Question 1

Which of the following is an advantage of using the method of least squares rather than the high-low method?

Accepted Answer

A) It can be calculated without a calculator. 
B) Two points are used to develop the cost function. 
C) For a given set of data, it will always produce the same cost formulae. 
D) The outlying observations have no effect on the cost function when the calculations are complete. 
A) It can be calculated without a calculator. 
B) Two points are used to develop the cost function. 
C) For a given set of data, it will always produce the same cost formulae. 
D) The outlying observations have no effect on the cost function when the calculations are complete. C

Question 2

Select the best description for the following:
-($40,000 − $30,000)/(3,000 − 2,500)

Accepted Answer

A) Fixed cost 
B) Variable cost 
C) Dependent variable 
D) Independent variable 
E) Variable rate
F)Cost equation 
A) Fixed cost 
B) Variable cost 
C) Dependent variable 
D) Independent variable 
E) Variable rate
F)Cost equation E

Question 3

Select the appropriate item for each of the definitions listed below.
-May reveal the presence of outliers

Accepted Answer

A) High-low method 
B) Scattergraph method 
C) Method of least squares 
A) High-low method 
B) Scattergraph method 
C) Method of least squares B

Question 4

Using a linear regression program,the term "X Variable 1" refers to the dependent variable.

Accepted Answer

A) True 
 B)False

Question 5

Select the appropriate type of cost for each of the definitions below.
-Has both a variable and a fixed component

Accepted Answer

A) Variable 
B) Fixed 
C) Mixed 
D) Step 
A) Variable 
B) Fixed 
C) Mixed 
D) Step

Question 6

Select the best description for the following:
-Utility cost

Accepted Answer

A) Fixed cost 
B) Variable cost 
C) Dependent variable 
D) Independent variable 
E) Variable rate
F)Cost equation 
A) Fixed cost 
B) Variable cost 
C) Dependent variable 
D) Independent variable 
E) Variable rate
F)Cost equation

Question 7

What is characteristic of variable costs within the relevant range?

Accepted Answer

A) stay constant on a per unit basis as output changes 
B) decrease in total as output increases 
C) decrease in per unit as output increases 
D) stay constant in total as output increases 
A) stay constant on a per unit basis as output changes 
B) decrease in total as output increases 
C) decrease in per unit as output increases 
D) stay constant in total as output increases

Question 8

What is characteristic of step costs?

Accepted Answer

A) remain the same within the relevant range 
B) have an increased fixed component at specified intervals 
C) increase in direct proportion to increases in output 
D) decrease in direct proportion to increases in output 
A) remain the same within the relevant range 
B) have an increased fixed component at specified intervals 
C) increase in direct proportion to increases in output 
D) decrease in direct proportion to increases in output

Question 9

Select the appropriate item for each of the definitions listed below.
-Results in the best-fitting line through a set of data points

Accepted Answer

A) High-low method 
B) Scattergraph method 
C) Method of least squares 
A) High-low method 
B) Scattergraph method 
C) Method of least squares

Question 10

The following six months of data were collected on Kelowna Company's electricity cost and the number of machine hours in a factory.
 $\begin{array}{lrr}& \text { Electricity } & \text { Machine } \\text { Month } & \text { cost } & \text { hours }\
\text { June } & \$ 25,160 & 4,500 \
\text { July } & 26,170 & 4,810 \
\text { August } & 27,250 & 5,120 \
\text { September } & 26,680 & 5,010 \
\text { October } & 27,950 & 5,430 \
\text { November } & 27,500 & 5,190
\end{array}$
-Refer to the Figure.Which of the following is the set of high and low months?
High                 Low

Accepted Answer

A) June               July 
B) June              October 
C) October         September 
D) October        June 
A) June               July 
B) June              October 
C) October         September 
D) October        June

Question 11

Determining cost behaviour is essential to planning,controlling,and decision making.

Accepted Answer

A) True 
 B)False

Question 12

Banff Company manufactures snowboards. The management accountant wants to calculate the fixed and variable costs associated with the leasing of machinery. Data for the past four months were collected. $\begin{array}{lrr}& & \text { Machine } \
\text { Month } &\text { Lease cost } & \text { hours }\
\text { April } & \$ 21,000 & 550 \
\text { May } & 16,500 & 420 \
\text { June } & 19,000 & 510 \
\text { July } & 22,230 & 570
\end{array}$
-Refer to the Figure.Which of the following is the variable rate for the lease cost when using the high-low method?

Accepted Answer

A) $37.25 
B) $38.18 
C) $38.20 
D) $61.50 
A) $37.25 
B) $38.18 
C) $38.20 
D) $61.50

Question 13

The following four months of data were collected on utility cost and the number of labour hours in Edmonton Company's factory.
 $\begin{array}{lrr}& \text { Utility } & \text { Labour } \
\text { Month } & \text { cost } & \text { hours }\
\text { May } & \$ 22,100 & 3,975 \
\text { June } & 24,600 & 5,430 \
\text { July } & 23,500 & 4,400 \
\text { August } & 20,140 & 3,200
\end{array}$
-Refer to the Figure.Which of the following is the set of high and low months? High Low

Accepted Answer

A) June August 
B) June July 
C) May July 
D) May August 
A) June August 
B) June July 
C) May July 
D) May August

Question 14

Calculation of the cost line using the high-low method tests the lowest cost period to see if it is an outlier.

