Question 1

Regression analysis differs from high-low analysis in that regression analysis

Accepted Answer

A)  measures the average amount of change in the outcome variable. 
B)  measures the total amount of change in the outcome variable. 
C)  ignores the high and low observations of the outcome variable. 
D)  ignores non-representative data. 
E)  ignores both the high and low observations of the outcome variable, and non-representative data. 
A)  measures the average amount of change in the outcome variable. 
B)  measures the total amount of change in the outcome variable. 
C)  ignores the high and low observations of the outcome variable. 
D)  ignores non-representative data. 
E)  ignores both the high and low observations of the outcome variable, and non-representative data.

Question 2

The slope of the line of regression is

Accepted Answer

A)  the rate at which the outcome variable varies. 
B)  the rate at which the predictor variable varies. 
C)  the level of total fixed costs. 
D)  the level of total variable costs. 
E)  equal to the intercept. 
A)  the rate at which the outcome variable varies. 
B)  the rate at which the predictor variable varies. 
C)  the level of total fixed costs. 
D)  the level of total variable costs. 
E)  equal to the intercept.

Question 3

The cost function y = 1,000 + 5X

Accepted Answer

A)  has a slope coefficient of 1,000. 
B)  has an intercept of 5. 
C)  is a straight line. 
D)  represents a fixed cost. 
E)  is missing the slope coefficient. 
A)  has a slope coefficient of 1,000. 
B)  has an intercept of 5. 
C)  is a straight line. 
D)  represents a fixed cost. 
E)  is missing the slope coefficient.

Question 4

Which of the following is an equation of a variable cost function?

Accepted Answer

A)  Y = ax + bx 
B)  Y = a + bx 
C)  Y = b 
D)  Y = a 
E)  Y = bx 
A)  Y = ax + bx 
B)  Y = a + bx 
C)  Y = b 
D)  Y = a 
E)  Y = bx

Question 5

Use the information below to answer the following question(s).
The Monroe Company uses the high-low method to estimate the cost function. The information for 2002 is provided below.
  
-Using the high-low method determine the slope coefficient per labour hour at Bradco Restoration?

Accepted Answer

A)  $5.25 
B)  $4.00 
C)  $2.00 
D)  $0.50 
E)  $0.25 
A)  $5.25 
B)  $4.00 
C)  $2.00 
D)  $0.50 
E)  $0.25

Question 6

Write a linear cost function equation for each of the following conditions. Use y for estimated costs and X for activity of the cost driver. a. Direct manufacturing labour is $10 per hour.
B) Direct materials cost $9.20 per cubic metre.
C) Utilities have a minimum charge of $1,000, plus a charge of $0.05 per kilowatt-hour.
D) Machine operating costs include $200,000 of machine amortization per year, plus $75 of utility costs for each day the machinery is in operation.

Accepted Answer

A. Y = $10X
b. y = $

Question 7

What criteria are available in determining which of two alternate cost function estimates is better for a particular management decision?

Accepted Answer

A)  goodness of fit 
B)  economic plausibility 
C)  the significance of the difference between the costs associated with the highest and lowest observations of the cost driver 
D)  the significance of the difference between the unit values for the highest and lowest observations of the cost driver 
E)  the goodness of fit and economic plausibility 
A)  goodness of fit 
B)  economic plausibility 
C)  the significance of the difference between the costs associated with the highest and lowest observations of the cost driver 
D)  the significance of the difference between the unit values for the highest and lowest observations of the cost driver 
E)  the goodness of fit and economic plausibility

Question 8

Spurious correlation refers to a repetitive coincidence of input measures with little causality to the outcome variable.

Accepted Answer

A) True 
 B)False

Question 9

A linear cost function is a function in which the graph of total costs versus a single cost driver forms a straight line, within the relevant range.

Accepted Answer

A) True 
 B)False

Question 10

Arfaei Company manufactures chairs. Because the efforts of manufacturing are approximately equal between labour and machinery, management is considering other possible cost drivers. By considering different cost drivers, it is anticipated that the estimating process can be improved. The following cost estimating equations with their r2 values have been determined for 2012:
   Required:
a. Which equation should be selected for the analysis?
b. What other factors should be included in the selection of the estimating equation?

Accepted Answer

a. Equation 1 for cutting time is slight

Question 11

Use the information below to answer the following question(s).
Miller's Good Value Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2012 operations.
  
-What were total fixed costs for 2012?

Accepted Answer

$75,000 +

Question 12

Use the information below to answer the following question(s).
Raymaster is a small computer software company which uses the account analysis method and has hired you to perform some management advisory services. The company sold 2,500 high quality payroll programs last year.
  
-What is the total budgeted cost per unit sold?

Accepted Answer

A)  $240.00 
B)  $288.00 
C)  $358.40 
D)  $362.40 
E)  $462.40 
A)  $240.00 
B)  $288.00 
C)  $358.40 
D)  $362.40 
E)  $462.40

Question 13

Use the information below to answer the following question(s).
Raymaster is a small computer software company which uses the account analysis method and has hired you to perform some management advisory services. The company sold 2,500 high quality payroll programs last year.
  
-What is the variable cost per unit sold?

Accepted Answer

A)  $180,000 
B)  $320 
C)  $312 
D)  $240 
E)  $72 
A)  $180,000 
B)  $320 
C)  $312 
D)  $240 
E)  $72

Question 14

Newton Company used least squares regression analysis to obtain the following output:
       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

a. The constant or intercept is the tota

Question 15

Patrick Ross, the president of Ross's Wild Game Company, has asked for information about the cost behaviour of manufacturing overhead costs. Specifically, he wants to know how much overhead cost is fixed and how much is variable. The following data are the only records available:
   Required:
Using the high-low method, determine the overhead cost equation. Use machine-hours as your cost driver.

Accepted Answer

@#IMG-DLM& Variable cost per M

Question 16

Use the information below to answer the following question(s).
The Monroe Company uses the high-low method to estimate the cost function. The information for 2002 is provided below.
  
-What is the estimate of Monroe's cost function when 200 machine hours are used?

Accepted Answer

A)  $1,840.00 
B)  $1,997.50 
C)  $2,280.00 
D)  $3,333.33 
E)  $3,680.00 
A)  $1,840.00 
B)  $1,997.50 
C)  $2,280.00 
D)  $3,333.33 
E)  $3,680.00

Question 17

Larson's Stables uses two different independent variables in two different equations to evaluate the cost activities of training horses, trainer's hours, and number of horses. The most recent year's results of the two regressions are as follows: Trainer's hours:
  r2 = 0.56
Number of horses:
  r2 = 0.63
What is the estimated cost for the coming year if 16,000 trainer hours are incurred and the stable has 400 horses to be trained based on the best cost driver?

Accepted Answer

A)  $33,555.50 
B)  $99,929.09 
C)  $350,756.50 
D)  $335,313.32 
E)  $13,844,444.50 
A)  $33,555.50 
B)  $99,929.09 
C)  $350,756.50 
D)  $335,313.32 
E)  $13,844,444.50

Question 18

Correctly identifying the cost driver and separating fixed from variable costs are important inputs for many management decisions.

Accepted Answer

A) True 
 B)False

Question 19

Use the information below to answer the following question(s).
Bernie Company used regression analysis to predict the annual cost of indirect materials. The results were as follows:
Indirect Materials Cost Explained by Units Produced
  
-The linear cost function is

Accepted Answer

A)  Y =.$918 + 0.44X. 
B)  Y = $912 + $1.03X. 
C)  Y = $4,020 + $0.92X. 
D)  Y = $4,378+ $0.92X. 
E)  Y = $4,378 + $2.35X. 
A)  Y =.$918 + 0.44X. 
B)  Y = $912 + $1.03X. 
C)  Y = $4,020 + $0.92X. 
D)  Y = $4,378+ $0.92X. 
E)  Y = $4,378 + $2.35X.

