Question 1

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 2

Multiple regression analysis uses only independent variables and not dependent variables.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is true of choosing cost drivers under activity-based costing?

Accepted Answer

A) All the cost drivers should be unit-level cost drivers. 
B) There should be a clear cause-and-effect relationship between cost drivers and cost pools. 
C) Cost drivers are independent variables. 
D) A single cost driver should be identified for all the activities. 
A) All the cost drivers should be unit-level cost drivers. 
B) There should be a clear cause-and-effect relationship between cost drivers and cost pools. 
C) Cost drivers are independent variables. 
D) A single cost driver should be identified for all the activities.

Question 4

Generally a coefficient of determination (r2)of 0.30 or higher passes a goodness of fit test.

Accepted Answer

A) True 
 B)False

Question 5

An experience curve ________.

Accepted Answer

A) is a narrower application of the learning curve 
B) measures the decline in cost per unit as production decreases for various value-chain functions such as marketing as production increases 
C) only measures the decline in labor-hours per unit as units produced increases 
D) measures the increase in cost per unit as productivity increases 
A) is a narrower application of the learning curve 
B) measures the decline in cost per unit as production decreases for various value-chain functions such as marketing as production increases 
C) only measures the decline in labor-hours per unit as units produced increases 
D) measures the increase in cost per unit as productivity increases

Question 6

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 7

Which of the following is a problem related to cost analysis?

Accepted Answer

A) fixed costs are allocated as if they are variable costs 
B) extreme observations are adjusted or removed 
C) a company keeps accounting records on the accrual basis 
D) inflationary effects are removed 
A) fixed costs are allocated as if they are variable costs 
B) extreme observations are adjusted or removed 
C) a company keeps accounting records on the accrual basis 
D) inflationary effects are removed

Question 8

The managers of the production department have decided to use the production levels of 2017 and 2018 as examples of the highest and lowest years of operating levels.Data for those years are as follows:
   
Required:
What is the cost estimating equation for the department if gallons of chemicals are used as the cost driver?

Accepted Answer

@#IMG-DLM&_TB5540_00

Question 9

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 10

When management develops cost estimations,they must chose one method,such as industrial engineering,conference,account analysis,or quantitative analysis,and stay consistently with that method as each method is mutually exclusive of the others.

Accepted Answer

A) True 
 B)False

Question 11

South Coast Appliance Store is a small company that has hired you to perform some management advisory services.The following information pertains to 2017 operations.
 
What was the variable cost per unit sold for 2017?

Accepted Answer

A) $32.00 
B) $175 
C) $207.00 
D) $277.72 
A) $32.00 
B) $175 
C) $207.00 
D) $277.72

Question 12

All cost functions are linear.

Accepted Answer

A) True 
 B)False

Question 13

At the Spring Valley Company,the cost of the personnel department has always been charged to production departments based upon number of employees.Recently,opinions gathered from the department managers indicate that the number of new hires might be a better predictor of personnel costs.

Which cost estimation method is being used by Spring Valley Company?

Accepted Answer

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

Question 14

The new cost analyst in your accounting department has just received a computer-generated report that contains the results of a simple regression program for cost estimation.The summary results of the report appear as follows:
   
Required:
a.What is the cost estimation equation according to the report?
b.What is the goodness of fit? What does it tell about the estimating equation?

Accepted Answer

a.y = $74.79 + $1,081.76X
b.Goodness of

Question 15

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 16

A cost driver should be measurable and have an economically plausible relationship with the dependent variable which means:

Accepted Answer

A) that the cost driver can be identified in an economically feasible way 
B) that the relationship is based on correlation 
C) that the relationship is based on a cause -and-effect criterion and makes economic sense to management 
D) that the relationship must be based on a physical relationship 
A) that the cost driver can be identified in an economically feasible way 
B) that the relationship is based on correlation 
C) that the relationship is based on a cause -and-effect criterion and makes economic sense to management 
D) that the relationship must be based on a physical relationship

Question 17

A step cost functions indicates that there are

Accepted Answer

A) costs that remain the same over various ranges of activity but increases by discrete amounts as the level of activity increases 
B) greater proportions of fixed costs than variable costs at lower levels of activities 
C) increases in the number of units produced during the each month of the period 
D) strong relationships between fixed costs and variable costs 
A) costs that remain the same over various ranges of activity but increases by discrete amounts as the level of activity increases 
B) greater proportions of fixed costs than variable costs at lower levels of activities 
C) increases in the number of units produced during the each month of the period 
D) strong relationships between fixed costs and variable costs

Question 18

Place the following steps in order for estimating a cost function using quantitative analysis.

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 19

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

Accepted Answer

A) True 
 B)False

Question 20

The slope of the line of regression is the ________.

Accepted Answer

A) rate at which the dependent variable varies 
B) rate at which the independent variable varies 
C) difference between the fixed cost and variable cost associated with the cost driver 
D) difference between actual cost and estimated cost for each observation of the cost driver 
A) rate at which the dependent variable varies 
B) rate at which the independent variable varies 
C) difference between the fixed cost and variable cost associated with the cost driver 
D) difference between actual cost and estimated cost for each observation of the cost driver

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

Multiple regression analysis uses only independent variables and not dependent variables.

Which of the following statements is true of choosing cost drivers under activity-based costing?

Generally a coefficient of determination (r²)of 0.30 or higher passes a goodness of fit test.

An experience curve ________.

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

Which of the following is a problem related to cost analysis?

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

When management develops cost estimations,they must chose one method,such as industrial engineering,conference,account analysis,or quantitative analysis,and stay consistently with that method as each method is mutually exclusive of the others.

South Coast Appliance Store is a small company that has hired you to perform some management advisory services.The following information pertains to 2017 operations. What was the variable cost per unit sold for 2017?

All cost functions are linear.

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

A cost driver should be measurable and have an economically plausible relationship with the dependent variable which means:

A step cost functions indicates that there are

Place the following steps in order for estimating a cost function using quantitative analysis.

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

The slope of the line of regression 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

Filters

Exam 10: Determining How Costs Behave

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

Multiple regression analysis uses only independent variables and not dependent variables.

Which of the following statements is true of choosing cost drivers under activity-based costing?

Generally a coefficient of determination (r2)of 0.30 or higher passes a goodness of fit test.

An experience curve ________.

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

Which of the following is a problem related to cost analysis?

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

When management develops cost estimations,they must chose one method,such as industrial engineering,conference,account analysis,or quantitative analysis,and stay consistently with that method as each method is mutually exclusive of the others.

South Coast Appliance Store is a small company that has hired you to perform some management advisory services.The following information pertains to 2017 operations. What was the variable cost per unit sold for 2017?

All cost functions are linear.

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

A cost driver should be measurable and have an economically plausible relationship with the dependent variable which means:

A step cost functions indicates that there are

Place the following steps in order for estimating a cost function using quantitative analysis.

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

The slope of the line of regression 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

Filters

Generally a coefficient of determination (r²)of 0.30 or higher passes a goodness of fit test.