Question 1

When using regression analysis to determine estimated costs, what criteria are necessary to evaluate a particular regression line?

Accepted Answer

A)  Closeness to pre-analysis guess 
B)  Goodness of fit 
C)  Coefficient of determination 
D)  Goodness of fit AND coefficient of determination 
A)  Closeness to pre-analysis guess 
B)  Goodness of fit 
C)  Coefficient of determination 
D)  Goodness of fit AND coefficient of determination

Question 2

Which term describes a cost resulting from the existence of the organisational structure and premises used by the firm?

Accepted Answer

A)  Discretionary 
B)  Fixed 
C)  Committed 
D)  Engineered 
A)  Discretionary 
B)  Fixed 
C)  Committed 
D)  Engineered

Question 3

The following is an extract of a cost report for Big Whale Car Wash for the six months from June to November. Management considers the activities in these six months as within the relevant range for the purpose of cost estimation.  
The car washing labour cost is a:

Accepted Answer

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

Question 4

Total costs are $80 000 when 8000 units are made. Of this amount, variable costs are $48 000. What are the total costs when 10 000 units are produced?

Accepted Answer

A)  $ 92 000 
B)  $ 98 000 
C)  $100 000 
D)  $108 000 
A)  $ 92 000 
B)  $ 98 000 
C)  $100 000 
D)  $108 000

Question 5

The relationship between cost and activity is called:

Accepted Answer

A)  cost prediction. 
B)  cost behaviour. 
C)  cost analysis. 
D)  cost approximation. 
A)  cost prediction. 
B)  cost behaviour. 
C)  cost analysis. 
D)  cost approximation.

Question 6

Variable cost per unit:

Accepted Answer

A)  increases in direct proportion to changes in the cost driver. 
B)  decreases in direct proportion to changes in the cost driver. 
C)  remains unchanged as the level of the cost driver changes. 
D)  increases, but not in direct proportion to changes in the cost driver. 
A)  increases in direct proportion to changes in the cost driver. 
B)  decreases in direct proportion to changes in the cost driver. 
C)  remains unchanged as the level of the cost driver changes. 
D)  increases, but not in direct proportion to changes in the cost driver.

Question 7

'Time and motion studies' refers to:

Accepted Answer

A)  the process in which managers use their judgment to estimate the time it takes to carry out each individual work task, in order to estimate cost. 
B)  the process in which employees complete timesheets each day; the timesheets then form the basis for cost estimation. 
C)  the process in which employees are observed when they undertake work tasks; these observations are then used to estimate cost. 
D)  the process in which the cost of work tasks are compared over time and across different divisions. 
A)  the process in which managers use their judgment to estimate the time it takes to carry out each individual work task, in order to estimate cost. 
B)  the process in which employees complete timesheets each day; the timesheets then form the basis for cost estimation. 
C)  the process in which employees are observed when they undertake work tasks; these observations are then used to estimate cost. 
D)  the process in which the cost of work tasks are compared over time and across different divisions.

Question 8

Which of the following statements is most complete and correct?

Accepted Answer

A)  Activity-based costing uses non-volume-based cost drivers only. 
B)  Activity-based costing uses volume-based cost drivers. 
C)  Activity-based costing recognises that both volume-based and non-volume-based cost drivers may be appropriate. 
D)  None of the given answers. 
A)  Activity-based costing uses non-volume-based cost drivers only. 
B)  Activity-based costing uses volume-based cost drivers. 
C)  Activity-based costing recognises that both volume-based and non-volume-based cost drivers may be appropriate. 
D)  None of the given answers.

Question 9

The relationship between a cost and the level of activity is known as the cost behaviour.

Accepted Answer

A) True 
 B)False

Question 10

When a manager notices an outlier during the cost estimation process, the appropriate response is to:

Accepted Answer

A)  no response is required, unless multiple outliers are observed. 
B)  attempt to identify the reasons for the outlier. 
C)  divide the outlier by the standard deviation, before including the outlier in the regression model 
D)  re-collect all the data, as an outlier indicates that the data has been corrupted. 
A)  no response is required, unless multiple outliers are observed. 
B)  attempt to identify the reasons for the outlier. 
C)  divide the outlier by the standard deviation, before including the outlier in the regression model 
D)  re-collect all the data, as an outlier indicates that the data has been corrupted.

Question 11

Eldervale Winery is a producer of premium wine. Which of the following is an example of a unit level cost?

Accepted Answer

A)  The cost of the labels on each bottle of wine 
B)  The cost of designing the labels on a wine bottle 
C)  Advertising costs 
D)  Costs of delivering wine to customers 
A)  The cost of the labels on each bottle of wine 
B)  The cost of designing the labels on a wine bottle 
C)  Advertising costs 
D)  Costs of delivering wine to customers

Question 12

In activity-based costing analysis, direct materials are classified as a:

Accepted Answer

A)  unit cost. 
B)  batch cost. 
C)  product cost. 
D)  facility cost. 
A)  unit cost. 
B)  batch cost. 
C)  product cost. 
D)  facility cost.

Question 13

When estimating cost behaviours, the appropriateness of the drivers can be tested by measuring the strength of the relationship between

Accepted Answer

A)  past costs and their selected cost driver. 
B)  past costs and future costs. 
C)  past costs and predicted costs. 
D)  predicted costs and their selected driver. 
A)  past costs and their selected cost driver. 
B)  past costs and future costs. 
C)  past costs and predicted costs. 
D)  predicted costs and their selected driver.

When using regression analysis to determine estimated costs, what criteria are necessary to evaluate a particular regression line?

Which term describes a cost resulting from the existence of the organisational structure and premises used by the firm?

The following is an extract of a cost report for Big Whale Car Wash for the six months from June to November. Management considers the activities in these six months as within the relevant range for the purpose of cost estimation. The car washing labour cost is a:

Total costs are $80 000 when 8000 units are made. Of this amount, variable costs are $48 000. What are the total costs when 10 000 units are produced?

The relationship between cost and activity is called:

Variable cost per unit:

'Time and motion studies' refers to:

Which of the following statements is most complete and correct?

The relationship between a cost and the level of activity is known as the cost behaviour.

When a manager notices an outlier during the cost estimation process, the appropriate response is to:

Eldervale Winery is a producer of premium wine. Which of the following is an example of a unit level cost?

In activity-based costing analysis, direct materials are classified as a:

When estimating cost behaviours, the appropriateness of the drivers can be tested by measuring the strength of the relationship between

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

When using regression analysis to determine estimated costs, what criteria are necessary to evaluate a particular regression line?

Which term describes a cost resulting from the existence of the organisational structure and premises used by the firm?

The following is an extract of a cost report for Big Whale Car Wash for the six months from June to November. Management considers the activities in these six months as within the relevant range for the purpose of cost estimation. The car washing labour cost is a:

Total costs are $80 000 when 8000 units are made. Of this amount, variable costs are $48 000. What are the total costs when 10 000 units are produced?

The relationship between cost and activity is called:

Variable cost per unit:

'Time and motion studies' refers to:

Which of the following statements is most complete and correct?

The relationship between a cost and the level of activity is known as the cost behaviour.

When a manager notices an outlier during the cost estimation process, the appropriate response is to:

Eldervale Winery is a producer of premium wine. Which of the following is an example of a unit level cost?

In activity-based costing analysis, direct materials are classified as a:

When estimating cost behaviours, the appropriateness of the drivers can be tested by measuring the strength of the relationship between

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