Question 1

In a small construction firm, another crew supervisor is added for every 10 workers employed. This is an example of a:

Accepted Answer

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

Question 2

The following three data points appear to be: $$\begin{array} { l l } 
\text { Units } & \text { Costs } \
600 & \$ 700 \
650 & 700 \
700 & 700
\end{array}$$

Accepted Answer

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

Question 3

The process of identifying appropriate cost drivers and their effects on the costs of making a product or providing a service is called:

Accepted Answer

A)  cost measurement 
B)  activity analysis 
C)  cost prediction 
D)  budgeting 
A)  cost measurement 
B)  activity analysis 
C)  cost prediction 
D)  budgeting

Question 4

The measure of reliability, or goodness of fit

Accepted Answer

Coefficien

Question 5

Explain management influences on cost behavior.

Accepted Answer

Management can influence cost behavior b

Question 6

A company could not temporarily eliminate:

Accepted Answer

A)  management salaries 
B)  depreciation 
C)  research and development 
D)  employee training 
A)  management salaries 
B)  depreciation 
C)  research and development 
D)  employee training

Question 7

Pertaining to a useful cost function, plausibility means whether you can rely upon the cost function.

Accepted Answer

A) True 
 B)False

Question 8

have no obvious relationship to levels of output activity, but are determined as part of the periodic planning process.

Accepted Answer

A)  Capacity costs 
B)  Engineered costs 
C)  Discretionary fixed costs 
D)  Committed fixed costs 
A)  Capacity costs 
B)  Engineered costs 
C)  Discretionary fixed costs 
D)  Committed fixed costs

Question 9

The simplest of the three methods to measure a linear- cost function from past cost data

Accepted Answer

The answer of The simplest of the three methods to...

Question 10

These costs contain elements of both fixed- and variable- cost behavior

Accepted Answer

The answer of These costs contain elements of both fixed-...

Question 11

Managers should apply these criteria to obtain accurate and useful cost functions

Accepted Answer

Plausibility (believ

Question 12

A thorough knowledge of cost behavior helps managers to:

Accepted Answer

A)  decide on the efficient use of resources 
B)  obtain feedback 
C)  plan costs 
D)  All of these answers are correct. 
A)  decide on the efficient use of resources 
B)  obtain feedback 
C)  plan costs 
D)  All of these answers are correct.

Question 13

The Viking Company has provided the following information: $\begin{array}{lll}& \text { Direct Factory } \
\text { Month } & \text { Overhead } & \underline{\text { Labor Hours }} \
\text { January } & \$ 92,095 & 4,600 \
\text { February } & 103,056 & 5,280 \
\text { March } & 83,802 & 3,760 \
\text { April } & 89,594 & 4,320 \
\text { May } & 105,694 & 5,720 \
\text { June } & 87,404 & 3,880
\end{array}$ a. Using the high- low method, calculate the total fixed factory overhead cost and the variable factory overhead cost per direct labor hour.
b. Prepare the cost function.
c. What would the total factory overhead cost be at a level of 5,000 hours?

Accepted Answer

a. ($108,694 $83,802) / (5,720 3,760) =

Question 14

A final product or service has only one cost driver.

Accepted Answer

A) True 
 B)False

Question 15

The method of measuring cost functions is the least reliable.

Accepted Answer

A)  multiple least- squares regression 
B)  visual- fit 
C)  high- low 
D)  simple least- squares regression 
A)  multiple least- squares regression 
B)  visual- fit 
C)  high- low 
D)  simple least- squares regression

Question 16

Examples of this type of cost are mortgage payments, property taxes, and insurance

Accepted Answer

Committed

Question 17

One of the more critical decisions made by a manager is the type of technology that the organization will use to produce its products or deliver its services. Why?

Accepted Answer

Choice of technology (for example, labor

Question 18

Pertaining to a useful cost function, plausibility refers to a cause- and- effect relationship.

