Question 1

The high-low method can be used to approximate a cost function.A disadvantage of this method is ________.

Accepted Answer

A) the choice of the high and low points is subjective 
B) it is difficult to use 
C) it provides information about the reliability of the cost estimates 
D) it requires less past cost data than account analysis

Question 2

The cost of a final product may have several cost drivers.

Accepted Answer

A) True 
 B)False

Question 3

The high-low method can be used to approximate a cost function.A disadvantage of this method is ________.

Accepted Answer

A) it is difficult to apply due to rigorous calculations 
B) it is more subjective than account analysis 
C) it is more subjective than engineering analysis 
D) it makes inefficient use of information because it does not use all the available data

Question 4

Account analysis is used to identify appropriate cost drivers and their effects on the costs of making a product or providing a service.

Accepted Answer

A) True 
 B)False

Question 5

Costs that change abruptly at different levels of activity because the resources and their costs come in indivisible chunks are called ________.

Accepted Answer

A) mixed costs 
B) variable costs 
C) fixed costs 
D) step costs

Question 6

Cat Company makes metal signs for businesses and residences.These signs are made of sheet metal,which the owner paints by hand.The owner is concerned that he does not have a good measure of support costs for the signs.Currently,he predicts support costs to be 30 percent of the cost of materials.Close investigation of the business reveals that $10 per direct labor hour is a more plausible and reliable support cost measure.Cat Company has the following information available:  Using direct labor hours as the cost driver,what amount of support costs is assigned to the small sign?

Accepted Answer

A) $50 
B) $110 
C) $160 
D) $200

Question 7

In a corporate setting,a mortgage payment would be identified as a ________.

Accepted Answer

A) purely variable cost 
B) discretionary fixed cost 
C) committed fixed cost 
D) mixed cost

Question 8

A disadvantage of the visual-fit method to approximate a cost function is ________.

Accepted Answer

A) it does not use all the available data 
B) it is costly to apply 
C) it does not capture the general tendency of the data 
D) the placement of the line is subjective

Question 9

A painting contractor is trying to estimate the cost function for painting jobs.He has the following information:  Using the high-low method,what is the variable cost per square foot?

Accepted Answer

A) $0.73 
B) $0.80 
C) $1.13 
D) $1.15

Question 10

The cost of using the telephone,which involves a flat rate per month plus a fee for every local and long-distance call would be a ________ cost.

Accepted Answer

A) step 
B) fixed 
C) variable 
D) mixed

Question 11

Presented below is the production data for six months of the year showing the mixed costs incurred by Brooklyn Company.  Brooklyn Company uses the high-low method to analyze mixed costs.The predicted total cost at an operating level of 10,000 units is ________.

Accepted Answer

A) $11,725 
B) $11,800 
C) $12,000 
D) $12,500

Question 12

PP Energies used regression analysis to predict the annual cost of indirect materials.The results were as follows:  The coefficient of determination is ________.

Accepted Answer

A) 0.7832 
B) 2.1876 
C) 11.75 
D) 9,960

Question 13

Skoda Company makes metal signs for businesses and residences.These signs are made of sheet metal,which the owner paints by hand.The owner is concerned that he does not have a good measure of support costs for the signs.Currently,he predicts support costs to be 30 percent of the cost of materials.Close investigation of the business reveals that $10 per direct labor hour is a more plausible and reliable support cost measure.Skoda Company has the following information available:  Using cost of materials as the cost driver,what amount of support costs is assigned to the small sign?

Accepted Answer

A) $37 
B) $50 
C) $90 
D) $210

Question 14

Salaries of the telemarketers are set at $10,000 per month.The telemarketers also receive a commission for each donation they receive.They receive $5 per donation.The telemarketers salaries' and commission is a ________ cost.

Accepted Answer

A) fixed 
B) variable 
C) mixed 
D) step

Question 15

An example of a volume-driven cost in making a textbook is the salaries of the editorial staff.

Accepted Answer

A) True 
 B)False

Question 16

In a corporate setting,property taxes are an example of a(n)________.

Accepted Answer

A) mixed cost 
B) committed fixed cost 
C) discretionary fixed cost 
D) engineering cost

Question 17

Measurement of cost behavior means understanding and quantifying how activities of an organization affect its level of costs.

Accepted Answer

A) True 
 B)False

Question 18

In a mixed-cost linear function with one cost driver,the intercept is the ________ and the slope is the ________.

Accepted Answer

A) fixed cost; step cost 
B) fixed cost; variable cost 
C) variable cost; fixed cost 
D) variable cost; step cost

Question 19

When managers graph a linear cost function with one cost driver,the intercept represents the ________ cost and the slope represents the ________ cost.

Accepted Answer

A) variable; fixed 
B) fixed; variable 
C) fixed; mixed 
D) variable; mixed

Question 20

In a regression analysis,the constant from the linear cost function is a measure of reliability.

Accepted Answer

A) True 
 B)False

Exam 3: Measurement of Cost Behavior

The high-low method can be used to approximate a cost function.A disadvantage of this method is ________.

The cost of a final product may have several cost drivers.

The high-low method can be used to approximate a cost function.A disadvantage of this method is ________.

Account analysis is used to identify appropriate cost drivers and their effects on the costs of making a product or providing a service.

Costs that change abruptly at different levels of activity because the resources and their costs come in indivisible chunks are called ________.

In a corporate setting,a mortgage payment would be identified as a ________.

A disadvantage of the visual-fit method to approximate a cost function is ________.

A painting contractor is trying to estimate the cost function for painting jobs.He has the following information: Using the high-low method,what is the variable cost per square foot?

The cost of using the telephone,which involves a flat rate per month plus a fee for every local and long-distance call would be a ________ cost.

Presented below is the production data for six months of the year showing the mixed costs incurred by Brooklyn Company. Brooklyn Company uses the high-low method to analyze mixed costs.The predicted total cost at an operating level of 10,000 units is ________.

PP Energies used regression analysis to predict the annual cost of indirect materials.The results were as follows: The coefficient of determination is ________.

Salaries of the telemarketers are set at $10,000 per month.The telemarketers also receive a commission for each donation they receive.They receive $5 per donation.The telemarketers salaries' and commission is a ________ cost.

An example of a volume-driven cost in making a textbook is the salaries of the editorial staff.

In a corporate setting,property taxes are an example of a(n) ________.

Measurement of cost behavior means understanding and quantifying how activities of an organization affect its level of costs.

In a mixed-cost linear function with one cost driver,the intercept is the and the slope is the .

When managers graph a linear cost function with one cost driver,the intercept represents the cost and the slope represents the cost.

In a regression analysis,the constant from the linear cost function is a measure of reliability.