Question 1

Excel is a useful tool for performing quantitative analysis.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following estimation methods is used by managers to estimate cost functions on the basis of opinions about costs and their drivers of a company gathered from various departments?

Accepted Answer

A) Industrial Engineering Method. 
B) Conference Method. 
C) Account Analysis Method. 
D) Quantitative Analysis Method. 
E) Work-Measurement Method.

Question 3

There is a better fit between actual cost observations and estimated costs when the ________ is small.

Accepted Answer

A) residual term 
B) fixed costs 
C) machine hours 
D) regression analysis 
E) activity-based costing

Question 4

A/an ________ is a function that measures the decline in cost per unit in various business functions of the value chain as the amount of activities increase.

Accepted Answer

A) learning curve 
B) experience curve 
C) variable-cost function 
D) step cost function 
E) nonlinear cost function

Question 5

Variations in the level of a single activity explain variations in the related ________.

Accepted Answer

A) total costs 
B) mixed costs 
C) linear costs 
D) nonlinear costs 
E) regression analysis

Question 6

A mixed cost is also called a semivariable cost because it has both fixed and variable elements.

Accepted Answer

A) True 
 B)False

Question 7

In which step of the decision process would managers use the regression analysis estimate of indirect manufacturing costs of alternative products,and choose to introduce the most profitable styles?

Accepted Answer

A) Step 1: Identify the Problem and Uncertainties. 
B) Step 2: Obtain Information. 
C) Step 3: Make Predictions about the Future. 
D) Step 4: Make Decisions by Choosing among the Alternatives. 
E) Step 5: Implement the Decision,Evaluate Performance,and Learn.

Question 8

The database should consider many values spanning a wide range for the cost driver.

Accepted Answer

A) True 
 B)False

Question 9

In the fuel service retail industry,two economically plausible cost drivers are gasoline and convenience store sales.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following cost-estimation methods uses a formal mathematical method to fit cost functions to past data and observations?

Accepted Answer

A) Industrial Engineering Method. 
B) Conference Method. 
C) Account Analysis Method. 
D) Quantitative Analysis Method. 
E) Work-Measurement Method.

Question 11

Which step of estimating a cost function using quantitative analysis is the most difficult step for a manager to implement in cost analysis?

Accepted Answer

A) Step 1: Choose the Dependent Variable. 
B) Step 2: Identify the Independent Variable,or Cost Driver. 
C) Step 3: Collect Data of the Dependent Variable and the Cost Driver. 
D) Step 4: Plot the Data. 
E) Step 5: Estimate the Cost Driver of the Estimated Cost Function.

Question 12

Why are a stable economy and technology important to managers?

Accepted Answer

The answer of Why are a stable economy and technology...

Question 13

The manager at Elegant Rugs used regression analysis and reported the following cost function to predict future indirect manufacturing labor costs:
y = $300.98 + ($10.31 per machine hour × 25 machine hours)
What is the cost driver?

Accepted Answer

The answer of The manager at Elegant Rugs used regression...

Question 14

What does a managerial accountant do when he or she can't classify costs into a fixed or variable cost?

Accepted Answer

The answer of What does a managerial accountant do when...

Question 15

The pooling of expert knowledge from different business functions of the value chain gives the conference method credibility.

Accepted Answer

A) True 
 B)False

Question 16

In which step of estimating a cost function using quantitative analysis would a manager estimate a cost function with the high-low method,or regression analysis?

Accepted Answer

A) Step 1: Choose the Dependent Variable 
B) Step 2: Identify the Independent Variable,or Cost Driver. 
C) Step 3: Collect Data of the Dependent Variable of the Cost Driver. 
D) Step 4: Plot the Data. 
E) Step 5: Estimate the Cost Driver of the Estimated Cost Function.

Question 17

Missing cost observations occur when:

Accepted Answer

A) a manager records accurate cost information. 
B) the manager fails to record accurate cost information. 
C) all costs reflect accurate data about the operations. 
D) data on cost drivers originate in the normal accounting system. 
E) management accountants design accurate data collection reports.

Question 18

The regression equation,y = $744.67 + $7.72X,could represent indirect manufacturing labor costs based on the number of direct manufacturing labor hours.

Accepted Answer

A) True 
 B)False

Question 19

Activity-based costing systems (ABC)have only one cost system and one cost pool.

Accepted Answer

A) True 
 B)False

Question 20

A/an ________ is a function that measures how labor-hours per unit decline as units of production increase because workers are learning and becoming better at their jobs.

Accepted Answer

A) learning curve 
B) experience curve 
C) variable-cost function 
D) step cost function 
E) nonlinear cost function

Exam 8: Determining How Costs Behave

Excel is a useful tool for performing quantitative analysis.

Which of the following estimation methods is used by managers to estimate cost functions on the basis of opinions about costs and their drivers of a company gathered from various departments?

There is a better fit between actual cost observations and estimated costs when the ________ is small.

A/an ________ is a function that measures the decline in cost per unit in various business functions of the value chain as the amount of activities increase.

Variations in the level of a single activity explain variations in the related ________.

A mixed cost is also called a semivariable cost because it has both fixed and variable elements.

In which step of the decision process would managers use the regression analysis estimate of indirect manufacturing costs of alternative products,and choose to introduce the most profitable styles?

The database should consider many values spanning a wide range for the cost driver.

In the fuel service retail industry,two economically plausible cost drivers are gasoline and convenience store sales.

Which of the following cost-estimation methods uses a formal mathematical method to fit cost functions to past data and observations?

Which step of estimating a cost function using quantitative analysis is the most difficult step for a manager to implement in cost analysis?

Why are a stable economy and technology important to managers?

The manager at Elegant Rugs used regression analysis and reported the following cost function to predict future indirect manufacturing labor costs: y = $300.98 + ($10.31 per machine hour × 25 machine hours) What is the cost driver?

What does a managerial accountant do when he or she can't classify costs into a fixed or variable cost?

The pooling of expert knowledge from different business functions of the value chain gives the conference method credibility.

In which step of estimating a cost function using quantitative analysis would a manager estimate a cost function with the high-low method,or regression analysis?

Missing cost observations occur when:

The regression equation,y = $744.67 + $7.72X,could represent indirect manufacturing labor costs based on the number of direct manufacturing labor hours.

Activity-based costing systems (ABC)have only one cost system and one cost pool.

A/an ________ is a function that measures how labor-hours per unit decline as units of production increase because workers are learning and becoming better at their jobs.