Accepted Answer

A) True 
 B)False

Question 19

Big Valley Company produces two products. Big Valley Company used labor cost as a cost driver for support cost. Direct labor cost is estimated at $20 per hour. Products A and B require 5 and 9 hours of direct labor, respectively. Support cost is twice the direct labor cost. Big Valley Company recently installed a computer integrated manufacturing system. Because of this change, Big Valley Company's accountants believe that the number of components is a better cost driver for support costs. Cost per component is estimated at $80 per component, Products A and B use 3 and 4 components, respectively.
Compute the following:
a. the support cost allocated to Product A, if direct labor cost is used as the cost driver
b. the support cost allocated to Product B, if direct labor cost is used as the cost driver
c. the support cost allocated to Product A, if number of components is the cost driver
d. the support cost allocated to Product B, if number of components is the cost driver

Accepted Answer

a. 2 x ($20 x 5 hours) = $200

Question 20

In a cost function equation, the cost to be explained is the independent variable.

Accepted Answer

A) True 
 B)False

In a small construction firm, another crew supervisor is added for every 10 workers employed. This is an example of a:

The following three data points appear to be: Units Costs 600 \ 700 650 700 700 700

The process of identifying appropriate cost drivers and their effects on the costs of making a product or providing a service is called:

The measure of reliability, or goodness of fit

Explain management influences on cost behavior.

A company could not temporarily eliminate:

Pertaining to a useful cost function, plausibility means whether you can rely upon the cost function.

have no obvious relationship to levels of output activity, but are determined as part of the periodic planning process.

The simplest of the three methods to measure a linear- cost function from past cost data

These costs contain elements of both fixed- and variable- cost behavior

Managers should apply these criteria to obtain accurate and useful cost functions

A thorough knowledge of cost behavior helps managers to:

A final product or service has only one cost driver.

The method of measuring cost functions is the least reliable.

Examples of this type of cost are mortgage payments, property taxes, and insurance

One of the more critical decisions made by a manager is the type of technology that the organization will use to produce its products or deliver its services. Why?

Pertaining to a useful cost function, plausibility refers to a cause- and- effect relationship.

In a cost function equation, the cost to be explained is the independent variable.

Managerial Accounting and the Business Organization

Introduction to Cost Behavior and Cost Volume Relationships

Cost Management Systems and Activity-Based Costing

Relevant Information and Decision-Making: Marketing Decisions

Relevant Information and Decision-Making: Product Decisions

The Master Budget

Flexible Budget and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Job-Costing

Process-Costing Systems

Overhead Application: Variable and Absorbtion Costing

Basic Accounting Concepts, Techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Filters

Exam 3: Measurement of Cost Behavior

In a small construction firm, another crew supervisor is added for every 10 workers employed. This is an example of a:

The following three data points appear to be: Units Costs 600 \ 700 650 700 700 700

The process of identifying appropriate cost drivers and their effects on the costs of making a product or providing a service is called:

The measure of reliability, or goodness of fit

Explain management influences on cost behavior.

A company could not temporarily eliminate:

Pertaining to a useful cost function, plausibility means whether you can rely upon the cost function.

have no obvious relationship to levels of output activity, but are determined as part of the periodic planning process.

The simplest of the three methods to measure a linear- cost function from past cost data

These costs contain elements of both fixed- and variable- cost behavior

Managers should apply these criteria to obtain accurate and useful cost functions

A thorough knowledge of cost behavior helps managers to:

A final product or service has only one cost driver.

The method of measuring cost functions is the least reliable.

Examples of this type of cost are mortgage payments, property taxes, and insurance

One of the more critical decisions made by a manager is the type of technology that the organization will use to produce its products or deliver its services. Why?

Pertaining to a useful cost function, plausibility refers to a cause- and- effect relationship.

In a cost function equation, the cost to be explained is the independent variable.

Managerial Accounting and the Business Organization

Introduction to Cost Behavior and Cost Volume Relationships

Cost Management Systems and Activity-Based Costing

Relevant Information and Decision-Making: Marketing Decisions

Relevant Information and Decision-Making: Product Decisions

The Master Budget

Flexible Budget and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Job-Costing

Process-Costing Systems

Overhead Application: Variable and Absorbtion Costing

Basic Accounting Concepts, Techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Filters