Accepted Answer

A) True 
 B)False

Question 15

Select the appropriate item for each of the definitions listed below.
-Can be changed by management

Accepted Answer

A) Committed fixed cost 
B) Discretionary fixed cost 
C) Mixed cost 
D) Step cost 
A) Committed fixed cost 
B) Discretionary fixed cost 
C) Mixed cost 
D) Step cost

Question 16

Which of the following is a characteristic of the method of least squares?

Accepted Answer

A) is a way to find the "best fitting" line through a set of data points 
B) is a graphical way of separating a mixed cost 
C) is easily done by hand 
D) uses the highest and lowest data point 
A) is a way to find the "best fitting" line through a set of data points 
B) is a graphical way of separating a mixed cost 
C) is easily done by hand 
D) uses the highest and lowest data point

Question 17

Select the best description for the following:

-$9097.80

Accepted Answer

A) Variable rate 
B) Fixed cost 
C) Variable cost 
D) Cost equation 
E) Coefficient of determination
F)Significance F 
A) Variable rate 
B) Fixed cost 
C) Variable cost 
D) Cost equation 
E) Coefficient of determination
F)Significance F

Question 18

Lindsay Company had utilities cost of $105,000 at an output level of 30,000 units.The utilities cost was a mixed cost,and the fixed portion was $60,000.What would be the best estimate of total utilities cost at an output level of 50,000 units?

Accepted Answer

A) $50,000 
B) $110,000 
C) $125,000 
D) $135,000 
A) $50,000 
B) $110,000 
C) $125,000 
D) $135,000

Question 19

Why is managerial judgement critically important in gathering information about costs?

Accepted Answer

A) It is important in determining cost behaviour. 
B) It helps to broaden statistical estimation results. 
C) Costs are enhanced by only by new managers. 
D) It is necessary to understand revenues. 
A) It is important in determining cost behaviour. 
B) It helps to broaden statistical estimation results. 
C) Costs are enhanced by only by new managers. 
D) It is necessary to understand revenues.

Question 20

Which of the following is characteristic of discretionary fixed costs?

Accepted Answer

A) They cannot be easily changed. 
B) They often involve a long-term contract. 
C) They can be easily changed by management. 
D) They increase as output increases. 
A) They cannot be easily changed. 
B) They often involve a long-term contract. 
C) They can be easily changed by management. 
D) They increase as output increases.

Which of the following is an advantage of using the method of least squares rather than the high-low method?

Select the best description for the following: -($40,000 − $30,000)/(3,000 − 2,500)

Select the appropriate item for each of the definitions listed below. -May reveal the presence of outliers

Using a linear regression program,the term "X Variable 1" refers to the dependent variable.

Select the appropriate type of cost for each of the definitions below. -Has both a variable and a fixed component

Select the best description for the following: -Utility cost

What is characteristic of variable costs within the relevant range?

What is characteristic of step costs?

Select the appropriate item for each of the definitions listed below. -Results in the best-fitting line through a set of data points

Determining cost behaviour is essential to planning,controlling,and decision making.

Calculation of the cost line using the high-low method tests the lowest cost period to see if it is an outlier.

Select the appropriate item for each of the definitions listed below. -Can be changed by management

Which of the following is a characteristic of the method of least squares?

Select the best description for the following: -$9097.80

Lindsay Company had utilities cost of $105,000 at an output level of 30,000 units.The utilities cost was a mixed cost,and the fixed portion was $60,000.What would be the best estimate of total utilities cost at an output level of 50,000 units?

Why is managerial judgement critically important in gathering information about costs?

Which of the following is characteristic of discretionary fixed costs?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Costvolumeprofit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Budgeting, production, cash, and Master Budget

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters

Exam 3: Cost Behaviour

Which of the following is an advantage of using the method of least squares rather than the high-low method?

Select the best description for the following: -($40,000 − $30,000)/(3,000 − 2,500)

Select the appropriate item for each of the definitions listed below. -May reveal the presence of outliers

Using a linear regression program,the term "X Variable 1" refers to the dependent variable.

Select the appropriate type of cost for each of the definitions below. -Has both a variable and a fixed component

Select the best description for the following: -Utility cost

What is characteristic of variable costs within the relevant range?

What is characteristic of step costs?

Select the appropriate item for each of the definitions listed below. -Results in the best-fitting line through a set of data points

Determining cost behaviour is essential to planning,controlling,and decision making.

Calculation of the cost line using the high-low method tests the lowest cost period to see if it is an outlier.

Select the appropriate item for each of the definitions listed below. -Can be changed by management

Which of the following is a characteristic of the method of least squares?

Select the best description for the following: -$9097.80

Lindsay Company had utilities cost of $105,000 at an output level of 30,000 units.The utilities cost was a mixed cost,and the fixed portion was $60,000.What would be the best estimate of total utilities cost at an output level of 50,000 units?

Why is managerial judgement critically important in gathering information about costs?

Which of the following is characteristic of discretionary fixed costs?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Costvolumeprofit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Budgeting, production, cash, and Master Budget

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters