Question 1

The relevant range represents those activity levels for which valid cost relationships have been observed.This is a definition of the term relevant range.

Accepted Answer

A) True 
 B)False

Question 2

The Business School at Eastern College is accumulating data as a first step in the preparation of next year's budget development.One cost that is being looked at closely is administrative costs as a function of student credit hours.Data on administrative costs and credit hours for the past thirteen months are shown below:   The controller's office has analyzed the data and has given you the results from the regression analysis:   If the controller uses the high-low method to estimate costs,the cost equation for administrative salaries is:

Accepted Answer

A) Cost = $96,409.42 + $103.56 × Credit-hours. 
B) Cost = $69,474.40 + $114 30 × Credit-hours. 
C) Cost = $201.21 × Credit-hours. 
D) Cost = $198,808. 
A) Cost = $96,409.42 + $103.56 × Credit-hours. 
B) Cost = $69,474.40 + $114 30 × Credit-hours. 
C) Cost = $201.21 × Credit-hours. 
D) Cost = $198,808.

Question 3

In general,cost behavior results are likely to differ between the engineering method and the account analysis method.Results are likely to differ from method to method.

Accepted Answer

A) True 
 B)False

Question 4

In the learning curve equation Y = aXb,the "a" term represents:

Accepted Answer

A) the labor time required to produce the first unit. 
B) the labor time required to produce the last single unit. 
C) the cumulative number of units. 
D) the index of learning. 
A) the labor time required to produce the first unit. 
B) the labor time required to produce the last single unit. 
C) the cumulative number of units. 
D) the index of learning.

Question 5

Which of the following costs would most likely be classified as variable,assuming the account analysis method is used to determine cost behaviors?

Accepted Answer

A) Indirect materials. 
B) Supervisory salaries. 
C) Equipment maintenance. 
D) Annual Christmas party. 
A) Indirect materials. 
B) Supervisory salaries. 
C) Equipment maintenance. 
D) Annual Christmas party.

Question 6

The Business School at Eastern College is accumulating data as a first step in the preparation of next year's budget development.One cost that is being looked at closely is administrative costs as a function of student credit hours.Data on administrative costs and credit hours for the past thirteen months are shown below:   The controller's office has analyzed the data and has given you the results from the regression analysis:   If the controller uses the high-low method to estimate costs,the variable cost per credit hour is:

Accepted Answer

A) $82.33. 
B) $103.56. 
C) $114.30. 
D) $201.22. 
A) $82.33. 
B) $103.56. 
C) $114.30. 
D) $201.22.

Question 7

The Armer Company is accumulating data to be used in preparing its annual profit plan for the coming year.The cost behavior pattern of the maintenance costs must be determined.The accounting staff has suggested that linear regression be employed to derive an equation in the form of y = a + bx for maintenance costs.Data regarding the maintenance hours and costs for last year and the results of the regression analysis are as follows: (CMA adapted)   What is the variable cost per hour using the high-low method to estimate the cost equation?

Accepted Answer

A) $9.00. 
B) $7.50. 
C) $0.1333. 
D) $0.1111. 
A) $9.00. 
B) $7.50. 
C) $0.1333. 
D) $0.1111.

Question 8

The coefficient of correlation is:

Accepted Answer

A) the range of values over which the probability may be estimated based upon the regression equation results. 
B) the proportion of the total variance in the dependent variable explained by the independent variable. 
C) the measure of variability of the actual observations from the predicting (forecasting)equation line. 
D) the relative degree that changes in one variable can be used to estimate changes in another variable. 
A) the range of values over which the probability may be estimated based upon the regression equation results. 
B) the proportion of the total variance in the dependent variable explained by the independent variable. 
C) the measure of variability of the actual observations from the predicting (forecasting)equation line. 
D) the relative degree that changes in one variable can be used to estimate changes in another variable.

Question 9

Thul Company is interested in establishing the relationship between electricity costs and machine hours.Data have been collected and a regression analysis prepared using Excel.The monthly data and the regression output follow:   Based on the results of the high-low analysis,the estimate of electricity costs in a month with 2,200 machine hours would be:

Accepted Answer

A) $15,375. 
B) $22,825. 
C) $15,180. 
D) $16,427. 
A) $15,375. 
B) $22,825. 
C) $15,180. 
D) $16,427.

Question 10

A scattergraph is useful for identifying outliers/irrelevant data points.This visual representation gives an indication of unusual or extreme points that are outside the area determined to be the norm.

