Question 1

In most accounting information systems, costs are often recorded and coded so they can be summarized based on different:

Accepted Answer

A)  Cost drivers 
B)  Cost objects 
C)  Volumes of activity 
D)  Independent variables 
A)  Cost drivers 
B)  Cost objects 
C)  Volumes of activity 
D)  Independent variables

Question 2

A p-value of 89% for the slope coefficient in a regression of a cost driver against a cost indicates:

Accepted Answer

A)  The true variable costs are statistically significantly different from zero 
B)  There is only an 11% chance the true variable costs are zero 
C)  The relationship between the cost and the cost driver is nonlinear 
D)  None of the above 
A)  The true variable costs are statistically significantly different from zero 
B)  There is only an 11% chance the true variable costs are zero 
C)  The relationship between the cost and the cost driver is nonlinear 
D)  None of the above

Question 3

Paula's Kennels is located in a small city in Nova Scotia. The company employs three pet attendants, four pet groomers, and two front office staff who book appointments and keep records. The Kennel provides a range of services for dogs and cats including boarding, grooming, and obedience training. The grooming area includes a small retail section that carries dog and cat food, pet supplies, and toys. If the cost object is the total cost of the grooming product line, which of the following is an indirect cost?

Accepted Answer

A)  Front office staff salaries 
B)  Labour cost of employees who groom pets 
C)  Cost of grooming supplies 
D)  Depreciation on grooming tables 
A)  Front office staff salaries 
B)  Labour cost of employees who groom pets 
C)  Cost of grooming supplies 
D)  Depreciation on grooming tables

Question 4

Variable costs:

Accepted Answer

A)  Do not vary in total within the relevant range 
B)  Do not vary on a per-unit basis within the relevant range 
C)  Vary on a per-unit basis within the relevant range 
D)  Both (a) and (c) 
A)  Do not vary in total within the relevant range 
B)  Do not vary on a per-unit basis within the relevant range 
C)  Vary on a per-unit basis within the relevant range 
D)  Both (a) and (c)

Question 5

The high-low method frequently distorts a cost function because it uses too many data points to make an estimate.

Accepted Answer

A) True 
 B)False

Question 6

The relevant range is defined as:

Accepted Answer

A)  The period of time over which costs do not change 
B)  The volume of production over which the cost assumptions hold 
C)  The volume of production over which step-wise fixed costs increase 
D)  The time period in which the level of production does not change 
A)  The period of time over which costs do not change 
B)  The volume of production over which the cost assumptions hold 
C)  The volume of production over which step-wise fixed costs increase 
D)  The time period in which the level of production does not change

Question 7

The learning curve refers to increases in sunk costs as production volume decreases.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements is true?

Accepted Answer

A)  Past costs are always relevant for decisions and are often useful in estimating future cost behaviour. 
B)  Past costs are always relevant for decisions, but are rarely useful in estimating future cost behaviour. 
C)  Past costs are never relevant for decisions, nor are they useful in estimating future cost behaviour. 
D)  Past costs are never relevant for decisions, but are often useful in estimating future cost behaviour. 
A)  Past costs are always relevant for decisions and are often useful in estimating future cost behaviour. 
B)  Past costs are always relevant for decisions, but are rarely useful in estimating future cost behaviour. 
C)  Past costs are never relevant for decisions, nor are they useful in estimating future cost behaviour. 
D)  Past costs are never relevant for decisions, but are often useful in estimating future cost behaviour.

Question 9

The high-low method is a specific application of this method of cost estimation:

Accepted Answer

A)  Two-point 
B)  Scatter plot 
C)  Engineered estimate of cost 
D)  Analysis at the account level 
A)  Two-point 
B)  Scatter plot 
C)  Engineered estimate of cost 
D)  Analysis at the account level

Question 10

Marginal cost is:

Accepted Answer

A)  The average cost per unit 
B)  The incremental cost of the next unit 
C)  Not relevant for decision-making 
D)  Constant even if the relevant range changes 
A)  The average cost per unit 
B)  The incremental cost of the next unit 
C)  Not relevant for decision-making 
D)  Constant even if the relevant range changes

Question 11

Simple regression analysis differs from multiple regression analysis based on the number of:

Accepted Answer

A)  Cost drivers used 
B)  Costs predicted 
C)  Data points incorporated 
D)  Personnel analyzing the data 
A)  Cost drivers used 
B)  Costs predicted 
C)  Data points incorporated 
D)  Personnel analyzing the data

Question 12

Paula's Kennels is located in a small city in Nova Scotia. The company employs three pet attendants, four pet groomers, and two front office staff who book appointments and keep records. The Kennel provides a range of services for dogs and cats including boarding, grooming, and obedience training. The grooming area includes a small retail section that carries dog and cat food, pet supplies, and toys. Which of the following is a sunk cost for any cost object related to Jackie's Kennels?

Accepted Answer

A)  Cost of the automobile Paula is planning to buy for pet transportation 
B)  Cost of existing computer equipment used to keep company records 
C)  Cost of annual wages for full-time employees 
D)  Cost of rent for the next period 
A)  Cost of the automobile Paula is planning to buy for pet transportation 
B)  Cost of existing computer equipment used to keep company records 
C)  Cost of annual wages for full-time employees 
D)  Cost of rent for the next period

Question 13

Changes in cost behaviour over time are one source of uncertainty in estimating future costs.

Accepted Answer

A) True 
 B)False

Question 14

A p-value of 1% for the intercept term in a regression of a cost driver against a cost indicates:

Accepted Answer

A)  The true fixed costs are statistically significantly different from zero 
B)  There is only a 1% chance the true fixed costs are zero 
C)  The variable costs are immaterial in this cost function 
D)  Both (a) and (b) 
A)  The true fixed costs are statistically significantly different from zero 
B)  There is only a 1% chance the true fixed costs are zero 
C)  The variable costs are immaterial in this cost function 
D)  Both (a) and (b)

Question 15

Discretionary costs reflect:

Accepted Answer

A)  The costs that managers incur to purchase new production machines when the old machines need replacing. 
B)  Decisions about the maximum amount that will be spent next period for activities such as travel and marketing. 
C)  Decisions about the amount of variable costs that will be incurred next period. 
D)  The costs that managers incur to pay overtime when production levels are high. 
A)  The costs that managers incur to purchase new production machines when the old machines need replacing. 
B)  Decisions about the maximum amount that will be spent next period for activities such as travel and marketing. 
C)  Decisions about the amount of variable costs that will be incurred next period. 
D)  The costs that managers incur to pay overtime when production levels are high.

Question 16

In a regression analysis for estimating a cost function, t-statistics and their p-values do not provide information about:

Accepted Answer

A)  Whether the cost and cost drivers are related 
B)  How confident we can be that the intercept or slope coefficients are different from zero 
C)  The amount of variation in cost that is explained by variation in the cost driver 
D)  Whether the cost is totally fixed, totally variable, or mixed 
A)  Whether the cost and cost drivers are related 
B)  How confident we can be that the intercept or slope coefficients are different from zero 
C)  The amount of variation in cost that is explained by variation in the cost driver 
D)  Whether the cost is totally fixed, totally variable, or mixed

Question 17

In regression analysis, the Adjusted R-square statistic is used to evaluate how well the cost driver explains the behaviour in the cost.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following statements is false?

Accepted Answer

A)  A cost can be defined as a direct cost if the bookkeeping system can keep track of how much of the cost was consumed by the cost object 
B)  Whether a cost is direct or indirect cannot be determined until the cost object has been defined 
C)  If the cost object is a batch of 1000 units of production, then factory property taxes could be a direct cost if the bookkeeping system is detailed enough 
D)  Some indirect costs might have been considered direct costs if a company had better technology for capturing information 
A)  A cost can be defined as a direct cost if the bookkeeping system can keep track of how much of the cost was consumed by the cost object 
B)  Whether a cost is direct or indirect cannot be determined until the cost object has been defined 
C)  If the cost object is a batch of 1000 units of production, then factory property taxes could be a direct cost if the bookkeeping system is detailed enough 
D)  Some indirect costs might have been considered direct costs if a company had better technology for capturing information

Question 19

Sunk costs are:

Accepted Answer

A)  The same as opportunity costs 
B)  Expenditures made in the past 
C)  Relevant to decisions 
D)  Difficult to value 
A)  The same as opportunity costs 
B)  Expenditures made in the past 
C)  Relevant to decisions 
D)  Difficult to value

Question 20

Which of the following statements is false?

