Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The dependent variable is a cost to be predicted and managed,whereas an independent variable or cost driver is the factor used to predict the dependent variable.

Accepted Answer

A) True 
 B)False

Question 3

Ben and Mildred'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:
 
R2 = 0.56
Number of horses:
 
R2 = 0.63
What is the estimated total cost for the coming year if 14,700 trainer hours are incurred and the stable has 310 horses to be trained,based upon the best cost driver?

Accepted Answer

A) $7,992.85 
B) $300,276.50 
C) $332,343.45 
D) $13,995,671.20 
A) $7,992.85 
B) $300,276.50 
C) $332,343.45 
D) $13,995,671.20

Question 4

What are the two assumptions behind a simple linear cost function? Briefly explain the three ways that a linear cost function may behave?

Accepted Answer

The two usual assump

Question 5

M & G TV and Appliance Store is a small company that has hired you to perform some management advisory services.The following information pertains to 2017 operations.
 
Which cost estimation method is being used by M & G TV and Appliance Store?

Accepted Answer

A) the operating costing method 
B) the marginal costing method 
C) the account analysis method 
D) the cost-volume-profit analysis method 
A) the operating costing method 
B) the marginal costing method 
C) the account analysis method 
D) the cost-volume-profit analysis method

Question 6

An experience curve is a function that measures the decline in cost per unit in various business functions of the value chain as the amount of these activities increases.

Accepted Answer

A) True 
 B)False

Question 7

Cross-sectional 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 8

Cross-sectional data pertain to the same entity (organization,plant,activity,and so on)
over successive past periods.

Accepted Answer

A) True 
 B)False

Question 9

Activity-based costing systems use the quantitative analysis method exclusively for cost estimation because of its accuracy.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

The t-value of a coefficient measures how large the value of the estimated coefficient is relative to its standard error.

Accepted Answer

A) True 
 B)False

Question 12

Discuss the potential use of nonlinear curves in cost functions and cost analysis.Give some examples.

Accepted Answer

Cost functions are not always linear.A n

Question 13

Presented below are the production data for the first six months of the year for the mixed costs incurred by Venus Company.
 
Venus Company uses the high-low method to analyze mixed costs.
What is the estimated total cost at an operating level of 6,300 units?

Accepted Answer

A) $9,450 
B) $8,179 
C) $6,867 
D) $7,875 
A) $9,450 
B) $8,179 
C) $6,867 
D) $7,875

Question 14

June Lockett,controller,gathered data on overhead costs and direct labor-hours over the past 12 months.List and discuss the different approaches June can use to estimate a cost function for overhead costs using direct labor-hours as the cost driver.

Accepted Answer

The four approaches to cost estimation a

Question 15

South by Southwest Company used least squares regression analysis to obtain the following output:
   
 $\begin{array}{ll}
X \text { coefficient(s) } & \$ 2.473 \
\text { Standard error of coefficient(s) } & 0.0966
\end{array}$ 
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 16

An "economy of scale" function is an example of a linear cost function.

Accepted Answer

A) True 
 B)False

Question 17

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 18

If the total cost function is y = 6,500 + 9X,calculate the variable cost for 4,400 units.

Accepted Answer

A) $46,100 
B) $39,600 
C) $58,500 
D) $6,500 
A) $46,100 
B) $39,600 
C) $58,500 
D) $6,500

Question 19

The Connors Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable.Connors Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation.
 
What is the estimated total cost at an operating level of 9,000 hours?

Accepted Answer

A) $34,200 
B) $38,200 
C) $41,400 
D) $37,800 
A) $34,200 
B) $38,200 
C) $41,400 
D) $37,800

Question 20

If machine maintenance is scheduled at a time when production is at a low level,then ________.

Accepted Answer

A) low production is the cost driver of high repair costs 
B) an understanding of operations is needed to determine an appropriate cost driver 
C) low production should be avoided since it is the cause of machine maintenance 
D) machine maintenance cannot be accurately predicted 
A) low production is the cost driver of high repair costs 
B) an understanding of operations is needed to determine an appropriate cost driver 
C) low production should be avoided since it is the cause of machine maintenance 
D) machine maintenance cannot be accurately predicted

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

The dependent variable is a cost to be predicted and managed,whereas an independent variable or cost driver is the factor used to predict the dependent variable.

What are the two assumptions behind a simple linear cost function? Briefly explain the three ways that a linear cost function may behave?

M & G TV and Appliance Store is a small company that has hired you to perform some management advisory services.The following information pertains to 2017 operations. Which cost estimation method is being used by M & G TV and Appliance Store?

An experience curve is a function that measures the decline in cost per unit in various business functions of the value chain as the amount of these activities increases.

Cross-sectional data analysis includes ________.

Cross-sectional data pertain to the same entity (organization,plant,activity,and so on) over successive past periods.

Activity-based costing systems use the quantitative analysis method exclusively for cost estimation because of its accuracy.

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

The t-value of a coefficient measures how large the value of the estimated coefficient is relative to its standard error.

Discuss the potential use of nonlinear curves in cost functions and cost analysis.Give some examples.

Presented below are the production data for the first six months of the year for the mixed costs incurred by Venus Company. Venus Company uses the high-low method to analyze mixed costs. What is the estimated total cost at an operating level of 6,300 units?

June Lockett,controller,gathered data on overhead costs and direct labor-hours over the past 12 months.List and discuss the different approaches June can use to estimate a cost function for overhead costs using direct labor-hours as the cost driver.

An "economy of scale" function is an example of a linear cost function.

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

If the total cost function is y = 6,500 + 9X,calculate the variable cost for 4,400 units.

If machine maintenance is scheduled at a time when production is at a low level,then ________.

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

The dependent variable is a cost to be predicted and managed,whereas an independent variable or cost driver is the factor used to predict the dependent variable.

What are the two assumptions behind a simple linear cost function? Briefly explain the three ways that a linear cost function may behave?

M & G TV and Appliance Store is a small company that has hired you to perform some management advisory services.The following information pertains to 2017 operations. Which cost estimation method is being used by M & G TV and Appliance Store?

An experience curve is a function that measures the decline in cost per unit in various business functions of the value chain as the amount of these activities increases.

Cross-sectional data analysis includes ________.

Cross-sectional data pertain to the same entity (organization,plant,activity,and so on) over successive past periods.

Activity-based costing systems use the quantitative analysis method exclusively for cost estimation because of its accuracy.

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

The t-value of a coefficient measures how large the value of the estimated coefficient is relative to its standard error.

Discuss the potential use of nonlinear curves in cost functions and cost analysis.Give some examples.

Presented below are the production data for the first six months of the year for the mixed costs incurred by Venus Company. Venus Company uses the high-low method to analyze mixed costs. What is the estimated total cost at an operating level of 6,300 units?

June Lockett,controller,gathered data on overhead costs and direct labor-hours over the past 12 months.List and discuss the different approaches June can use to estimate a cost function for overhead costs using direct labor-hours as the cost driver.

An "economy of scale" function is an example of a linear cost function.

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

If the total cost function is y = 6,500 + 9X,calculate the variable cost for 4,400 units.

If machine maintenance is scheduled at a time when production is at a low level,then ________.

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