Accepted Answer

A) True 
 B)False

Question 11

The Armer Company is accumulating data to be used in preparing its annual profit plan for the coming year.The cost behavior pattern of the maintenance costs must be determined.The accounting staff has suggested that linear regression be employed to derive an equation in the form of y = a + bx for maintenance costs.Data regarding the maintenance hours and costs for last year and the results of the regression analysis are as follows: (CMA adapted)   What would be the cost equation if regression analysis is used?

Accepted Answer

A) Maintenance Costs = 7.2884 + 684.65 × Hours of Activity. 
B) Maintenance Costs = 684.65 + 49.515 × Hours of Activity. 
C) Maintenance Costs = 684.65 + 7.2884 × Hours of Activity. 
D) Maintenance Costs = 34.469 + .99724 × Hours of Activity. 
A) Maintenance Costs = 7.2884 + 684.65 × Hours of Activity. 
B) Maintenance Costs = 684.65 + 49.515 × Hours of Activity. 
C) Maintenance Costs = 684.65 + 7.2884 × Hours of Activity. 
D) Maintenance Costs = 34.469 + .99724 × Hours of Activity.

Question 12

Which of the following statements regarding regression analysis is (are)true? (A)One way to control the effects of a nonlinear relationship between total costs and activity is reduce the relevant range.(B)The linear cost estimate tends to understate the slope of the cost line in ranges close to capacity.

Accepted Answer

A) Only A is true. 
B) Only B is true. 
C) Both A and B are true. 
D) Neither A nor B is true. 
A) Only A is true. 
B) Only B is true. 
C) Both A and B are true. 
D) Neither A nor B is true.

Question 13

Thul Company is interested in establishing the relationship between electricity costs and machine hours.Data have been collected and a regression analysis prepared using Excel.The monthly data and the regression output follow:   If the controller uses regression analysis to estimate costs,the cost equation for electricity cost is:

Accepted Answer

A) Cost = $1,425.18 + $12.00 × Machine-hours. 
B) Cost = $3,726.88 + $1,682.82 × Machine-hours. 
C) Cost = $1,682.82 + $0.49 × Machine-hours. 
D) Cost = $3,726.88 + $5.77 × Machine-hours. 
A) Cost = $1,425.18 + $12.00 × Machine-hours. 
B) Cost = $3,726.88 + $1,682.82 × Machine-hours. 
C) Cost = $1,682.82 + $0.49 × Machine-hours. 
D) Cost = $3,726.88 + $5.77 × Machine-hours.

Question 14

Thul Company is interested in establishing the relationship between electricity costs and machine hours.Data have been collected and a regression analysis prepared using Excel.The monthly data and the regression output follow:   The correlation coefficient for the regression equation for electricity costs is:

Accepted Answer

A) 0.965. 
B) 0.932. 
C) 0.925. 
D) 0.982. 
A) 0.965. 
B) 0.932. 
C) 0.925. 
D) 0.982.

Question 15

The cost accountants at the Doering Company regressed total overhead costs and direct labor hours for the past 30-months and reported the following results:   What is the estimated overhead cost if 225 direct labor hours are expected to be used in the upcoming period? (rounded to the nearest whole dollar)

Accepted Answer

A) $10,534. 
B) $9,882. 
C) $9,230. 
D) $8,617. 
A) $10,534. 
B) $9,882. 
C) $9,230. 
D) $8,617.

Question 16

Thul Company is interested in establishing the relationship between electricity costs and machine hours.Data have been collected and a regression analysis prepared using Excel.The monthly data and the regression output follow:   If the controller uses regression analysis to estimate costs,the estimate of the variable portion of electricity cost is:

Accepted Answer

A) Cost = $11.70 × Machine-hours. 
B) Cost = $0.93 × Machine-hours. 
C) Cost = $5.77 × Machine-hours. 
D) Cost = $0.49 × Machine-hours. 
A) Cost = $11.70 × Machine-hours. 
B) Cost = $0.93 × Machine-hours. 
C) Cost = $5.77 × Machine-hours. 
D) Cost = $0.49 × Machine-hours.

Question 17

In the cost equation TC = F + VX,V is best described as the:

Accepted Answer

A) costs that do not vary with changes in the activity level. 
B) intercept of the cost equation. 
C) slope of the cost equation. 
D) activity level used to estimate the dependent variable. 
A) costs that do not vary with changes in the activity level. 
B) intercept of the cost equation. 
C) slope of the cost equation. 
D) activity level used to estimate the dependent variable.