Accepted Answer

A)  Information for some costs cannot easily be obtained from the accounting information system. 
B)  Useful cost information is rarely available from the accounting information system. 
C)  The accounting system design affects the availability of useful cost information. 
D)  The nature of cost information affects its usefulness for decision-making. 
A)  Information for some costs cannot easily be obtained from the accounting information system. 
B)  Useful cost information is rarely available from the accounting information system. 
C)  The accounting system design affects the availability of useful cost information. 
D)  The nature of cost information affects its usefulness for decision-making.

In most accounting information systems, costs are often recorded and coded so they can be summarized based on different:

A p-value of 89% for the slope coefficient in a regression of a cost driver against a cost indicates:

Variable costs:

The high-low method frequently distorts a cost function because it uses too many data points to make an estimate.

The relevant range is defined as:

The learning curve refers to increases in sunk costs as production volume decreases.

Which of the following statements is true?

The high-low method is a specific application of this method of cost estimation:

Marginal cost is:

Simple regression analysis differs from multiple regression analysis based on the number of:

Changes in cost behaviour over time are one source of uncertainty in estimating future costs.

A p-value of 1% for the intercept term in a regression of a cost driver against a cost indicates:

Discretionary costs reflect:

In a regression analysis for estimating a cost function, t-statistics and their p-values do not provide information about:

In regression analysis, the Adjusted R-square statistic is used to evaluate how well the cost driver explains the behaviour in the cost.

Which of the following statements is false?

Sunk costs are:

Which of the following statements is false?

The Role of Accounting Information in Ethical Management Decision Making

Cost-Volume-Profit Analysis

Relevant Information for Decision Making

Job Costing

Process Costing

Activity-Based Costing and Management

Measuring and Assigning Support Department Costs

Joint Product and By-Product Costing

Static and Flexible Budgets

Standard Costs and Variance Analysis

Strategic Investment Decisions

Pricing Decisions

Strategic Management of Costs

Measuring and Assigning Costs for Income Statements

Performance Evaluation and Compensation

Filters

Exam 2: Cost Concepts, Behaviour, and Estimation

In most accounting information systems, costs are often recorded and coded so they can be summarized based on different:

A p-value of 89% for the slope coefficient in a regression of a cost driver against a cost indicates:

Variable costs:

The high-low method frequently distorts a cost function because it uses too many data points to make an estimate.

The relevant range is defined as:

The learning curve refers to increases in sunk costs as production volume decreases.

Which of the following statements is true?

The high-low method is a specific application of this method of cost estimation:

Marginal cost is:

Simple regression analysis differs from multiple regression analysis based on the number of:

Changes in cost behaviour over time are one source of uncertainty in estimating future costs.

A p-value of 1% for the intercept term in a regression of a cost driver against a cost indicates:

Discretionary costs reflect:

In a regression analysis for estimating a cost function, t-statistics and their p-values do not provide information about:

In regression analysis, the Adjusted R-square statistic is used to evaluate how well the cost driver explains the behaviour in the cost.

Which of the following statements is false?

Sunk costs are:

Which of the following statements is false?

The Role of Accounting Information in Ethical Management Decision Making

Cost-Volume-Profit Analysis

Relevant Information for Decision Making

Job Costing

Process Costing

Activity-Based Costing and Management

Measuring and Assigning Support Department Costs

Joint Product and By-Product Costing

Static and Flexible Budgets

Standard Costs and Variance Analysis

Strategic Investment Decisions

Pricing Decisions

Strategic Management of Costs

Measuring and Assigning Costs for Income Statements

Performance Evaluation and Compensation

Filters