Question 1

In the regression formula Y = a + bX, b is:

Accepted Answer

A)  the slope of the line. 
B)  the cost driver. 
C)  the intercept on the vertical axis. 
D)  the dependent variable. 
A)  the slope of the line. 
B)  the cost driver. 
C)  the intercept on the vertical axis. 
D)  the dependent variable.

Question 2

Total costs are $140 000 when 10 000 units are made. Of this amount, variable costs are $4 per unit. What are the total costs when 8000 units are produced?

Accepted Answer

A)  $140 000 
B)  $136 000 
C)  $132 000 
D)  $124 000 
A)  $140 000 
B)  $136 000 
C)  $132 000 
D)  $124 000

Question 3

As a firm begins to operate outside the relevant range, the accuracy of cost estimates for fixed and variable costs:

Accepted Answer

A)    
B)    
C)    
D)  Do not change 
A)    
B)    
C)    
D)  Do not change

Question 4

Which per unit cost does the slope of the total cost line represent?

Accepted Answer

A)  Fixed 
B)  Variable 
C)  Semivariable 
D)  Step-variable 
A)  Fixed 
B)  Variable 
C)  Semivariable 
D)  Step-variable

Question 5

Which of the following are important in estimating the cost of machine maintenance?

Accepted Answer

A)  The relevant range 
B)  The time period selected 
C)  The cost driver selected 
D)  All of the given answers 
A)  The relevant range 
B)  The time period selected 
C)  The cost driver selected 
D)  All of the given answers

Question 6

Activity based costing is a traditional approach to costing that has focused on analysing cost behaviour.

Accepted Answer

A) True 
 B)False

Question 7

For a manufacturer of kitchens, which of the following would you expect to be a fixed cost?

Accepted Answer

A)  Hourly labour cost of employee installing kitchens 
B)  Material for kitchen benchtops 
C)  Adhesive for benchtops 
D)  Rent of factory premises 
A)  Hourly labour cost of employee installing kitchens 
B)  Material for kitchen benchtops 
C)  Adhesive for benchtops 
D)  Rent of factory premises

Question 8

A cost that remains unchanged in total as the activity level (or cost driver) changes is called a:

Accepted Answer

A)  fixed cost. 
B)  variable cost. 
C)  step-fixed cost. 
D)  step-variable cost. 
A)  fixed cost. 
B)  variable cost. 
C)  step-fixed cost. 
D)  step-variable cost.

Question 9

Which of the following statements about the coefficient of determination (R2) is correct?

Accepted Answer

A)  R2 is a measure of economic plausibility. 
B)  The higher the R2, the more confident we are when using a regression model to predict costs. 
C)  R2 is a measure of data accuracy. 
D)  R2 is a useful measure only for simple regressions. 
A)  R2 is a measure of economic plausibility. 
B)  The higher the R2, the more confident we are when using a regression model to predict costs. 
C)  R2 is a measure of data accuracy. 
D)  R2 is a useful measure only for simple regressions.

Question 10

Fixed costs per unit:

Accepted Answer

A)  is unrelated to activity levels. 
B)  change as activity varies. 
C)  remain unchanged as activity level changes. 
D)  None of the given answers 
A)  is unrelated to activity levels. 
B)  change as activity varies. 
C)  remain unchanged as activity level changes. 
D)  None of the given answers

Question 11

In which approach to costs estimation, is task analysis used?

Accepted Answer

A)  Account classification 
B)  Engineering method 
C)  High-low method 
D)  Managerial judgement 
A)  Account classification 
B)  Engineering method 
C)  High-low method 
D)  Managerial judgement

Question 12

If the cost of a complaints department is driven by the number of calls taken, the calls are said to be the dependent variable.

Accepted Answer

A) True 
 B)False

Question 13

The Longreach Toy Factory has determined machine hours to be the cost driver of the company's electricity costs. During the first six months of the year, the company incurred the following electricity costs:  
Using the high-low method, estimate the variable cost per machine hour.

Accepted Answer

A)  $8.38 
B)  $7.44 
C)  $5.50 
D)  None of the given answers 
A)  $8.38 
B)  $7.44 
C)  $5.50 
D)  None of the given answers

Question 14

A scatter diagram is most useful in providing insight into whether there is a relationship between a cost and a level of activity.

Accepted Answer

A) True 
 B)False

Question 15

Regardless of the approach taken to cost estimation, data collection will affect how 'good' the estimation is.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following describes a method of cost estimation in which a cost line is drawn through a scatter diagram to help the analyst visualise the relationship between cost and activity?

Accepted Answer

A)  Least squares regression 
B)  High-low 
C)  Visual fit 
D)  Multiple regression 
A)  Least squares regression 
B)  High-low 
C)  Visual fit 
D)  Multiple regression

Question 17

The results of the regression analysis to estimate delivery costs are as follows:  
Which of the following statements represent a valid conclusion based on the above regression analysis output?

Accepted Answer

A)  54.4% of transportation cost can be explained by the number of cargos. 
B)  The F-statistic is considered significant; therefore, the relationship in the regression is unlikely to happen by chance. 
C)  The p-value associated with the intercept suggests that the delivery costs are entirely variable. 
D)  Given the t-statistic, number of cargos is a poor cost driver of delivery cost. 
A)  54.4% of transportation cost can be explained by the number of cargos. 
B)  The F-statistic is considered significant; therefore, the relationship in the regression is unlikely to happen by chance. 
C)  The p-value associated with the intercept suggests that the delivery costs are entirely variable. 
D)  Given the t-statistic, number of cargos is a poor cost driver of delivery cost.

Question 18

Forecasting a cost at a particular level of activity is called:

Accepted Answer

A)  cost estimation. 
B)  cost prediction. 
C)  cost behaviour. 
D)  cost functions. 
A)  cost estimation. 
B)  cost prediction. 
C)  cost behaviour. 
D)  cost functions.

Question 19

Technical Engineering presently leases a copying machine on a monthly basis. The lease agreement requires a fixed fee each month in addition to a charge per copy. Technical Engineering made 2400 copies and paid a total of $162 in rent in September and in October they paid $195 for 3500 copies. Determine Technical Engineering's variable cost per copy.

Accepted Answer

A)  $0.06 
B)  $0.04 
C)  $0.03 
D)  $0.01 
A)  $0.06 
B)  $0.04 
C)  $0.03 
D)  $0.01

Question 20

The fixed costs per unit are $10 when a company makes 10 000 units. What are the per unit fixed costs when 12 500 units are produced?

Accepted Answer

A)  $6.00 
B)  $12.00 
C)  $10.00 
D)  $ 8.00 
A)  $6.00 
B)  $12.00 
C)  $10.00 
D)  $ 8.00

In the regression formula Y = a + bX, b is:

Total costs are $140 000 when 10 000 units are made. Of this amount, variable costs are $4 per unit. What are the total costs when 8000 units are produced?

As a firm begins to operate outside the relevant range, the accuracy of cost estimates for fixed and variable costs:

Which per unit cost does the slope of the total cost line represent?

Which of the following are important in estimating the cost of machine maintenance?

Activity based costing is a traditional approach to costing that has focused on analysing cost behaviour.

For a manufacturer of kitchens, which of the following would you expect to be a fixed cost?

A cost that remains unchanged in total as the activity level (or cost driver) changes is called a:

Which of the following statements about the coefficient of determination (R²) is correct?

Fixed costs per unit:

In which approach to costs estimation, is task analysis used?

If the cost of a complaints department is driven by the number of calls taken, the calls are said to be the dependent variable.

The Longreach Toy Factory has determined machine hours to be the cost driver of the company's electricity costs. During the first six months of the year, the company incurred the following electricity costs: Using the high-low method, estimate the variable cost per machine hour.

A scatter diagram is most useful in providing insight into whether there is a relationship between a cost and a level of activity.

Regardless of the approach taken to cost estimation, data collection will affect how 'good' the estimation is.

Which of the following describes a method of cost estimation in which a cost line is drawn through a scatter diagram to help the analyst visualise the relationship between cost and activity?

The results of the regression analysis to estimate delivery costs are as follows: Which of the following statements represent a valid conclusion based on the above regression analysis output?

Forecasting a cost at a particular level of activity is called:

The fixed costs per unit are $10 when a company makes 10 000 units. What are the per unit fixed costs when 12 500 units are produced?

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

Filters

Exam 3: Cost Behaviour, Cost Drivers and Cost Estimation

In the regression formula Y = a + bX, b is:

Total costs are $140 000 when 10 000 units are made. Of this amount, variable costs are $4 per unit. What are the total costs when 8000 units are produced?

As a firm begins to operate outside the relevant range, the accuracy of cost estimates for fixed and variable costs:

Which per unit cost does the slope of the total cost line represent?

Which of the following are important in estimating the cost of machine maintenance?

Activity based costing is a traditional approach to costing that has focused on analysing cost behaviour.

For a manufacturer of kitchens, which of the following would you expect to be a fixed cost?

A cost that remains unchanged in total as the activity level (or cost driver) changes is called a:

Which of the following statements about the coefficient of determination (R2) is correct?

Fixed costs per unit:

In which approach to costs estimation, is task analysis used?

If the cost of a complaints department is driven by the number of calls taken, the calls are said to be the dependent variable.

The Longreach Toy Factory has determined machine hours to be the cost driver of the company's electricity costs. During the first six months of the year, the company incurred the following electricity costs: Using the high-low method, estimate the variable cost per machine hour.

A scatter diagram is most useful in providing insight into whether there is a relationship between a cost and a level of activity.

Regardless of the approach taken to cost estimation, data collection will affect how 'good' the estimation is.

Which of the following describes a method of cost estimation in which a cost line is drawn through a scatter diagram to help the analyst visualise the relationship between cost and activity?

The results of the regression analysis to estimate delivery costs are as follows: Which of the following statements represent a valid conclusion based on the above regression analysis output?

Forecasting a cost at a particular level of activity is called:

The fixed costs per unit are $10 when a company makes 10 000 units. What are the per unit fixed costs when 12 500 units are produced?

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

Filters

Which of the following statements about the coefficient of determination (R²) is correct?