Question 1

The high-low method is more accurate than the regression method of estimating a cost function.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following does NOT represent a cause-and-effect relationship?

Accepted Answer

A) Material costs increase as the number of units produced increases. 
B) A company is charged 40 cents for each brochure printed and mailed. 
C) Utility costs increase at the same time that insurance costs increase. 
D) It makes sense that if a complex product has a large number of parts it will take longer to assemble than a simple product with fewer parts. 
A) Material costs increase as the number of units produced increases. 
B) A company is charged 40 cents for each brochure printed and mailed. 
C) Utility costs increase at the same time that insurance costs increase. 
D) It makes sense that if a complex product has a large number of parts it will take longer to assemble than a simple product with fewer parts.

Question 3

A linear cost function can only represent fixed cost behavior.

Accepted Answer

A) True 
 B)False

Question 4

Schotte Manufacturing Company uses two different independent variables (machine-hours and number of packages)in two different equations to evaluate costs of the packaging department. The most recent results of the two regressions are as follows:
Machine-hours:
     Number of packages:
     Required:
a. What are the estimating equations for each cost driver?
b. Which cost driver is best and why?

Accepted Answer

@#IMG-DLM& b. Machine-hours has a low r²

Question 5

y = a + bX represents the general form of the linear cost function. which is expressed in Excel as y=mx+b.

Accepted Answer

A) True 
 B)False

Question 6

Time-series data analysis includes:

Accepted Answer

A) using a variety of time periods to measure the dependent variable 
B) using the highest and lowest observation 
C) observing different entities during the same time period 
D) comparing information in different cost pools 
A) using a variety of time periods to measure the dependent variable 
B) using the highest and lowest observation 
C) observing different entities during the same time period 
D) comparing information in different cost pools

Question 7

Simple regression differs from multiple regression in that:

Accepted Answer

A) multiple regression uses 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 regression can use both dependent and independent variables 
C) simple regression uses only one independent variable and multiple regression uses more than one independent variable 
D) simple regression uses only one dependent variable and multiple regression uses more than one dependent variable 
A) multiple regression uses 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 regression can use both dependent and independent variables 
C) simple regression uses only one independent variable and multiple regression uses more than one independent variable 
D) simple regression uses only one dependent variable and multiple regression uses more than one dependent variable

Question 8

Answer the following questions using the information below:
For Alice Company, labor-hours are 25,000 and wages $94,000 at the high point of the relevant range, and labor-hours are 15,000 and wages $70,000 at the low point of the relevant range.
-What is the slope coefficient per labor-hour?

Accepted Answer

A) $4.67 
B) $3.76 
C) $2.40 
D) $0.42 
A) $4.67 
B) $3.76 
C) $2.40 
D) $0.42

Question 9

Answer the following questions using the information below:
The Ranger Company uses the high-low method to estimate it's cost function. The information for 2011 is provided below:
  
-What is the estimate of the total cost when 1,100 machine-hours are used?

Accepted Answer

A) $250,000 
B) $270,000 
C) $300,000 
D) $400,000 
A) $250,000 
B) $270,000 
C) $300,000 
D) $400,000

Question 10

A plot of data that results in one extreme observation most likely indicates that:

Accepted Answer

A) more than one cost pool should be used 
B) an unusual event such as a plant shutdown occurred during that month 
C) the cost-allocation base has been incorrectly identified 
D) individual cost items do not have the same cost driver 
A) more than one cost pool should be used 
B) an unusual event such as a plant shutdown occurred during that month 
C) the cost-allocation base has been incorrectly identified 
D) individual cost items do not have the same cost driver

Question 11

Answer the following questions using the information below:
The Delmonico Company uses the high-low method to estimate the cost function. The information for 2011 is provided below:
  
-What is the slope coefficient per machine-hour?

Accepted Answer

A) $56.66 
B) $0.10 
C) $40.00 
D) $50.00 
A) $56.66 
B) $0.10 
C) $40.00 
D) $50.00

Question 12

Quantitative analysis methods estimate cost functions:

Accepted Answer

A) which depend on the experience and judgment of the analyst for accuracy 
B) based on analysis and opinions gathered from various departments 
C) using significant amounts of historical data 
D) using the pooling of knowledge from each value chain function 
A) which depend on the experience and judgment of the analyst for accuracy 
B) based on analysis and opinions gathered from various departments 
C) using significant amounts of historical data 
D) using the pooling of knowledge from each value chain function

Question 13

When new products are introduced, learning-curve effects can have a major influence on production scheduling.

Accepted Answer

A) True 
 B)False

Question 14

The last step in estimating a cost function using quantitative analysis is to identify the independent variable.

Accepted Answer

A) True 
 B)False

Question 15

Which cost estimation method analyzes accounts in the subsidiary ledger as variable, fixed, or mixed using qualitative methods?

Accepted Answer

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

Question 16

A negative slope of a regression line indicates that total costs are higher for higher values of the cost driver.

Accepted Answer

A) True 
 B)False

Question 17

A learning curve is a function that measures how labor-hours per unit decrease, as units of production decrease.

Accepted Answer

A) True 
 B)False

Question 18

Answer the following questions using the information below:
The Gangwere Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Gangwere Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation.
  
-What is the estimated total cost at an operating level of 2,850 hours?

Accepted Answer

A) $25,692 
B) $33,240 
C) $32,016 
D) $34,736 
A) $25,692 
B) $33,240 
C) $32,016 
D) $34,736

Question 19

Machine-hours is a more economically plausible cost driver of machine maintenance than number of direct manufacturing labor-hours.

Accepted Answer

A) True 
 B)False

Question 20

If machine maintenance is scheduled at a time when production is at a low level, then:

Accepted Answer

A) low production is the cost driver of high repair costs 
B) an understanding of operations is needed to determine an appropriate cost driver 
C) low production should be avoided since it is the cause of machine maintenance 
D) machine maintenance cannot be accurately predicted 
A) low production is the cost driver of high repair costs 
B) an understanding of operations is needed to determine an appropriate cost driver 
C) low production should be avoided since it is the cause of machine maintenance 
D) machine maintenance cannot be accurately predicted

Exam 10: Determining How Costs Behave

The high-low method is more accurate than the regression method of estimating a cost function.

Which of the following does NOT represent a cause-and-effect relationship?

A linear cost function can only represent fixed cost behavior.

y = a + bX represents the general form of the linear cost function. which is expressed in Excel as y=mx+b.

Time-series data analysis includes:

Simple regression differs from multiple regression in that:

Answer the following questions using the information below: For Alice Company, labor-hours are 25,000 and wages $94,000 at the high point of the relevant range, and labor-hours are 15,000 and wages $70,000 at the low point of the relevant range. -What is the slope coefficient per labor-hour?

Answer the following questions using the information below: The Ranger Company uses the high-low method to estimate it's cost function. The information for 2011 is provided below: -What is the estimate of the total cost when 1,100 machine-hours are used?

A plot of data that results in one extreme observation most likely indicates that:

Answer the following questions using the information below: The Delmonico Company uses the high-low method to estimate the cost function. The information for 2011 is provided below: -What is the slope coefficient per machine-hour?

Quantitative analysis methods estimate cost functions:

When new products are introduced, learning-curve effects can have a major influence on production scheduling.

The last step in estimating a cost function using quantitative analysis is to identify the independent variable.

Which cost estimation method analyzes accounts in the subsidiary ledger as variable, fixed, or mixed using qualitative methods?

A negative slope of a regression line indicates that total costs are higher for higher values of the cost driver.

A learning curve is a function that measures how labor-hours per unit decrease, as units of production decrease.

Machine-hours is a more economically plausible cost driver of machine maintenance than number of direct manufacturing labor-hours.

If machine maintenance is scheduled at a time when production is at a low level, then:

The Accountants Role in the Organization

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Decision Making and Relevant Information

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

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