Question 1

A cost function is a ________.

Accepted Answer

A) process of calculating present value of projected cash flows 
B) process of allocating costs to cost centers or cost objects 
C) mathematical description of how a cost changes with changes in the level of an activity relating to that cost 
D) is a very thorough and detailed way to identifying a cost object when there is a physical relationship between inputs and outputs 
A) process of calculating present value of projected cash flows 
B) process of allocating costs to cost centers or cost objects 
C) mathematical description of how a cost changes with changes in the level of an activity relating to that cost 
D) is a very thorough and detailed way to identifying a cost object when there is a physical relationship between inputs and outputs

Question 2

Multicollinearity exists in multiple regression when two or more independent variables are highly correlated with each other.

Accepted Answer

A) True 
 B)False

Question 3

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 4

If a cost item is fixed for one cost object,it will be fixed for all cost objects for which it is associated.

Accepted Answer

A) True 
 B)False

Question 5

The major advantages of quantitative methods are that they are objective,so managers can use them to evaluate different cost drivers.

Accepted Answer

A) True 
 B)False

Question 6

Why is choosing the correct cost driver to estimate indirect manufacturing costs important?

Accepted Answer

A) Identifying the wrong driver can lead management to incorrect and costly decisions 
B) Identifying the wrong driver can increase actual overhead costs 
C) Identifying the wrong driver can increase the usage of the correct driver 
D) Identifying the wrong driver can increase the direct costs of the cost object 
A) Identifying the wrong driver can lead management to incorrect and costly decisions 
B) Identifying the wrong driver can increase actual overhead costs 
C) Identifying the wrong driver can increase the usage of the correct driver 
D) Identifying the wrong driver can increase the direct costs of the cost object

Question 7

When new products are introduced,learning-curve effects can have a major influence on production scheduling.

Accepted Answer

A) True 
 B)False

Question 8

As part of his job as cost analyst,John Kelly collected the following information concerning the operations of the Machining Department:
 $\begin{array}{lll}\text { Observation }&\text { Machine-hours }&\text { Total Operating Costs }\
\text { January } & 4,700 & \$ 43,000 \
\text { February } & 5,060 & 45,395 \
\text { March } & 4,180 & 42,535 \
\text { April } & 4,500 & 43,600 \
\text { May } & 4,250 & 42,890
\end{array}$ 
Required:
a.Use the high-low method to determine the estimating cost function with machine-hours as the cost driver.
b.If June's estimated machine-hours are 4,300,calculate the total estimated costs of the Machining Department?

Accepted Answer

a.Slope coefficient = ($45,395

Question 9

High Tech Manufacturing Inc. ,incurred total indirect manufacturing labor costs of $480,000.The company is labor intensive.Total labor hours during the period were 4,400.Using qualitative analysis,the manager and the management accountant determine that over the period the indirect manufacturing labor costs are mixed costs with only one cost driver-labor-hours.They separated the total indirect manufacturing labor costs into costs that are fixed ($130,000 based on 8,100 hours of labor)and costs that are variable based on the number of labor-hours used.The company has estimated 7,700 labor hours during the next period.
 
What will be the total cost for the estimated 7,700 hours? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar. )

Accepted Answer

A) $462,716 
B) $586,296 
C) $840,000 
D) $742,535 
A) $462,716 
B) $586,296 
C) $840,000 
D) $742,535

Question 10

The advantages of the high-low method to estimate a cost function is that it is easy and accurate.

Accepted Answer

A) True 
 B)False

Question 11

Yancy Company manufactures chairs.Because the efforts of manufacturing are approximately equal between labor and machinery,management is considering other possible cost drivers.By considering different cost drivers,it is anticipated that the estimating process can be improved.The following cost estimating equations with their r2 values have been determined for 2017:
   
Required:
a.Which equation should be selected for the analysis?
b.What other factors should be included in the selection of the estimating equation?

Accepted Answer

a.Equation 1 for cutting time is slightl

Question 12

Data collection problems arise when ________.

Accepted Answer

A) data are recorded electronically rather than manually 
B) accrual-basis costs are used rather than cash-basis costs 
C) fixed and variable costs are not separately identified and both are allocated to products on a per unit basis 
D) purely inflationary price effects are removed 
A) data are recorded electronically rather than manually 
B) accrual-basis costs are used rather than cash-basis costs 
C) fixed and variable costs are not separately identified and both are allocated to products on a per unit basis 
D) purely inflationary price effects are removed

Question 13

The cost components of a heater include $35 for the compressor,$11 for the sheet molded compound frame,and $74 per unit for assembly.The factory machines and tools cost is $55,000.The company expects to produce 1,300 heaters in the coming year.What cost function best represents these costs?