Question 20

Use the information below to answer the following question(s).
The Monroe Company uses the high-low method to estimate the cost function. The information for 2002 is provided below.
  
-Using the high-low method determine the constant at Bradco Restoration?

Accepted Answer

A)  $17,500 
B)  $13,750 
C)  $2,500 
D)  $1,250 
E)  $750 
A)  $17,500 
B)  $13,750 
C)  $2,500 
D)  $1,250 
E)  $750

Regression analysis differs from high-low analysis in that regression analysis

The slope of the line of regression is

The cost function y = 1,000 + 5X

Which of the following is an equation of a variable cost function?

Use the information below to answer the following question(s). The Monroe Company uses the high-low method to estimate the cost function. The information for 2002 is provided below. -Using the high-low method determine the slope coefficient per labour hour at Bradco Restoration?

What criteria are available in determining which of two alternate cost function estimates is better for a particular management decision?

Spurious correlation refers to a repetitive coincidence of input measures with little causality to the outcome variable.

A linear cost function is a function in which the graph of total costs versus a single cost driver forms a straight line, within the relevant range.

Use the information below to answer the following question(s). Miller's Good Value Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2012 operations. -What were total fixed costs for 2012?

Newton Company used least squares regression analysis to obtain the following output: 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.

Use the information below to answer the following question(s). The Monroe Company uses the high-low method to estimate the cost function. The information for 2002 is provided below. -What is the estimate of Monroe's cost function when 200 machine hours are used?

Correctly identifying the cost driver and separating fixed from variable costs are important inputs for many management decisions.

Use the information below to answer the following question(s). Bernie Company used regression analysis to predict the annual cost of indirect materials. The results were as follows: Indirect Materials Cost Explained by Units Produced -The linear cost function is

Use the information below to answer the following question(s). The Monroe Company uses the high-low method to estimate the cost function. The information for 2002 is provided below. -Using the high-low method determine the constant at Bradco Restoration?

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Cost Management: Quality, Time, and the Theory of Constraints

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Capital Budgeting: a Closer Look

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 10: Quantitative Analyses of Cost Functions

Regression analysis differs from high-low analysis in that regression analysis

The slope of the line of regression is

The cost function y = 1,000 + 5X

Which of the following is an equation of a variable cost function?

Use the information below to answer the following question(s). The Monroe Company uses the high-low method to estimate the cost function. The information for 2002 is provided below. -Using the high-low method determine the slope coefficient per labour hour at Bradco Restoration?

What criteria are available in determining which of two alternate cost function estimates is better for a particular management decision?

Spurious correlation refers to a repetitive coincidence of input measures with little causality to the outcome variable.

A linear cost function is a function in which the graph of total costs versus a single cost driver forms a straight line, within the relevant range.

Use the information below to answer the following question(s). Miller's Good Value Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2012 operations. -What were total fixed costs for 2012?

Newton Company used least squares regression analysis to obtain the following output: 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.

Use the information below to answer the following question(s). The Monroe Company uses the high-low method to estimate the cost function. The information for 2002 is provided below. -What is the estimate of Monroe's cost function when 200 machine hours are used?

Correctly identifying the cost driver and separating fixed from variable costs are important inputs for many management decisions.

Use the information below to answer the following question(s). Bernie Company used regression analysis to predict the annual cost of indirect materials. The results were as follows: Indirect Materials Cost Explained by Units Produced -The linear cost function is

Use the information below to answer the following question(s). The Monroe Company uses the high-low method to estimate the cost function. The information for 2002 is provided below. -Using the high-low method determine the constant at Bradco Restoration?

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Cost Management: Quality, Time, and the Theory of Constraints

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Capital Budgeting: a Closer Look

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters