Question 1

A cost function with a lower slope coefficient than a year ago could indicate that:

Accepted Answer

A) production has decreased. 
B) new cost-cutting initiatives are beneficial. 
C) rental costs have decreased. 
D) total variable costs have decreased.

Question 2

Answer the following questions using the information below:
The Yeppoon Company uses the high-low method to estimate its cost function.The information for 2018 is provided below:
 $$\begin{array} { l c c } 
& \text { Machine-hours } & \text { Costs } \
\text { Highest observation of cost driver } & 2000 & \$ 225000 \
\text { Lowest observation of cost driver } & 1000 & \$ 125000
\end{array}$$
-What is the constant for the estimating cost equation?

Accepted Answer

A) $0 
B) $225 000 
C) $25 000 
D) $125 000

Question 3

In estimating a cost function using quantitative analysis,the independent variable is the factor used to predict the dependent variable.

Accepted Answer

A) True 
 B)False

Question 4

Step fixed-cost functions are variable over the long run.

Accepted Answer

A) True 
 B)False

Question 5

The 'industrial engineering method' estimates cost functions:

Accepted Answer

A) using qualitative rather than quantitative analysis. 
B) based on analysis and opinions gathered from various departments. 
C) by analysing the relationship between inputs and outputs in physical terms. 
D) quickly while incurring little cost.

Question 6

Answer the following questions using the information below:
At the Gregan Company,the cost of the personnel department has always been charged to production departments based upon number of employees.Recently,opinions gathered from the department managers indicate that the number of new hires might be a better predictor of personnel costs.
Total personnel department costs are $320 000.
 $$\begin{array} { l r r r } 
\text { Department } & \underline { \mathbf { A } } & \underline { \mathbf { B } } & \underline { \mathrm { C } } \
\text { Number of employees } & 30 & 270 & 100 \
\text { The number of new hires } & 8 & 12 & 5
\end{array}$$
-Which cost estimation method is being used by Gregan Company?

Accepted Answer

A) The industrial engineering method 
B) The quantitative analysis method 
C) The account analysis method 
D) The conference method

Question 7

The cumulative average-time learning model with a 90% learning curve indicates that if it takes 100 minutes to manufacture the first unit of a new model,then the second unit will take only 90 minutes to manufacture.

Accepted Answer

A) True 
 B)False

Question 8

Discuss the potential use of non-linear curves in cost functions and cost analysis.Give some examples.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of Discuss the potential use of non-linear curves...

Question 9

Answer the following questions using the information below:
Hewitt Sporting Goods Store is a small company that has hired you to perform some management advisory services.The following information pertains to 2018 operations.
 $\begin{array}{lr}
\text { Sales (2000 cricket bats) } & \$ 900000 \
\text { Cost of goods sold } & 400000 \
\text { Store manager's salary per year } & 70000 \
\text { Operating costs per year } & 157000 \
\text { Advertising and promotion per year } & 15000 \
\text { Commissions ( } 4 \% \text { of sales) } & 36000
\end{array}$
-Which cost estimation method is being used by Hewitt Sporting Goods Store?

Accepted Answer

A) The conference method 
B) The industrial engineering method 
C) The account analysis method 
D) The quantitative analysis method

Question 10

A linear cost function can only represent fixed cost behaviour.

Accepted Answer

A) True 
 B)False

Question 11

What is the difference between the 'cumulative average-time learning model' and the 'incremental unit-time learning model'?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of What is the difference between the 'cumulative...

Question 12

The slope of the line of regression is the:

Accepted Answer

A) rate at which the dependent variable varies. 
B) level of total variable costs. 
C) level of total fixed costs. 
D) rate at which the independent variable varies.

Question 13

Simple regression differs from multiple regressions in that:

Accepted Answer

A) multiple regressions use all available data to estimate the cost function,whereas simple regression only uses simple data. 
B) simple regression is limited to the use of only the dependent variables and multiple regressions can use both dependent and independent variables. 
C) simple regression uses only one dependent variable and multiple regressions uses more than one dependent variable. 
D) simple regression uses only one independent variable and multiple regressions uses more than one independent variable.

Question 14

An example of a physical cause-and-effect relationship is when additional units of production increase total direct material costs.

Accepted Answer

A) True 
 B)False

Question 15

A step variable-cost function:

Accepted Answer

A) is often approximated with a continuous variable-cost function. 
B) remains the same over a wide range of activity. 
C) example includes adding additional warehouse space. 
D) is fixed over the long run but not over the short run.

Question 16

An 'economy of scale' function is an example of a linear cost function.

Accepted Answer

A) True 
 B)False

Question 17

McDevitt Company employs six individuals.They are all paid $12.50 per hour.How would total costs of personnel be classified?

Accepted Answer

A) Mixed 
B) A variable cost within a relevant range 
C) A fixed cost within a relevant range 
D) Variable

Question 18

The cost of the personnel department at the Miller Company has always been charged to the production departments based upon number of employees.Recently,opinions gathered from the department managers indicated that the number of new hires might also be a predictor of personnel costs to be assigned.Total personnel department costs are $360 000.
 $$\begin{array} { l c c c } 
& \text { Department } & \text { Department } & \text { Department } \
\text { Cost Driver } & \underline { \mathbf { A } } & \underline { \mathbf { B } } & \underline { \mathbf { C } } \
\text { Number of employees } & 300 & 250 & 50 \
\text { The number of new hires } & 15 & 25 & 10
\end{array}$$ 
Required:
Using the above data,prepare a report that contrasts the different amounts of personnel department cost that would be allocated to each of the production departments if the cost driver used is:
a.number of employees
b.the number of new hires
c.Which cost estimation method is being used by Miller Company?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of The cost of the personnel department at...

Question 19

A cost function with a lower constant than a year ago could indicate all of the following EXCEPT:

Accepted Answer

A) a new operations manager is being effective. 
B) the sales commission percentage has decreased. 
C) insurance premiums have decreased. 
D) last year's cost function was inaccurate.

Question 20

Newton Company used 'least squares regression analysis' to obtain the following output:
 Payroll Department Cost 
Explained by Number of Emplo vees
$\begin{array}{lr}
\text { Constant } & \$ 5800 \
\text { Standard error of Y estimate } & 630 \
\mathrm{r}^{2} & 0.8924 \
\text { Number of observations } & 20 \
& \
X \text { coefficient(s) } & \$ 1.902 \
\text { Standard error of coefficient(s) } & 0.0966
\end{array}$ 
Required:
a.What is the total fixed cost?
b.What is the variable cost per employee?
c.Prepare the linear cost function.
d.What is the coefficient of determination? Comment on the goodness of fit.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of Newton Company used 'least squares regression analysis'...

Exam 3: Determining How Costs Behave

A cost function with a lower slope coefficient than a year ago could indicate that:

In estimating a cost function using quantitative analysis,the independent variable is the factor used to predict the dependent variable.

Step fixed-cost functions are variable over the long run.

The 'industrial engineering method' estimates cost functions:

The cumulative average-time learning model with a 90% learning curve indicates that if it takes 100 minutes to manufacture the first unit of a new model,then the second unit will take only 90 minutes to manufacture.

Discuss the potential use of non-linear curves in cost functions and cost analysis.Give some examples. _ _

A linear cost function can only represent fixed cost behaviour.

What is the difference between the 'cumulative average-time learning model' and the 'incremental unit-time learning model'? _ _

The slope of the line of regression is the:

Simple regression differs from multiple regressions in that:

An example of a physical cause-and-effect relationship is when additional units of production increase total direct material costs.

A step variable-cost function:

An 'economy of scale' function is an example of a linear cost function.

McDevitt Company employs six individuals.They are all paid $12.50 per hour.How would total costs of personnel be classified?

A cost function with a lower constant than a year ago could indicate all of the following EXCEPT:

Exam 3: Determining How Costs Behave

A cost function with a lower slope coefficient than a year ago could indicate that:

In estimating a cost function using quantitative analysis,the independent variable is the factor used to predict the dependent variable.

Step fixed-cost functions are variable over the long run.

The 'industrial engineering method' estimates cost functions:

The cumulative average-time learning model with a 90% learning curve indicates that if it takes 100 minutes to manufacture the first unit of a new model,then the second unit will take only 90 minutes to manufacture.

Discuss the potential use of non-linear curves in cost functions and cost analysis.Give some examples. _____________________________________________________________________________________________ _____________________________________________________________________________________________

A linear cost function can only represent fixed cost behaviour.

The slope of the line of regression is the:

Simple regression differs from multiple regressions in that:

An example of a physical cause-and-effect relationship is when additional units of production increase total direct material costs.

A step variable-cost function:

An 'economy of scale' function is an example of a linear cost function.

McDevitt Company employs six individuals.They are all paid $12.50 per hour.How would total costs of personnel be classified?

A cost function with a lower constant than a year ago could indicate all of the following EXCEPT:

Discuss the potential use of non-linear curves in cost functions and cost analysis.Give some examples. _ _