 April \ 36,400 3,500 May \ 40,000 4,000 The total fixed cost is ________.

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus on Pricing Decisions

Relevant Information for Decision Making With a Focus on Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Exam 3: Measurement of Cost Behavior

________ arise as a result of strategic decisions about the scale and scope of an organization's activities.

Least-squares regression provides statistical information about the reliability of its cost estimates.

To approximate cost functions for a particular manufacturing process,engineering analysis relies on ________.

Which statement is TRUE regarding the high-low method to approximate a linear cost function?

In a graph of a mixed cost function,the y-axis is ________ and the x-axis is ________.

A cause and effect relationship between a ________ and a ________ is desirable in order to obtain accurate and useful cost functions.

When performing an engineering analysis,one must consider that the observed time period may be abnormal.

Managers can eliminate ________ costs entirely for a given year in dire times such as a major recession.However,managers cannot eliminate ________ costs.

A measure of how much of the fluctuation of a cost is explained by changes in the cost driver is ________.

If a company eliminates all discretionary costs due to a severe recession,this could ________.

When evaluating a cost function estimated by least squares regression,it is important to see if the estimated cost function makes economic sense.This is assessed by ________.

Costs arising from the possession of facilities,equipment and a basic organizational structure are ________.

When developing cost functions,which of the following statements is FALSE?

When estimating the cost of the maintenance department in a hospital for a month,what cost driver should be used?

When examining the output from regression analysis,the fixed cost measure is labeled the ________ by most computer programs.

Capacity costs are variable costs related to a desired level of production or service.

The following data has been assembled for Arnold Company.Use the high-low method. Month Cost Hours: January \ 24,000 2,000 February \ 39,000 2,200 March \ 35,280 2,750 April \ 36,400 3,500 May \ 40,000 4,000 The total fixed cost is ________.

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus on Pricing Decisions

Relevant Information for Decision Making With a Focus on Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

In a graph of a mixed cost function,the y-axis is and the x-axis is .

A cause and effect relationship between a and a is desirable in order to obtain accurate and useful cost functions.

Managers can eliminate costs entirely for a given year in dire times such as a major recession.However,managers cannot eliminate costs.