Accepted Answer

A) y = 55,000 + 120X 
B) y = 1,300 + 55,000X 
C) y = 55,000 + 1,300X 
D) y = 1,300 + 120X 
A) y = 55,000 + 120X 
B) y = 1,300 + 55,000X 
C) y = 55,000 + 1,300X 
D) y = 1,300 + 120X

Question 14

Bennet Company employs 20 individuals.Eighteen employees are paid $18 per hour and the rest are salaried employees paid $3,000 a month.Which of the following is the total cost function of personnel?

Accepted Answer

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

Question 15

Quantum Company uses the high-low method to estimate the cost function.The information for 2017 is provided below:
 
What is the estimated cost function for the above data?

Accepted Answer

A) y = 26,000 + 62.00X 
B) y = 6,000 + 50.00X 
C) y = 36,000 + 60.00X 
D) y = 30,000 + 65.00X 
A) y = 26,000 + 62.00X 
B) y = 6,000 + 50.00X 
C) y = 36,000 + 60.00X 
D) y = 30,000 + 65.00X

Question 16

The cost of the personnel department at the Speedy Process Company has always been charged to the production departments based upon number of employees.Recently,opinions gathered from the department managers indicated that the number of new hires might also be a predictor of personnel costs to be assigned.Total personnel department costs are $200.000.
   
Required:
Using the above data,prepare a report that contrasts the different amounts of personnel department cost that would be allocated to each of the production departments if the cost driver used is:
a.number of employees.
b.the number of new hires.
c.Which cost estimation method is being used by Speedy Company?

Accepted Answer

@#IMG-DLM&_TB5540_00_TB5540_00

Question 17

In a cost function y = 18,000,the slope coefficient is zero.

Accepted Answer

A) True 
 B)False

Question 18

The Michigan Manufacturing Company has provided the following information:
   
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

a.Variable cost = ($3,261,840

Question 19

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.

If the number of employees is considered the cost driver,what amount of personnel costs will be allocated to Department A? (Round any intermediary calculations to two decimal places and your final answer to the nearest dollar. )

Accepted Answer

A) $41,860 
B) $7,085 
C) $143,111 
D) $44,874 
A) $41,860 
B) $7,085 
C) $143,111 
D) $44,874

Question 20

The cost function y = 300 + 2X ________.

Accepted Answer

A) has a slope coefficient of 300 
B) has an intercept of 300 
C) is a nonlinear 
D) represents a fixed cost 
A) has a slope coefficient of 300 
B) has an intercept of 300 
C) is a nonlinear 
D) represents a fixed cost

A cost function is a ________.

Multicollinearity exists in multiple regression when two or more independent variables are highly correlated with each other.

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

If a cost item is fixed for one cost object,it will be fixed for all cost objects for which it is associated.

The major advantages of quantitative methods are that they are objective,so managers can use them to evaluate different cost drivers.

Why is choosing the correct cost driver to estimate indirect manufacturing costs important?

When new products are introduced,learning-curve effects can have a major influence on production scheduling.

The advantages of the high-low method to estimate a cost function is that it is easy and accurate.

Data collection problems arise when ________.

The cost components of a heater include $35 for the compressor,$11 for the sheet molded compound frame,and $74 per unit for assembly.The factory machines and tools cost is $55,000.The company expects to produce 1,300 heaters in the coming year.What cost function best represents these costs?

Bennet Company employs 20 individuals.Eighteen employees are paid $18 per hour and the rest are salaried employees paid $3,000 a month.Which of the following is the total cost function of personnel?

Quantum Company uses the high-low method to estimate the cost function.The information for 2017 is provided below: What is the estimated cost function for the above data?

In a cost function y = 18,000,the slope coefficient is zero.

The Michigan Manufacturing Company has provided the following information: 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.

The cost function y = 300 + 2X ________.

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 cost function is a ________.

Multicollinearity exists in multiple regression when two or more independent variables are highly correlated with each other.

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

If a cost item is fixed for one cost object,it will be fixed for all cost objects for which it is associated.

The major advantages of quantitative methods are that they are objective,so managers can use them to evaluate different cost drivers.

Why is choosing the correct cost driver to estimate indirect manufacturing costs important?

When new products are introduced,learning-curve effects can have a major influence on production scheduling.

The advantages of the high-low method to estimate a cost function is that it is easy and accurate.

Data collection problems arise when ________.

The cost components of a heater include $35 for the compressor,$11 for the sheet molded compound frame,and $74 per unit for assembly.The factory machines and tools cost is $55,000.The company expects to produce 1,300 heaters in the coming year.What cost function best represents these costs?

Bennet Company employs 20 individuals.Eighteen employees are paid $18 per hour and the rest are salaried employees paid $3,000 a month.Which of the following is the total cost function of personnel?

Quantum Company uses the high-low method to estimate the cost function.The information for 2017 is provided below: What is the estimated cost function for the above data?

In a cost function y = 18,000,the slope coefficient is zero.

The Michigan Manufacturing Company has provided the following information: 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.

The cost function y = 300 + 2X ________.

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