Question 18

Engineering cost estimates are usually based on operating conditions that are considered:

Accepted Answer

A) optimal. 
B) practical. 
C) attainable. 
D) historical. 
A) optimal. 
B) practical. 
C) attainable. 
D) historical.

Question 19

In the standard regression equation of y = a + bx,the letter b is best described as the:

Accepted Answer

A) independent variable. 
B) dependent variable. 
C) slope of the equation. 
D) intercept of the equation. 
A) independent variable. 
B) dependent variable. 
C) slope of the equation. 
D) intercept of the equation.

Question 20

Which of the following is the difference between variable costs and fixed costs: (CMA adapted)

Accepted Answer

A) variable costs per unit fluctuate and fixed costs per unit remain constant. 
B) variable costs per unit are fixed over the relevant range and fixed costs per unit are variable. 
C) total variable costs are variable over the relevant range and fixed in the long term,while fixed costs never change. 
D) variable costs per unit change in varying increments,while fixed costs per unit change in equal units. 
A) variable costs per unit fluctuate and fixed costs per unit remain constant. 
B) variable costs per unit are fixed over the relevant range and fixed costs per unit are variable. 
C) total variable costs are variable over the relevant range and fixed in the long term,while fixed costs never change. 
D) variable costs per unit change in varying increments,while fixed costs per unit change in equal units.

The relevant range represents those activity levels for which valid cost relationships have been observed.This is a definition of the term relevant range.

In general,cost behavior results are likely to differ between the engineering method and the account analysis method.Results are likely to differ from method to method.

In the learning curve equation Y = aX^b,the "a" term represents:

Which of the following costs would most likely be classified as variable,assuming the account analysis method is used to determine cost behaviors?

The coefficient of correlation is:

A scattergraph is useful for identifying outliers/irrelevant data points.This visual representation gives an indication of unusual or extreme points that are outside the area determined to be the norm.

In the cost equation TC = F + VX,V is best described as the:

Engineering cost estimates are usually based on operating conditions that are considered:

In the standard regression equation of y = a + bx,the letter b is best described as the:

Which of the following is the difference between variable costs and fixed costs: (CMA adapted)

Cost Accounting: Information for Decision Making

Cost Concepts and Behavior

Fundamentals of Cost-Volume-Profit Analysis

Fundamentals of Cost Analysis for Decision Making

Fundamentals of Product and Service Costing

Job Costing

Process Costing

Activity-Based Costing

Fundamentals of Cost Management

Service Department and Joint Cost Allocation

Fundamentals of Management Control Systems

Planning and Budgeting

Business Unit Performance Measurement

Transfer Pricing

Fundamentals of Variance Analysis

Additional Topics in Variance Analysis

Performance Measurement to Support Business Strategy

Filters

Exam 5: Cost Estimation

The relevant range represents those activity levels for which valid cost relationships have been observed.This is a definition of the term relevant range.

In general,cost behavior results are likely to differ between the engineering method and the account analysis method.Results are likely to differ from method to method.

In the learning curve equation Y = aXb,the "a" term represents:

Which of the following costs would most likely be classified as variable,assuming the account analysis method is used to determine cost behaviors?

The coefficient of correlation is:

A scattergraph is useful for identifying outliers/irrelevant data points.This visual representation gives an indication of unusual or extreme points that are outside the area determined to be the norm.

In the cost equation TC = F + VX,V is best described as the:

Engineering cost estimates are usually based on operating conditions that are considered:

In the standard regression equation of y = a + bx,the letter b is best described as the:

Which of the following is the difference between variable costs and fixed costs: (CMA adapted)

Cost Accounting: Information for Decision Making

Cost Concepts and Behavior

Fundamentals of Cost-Volume-Profit Analysis

Fundamentals of Cost Analysis for Decision Making

Fundamentals of Product and Service Costing

Job Costing

Process Costing

Activity-Based Costing

Fundamentals of Cost Management

Service Department and Joint Cost Allocation

Fundamentals of Management Control Systems

Planning and Budgeting

Business Unit Performance Measurement

Transfer Pricing

Fundamentals of Variance Analysis

Additional Topics in Variance Analysis

Performance Measurement to Support Business Strategy

Filters

In the learning curve equation Y = aX^b,the "a" term represents: