Question 1

When a manager notices an outlier during the cost estimation process,the appropriate response is to:

Accepted Answer

A)  No response is required,unless multiple outliers are observed. 
B)  Attempt to identify the reasons for the outlier. 
C)  Divide the outlier by the standard deviation,before including the outlier in the regression model. 
D)  Re-collect all the data,as an outlier indicates that the data has been corrupted. 
A)  No response is required,unless multiple outliers are observed. 
B)  Attempt to identify the reasons for the outlier. 
C)  Divide the outlier by the standard deviation,before including the outlier in the regression model. 
D)  Re-collect all the data,as an outlier indicates that the data has been corrupted.

Question 2

The relevant range is that range of activity where:

Accepted Answer

A)  management may not find it important to concern itself 
B)  management does not expect the firm to operate 
C)  fixed costs remain unchanged 
D)  the expected costs exceed the benefits from the activity 
A)  management may not find it important to concern itself 
B)  management does not expect the firm to operate 
C)  fixed costs remain unchanged 
D)  the expected costs exceed the benefits from the activity

Question 3

Which of the following are valid reasons for a firm not using objective techniques?
i.Data may not be available
ii.Cost estimates are sufficiently accurate for the firm's purposes.
iii.Accountants may be ignorant of appropriate techniques.iv.The firm gives low priority to cost estimation.

Accepted Answer

A)  i and ii 
B)  i,ii and iii 
C)  ii,iii and iv 
D)  i,ii and iv 
A)  i and ii 
B)  i,ii and iii 
C)  ii,iii and iv 
D)  i,ii and iv

Question 4

Fixed costs per unit:

Accepted Answer

A)  is unrelated to activity levels 
B)  change as activity varies 
C)  remain unchanged as activity level changes 
D)  None of the given answers 
A)  is unrelated to activity levels 
B)  change as activity varies 
C)  remain unchanged as activity level changes 
D)  None of the given answers

Question 5

Within the relevant range of activity,costs:

Accepted Answer

A)  can be estimated with reasonable accuracy. 
B)  exhibit decreasing marginal cost patterns. 
C)  exhibit increasing marginal cost patterns. 
D)  None of the given answers. 
A)  can be estimated with reasonable accuracy. 
B)  exhibit decreasing marginal cost patterns. 
C)  exhibit increasing marginal cost patterns. 
D)  None of the given answers.

Question 6

The Longreach Toy Factory has determined machine hours to be the cost driver of the company's electricity costs.During the first six months of the year,the company incurred the following electricity costs:
Using the high-low method,estimate the variable cost per machine hour:

Accepted Answer

A)  $8.38 
B)  $7.44 
C)  $5.50 
D)  None of the given answers 
A)  $8.38 
B)  $7.44 
C)  $5.50 
D)  None of the given answers

Question 7

Yang Manufacturing makes a product called Yin.The relevant range of operations is between 2500 units and 10 000 units of Yin per month.Per unit costs at two activity levels are as follows: 5000 units at $17.00 per unit;7500 units at $13.00 per unit.Determine their total cost if Yang produces 10 000 units.

Accepted Answer

A)  $130 000 
B)  $125 000 
C)  $110 000 
D)  $100 000 
A)  $130 000 
B)  $125 000 
C)  $110 000 
D)  $100 000

Question 8

Which of the following would always be a mixed (semivariable)cost for a firm?

Accepted Answer

A)  Raw materials because it includes direct and indirect materials 
B)  Direct labour 
C)  Manufacturing overhead 
D)  Raw materials AND manufacturing overhead 
A)  Raw materials because it includes direct and indirect materials 
B)  Direct labour 
C)  Manufacturing overhead 
D)  Raw materials AND manufacturing overhead

Question 9

Variable cost per unit:

Accepted Answer

A)  increases in direct proportion to changes in the cost driver 
B)  decreases in direct proportion to changes in the cost driver 
C)  remains unchanged as the level of the cost driver changes 
D)  increases,but not in direct proportion to changes in the cost driver 
A)  increases in direct proportion to changes in the cost driver 
B)  decreases in direct proportion to changes in the cost driver 
C)  remains unchanged as the level of the cost driver changes 
D)  increases,but not in direct proportion to changes in the cost driver

Question 10

Which of the following statements are assumptions underlying cost estimation?

Accepted Answer

A)  Cost behaviour depends on one or a few activities. 
B)  All costs are production driven. 
C)  There is a strong correlation between the cost and the cost driver. 
D)  Cost behaviour depends on one or a few activities AND there is a strong correlation between the cost and the cost driver. 
A)  Cost behaviour depends on one or a few activities. 
B)  All costs are production driven. 
C)  There is a strong correlation between the cost and the cost driver. 
D)  Cost behaviour depends on one or a few activities AND there is a strong correlation between the cost and the cost driver.

Question 11

Which of the following increases as volume of activity decreases?

Accepted Answer

A)  Fixed cost per unit 
B)  Variable cost per unit 
C)  Total fixed cost 
D)  Total variable cost 
A)  Fixed cost per unit 
B)  Variable cost per unit 
C)  Total fixed cost 
D)  Total variable cost

Question 12

Technical Engineering presently leases a copying machine on a monthly basis.The lease agreement requires a fixed fee each month in addition to a charge per copy.Technical made 2400 copies and paid a total of $162 in rent in September and in October they paid $195 for 3500 copies.Determine the total amount that would be paid for 1800 copies.

Accepted Answer

A)  $120 
B)  $138 
C)  $144 
D)  $163 
A)  $120 
B)  $138 
C)  $144 
D)  $163

Question 13

For a manufacturer of kitchens,which of the following would you expect to be a direct cost?

Accepted Answer

A)  Hourly labour cost of employee installing kitchens 
B)  Material for kitchen benchtops 
C)  Hourly labour cost of employee installing kitchens AND material for kitchen benchtops 
D)  Rent of factory premises 
A)  Hourly labour cost of employee installing kitchens 
B)  Material for kitchen benchtops 
C)  Hourly labour cost of employee installing kitchens AND material for kitchen benchtops 
D)  Rent of factory premises

Question 14

In which approach to costs estimation,is task analysis used?

Accepted Answer

A)  Account classification 
B)  Engineering method 
C)  High-­low method 
D)  Managerial judgement 
A)  Account classification 
B)  Engineering method 
C)  High-­low method 
D)  Managerial judgement

Question 15

For a fixed cost,as volume increases:

Accepted Answer

A)  the cost behaviour depends on the type of fixed cost involved 
B)  total fixed costs remain constant and fixed costs per unit increase 
C)  both total fixed costs and fixed costs per unit remain constant 
D)  total fixed costs remain constant and fixed costs per unit decrease 
A)  the cost behaviour depends on the type of fixed cost involved 
B)  total fixed costs remain constant and fixed costs per unit increase 
C)  both total fixed costs and fixed costs per unit remain constant 
D)  total fixed costs remain constant and fixed costs per unit decrease

Question 16

Which of the following describes a method of cost estimation in which a cost line is drawn through a scatter diagram to help the analyst visualise the relationship between cost and activity?

Accepted Answer

A)  Least squares regression 
B)  High-low 
C)  Visual fit 
D)  Multiple regression 
A)  Least squares regression 
B)  High-low 
C)  Visual fit 
D)  Multiple regression

Question 17

The Longreach Toy Factory has determined machine hours to be the cost driver of the company's electricity costs.During the first six months of the year,the company incurred the following electricity costs:
Using the high-low method,determine the cost formula that expresses the cost behaviour of the company's electricity costs:

Accepted Answer

A)  Y = $3735 + $6.20X 
B)  Y = $1664 + $8.38X 
C)  Y = $4760 + $5.00X 
D)  Y = $4400 + $5.50X 
A)  Y = $3735 + $6.20X 
B)  Y = $1664 + $8.38X 
C)  Y = $4760 + $5.00X 
D)  Y = $4400 + $5.50X

Question 18

Which of the following statement/s is/are true concerning cost estimation methods?

Accepted Answer

A)  Cost behaviour is always assumed to depend on more than one cost driver. 
B)  Cost behaviour patterns are curvilinear. 
C)  Costs and benefits of using sophisticated and costly cost-estimation methods must be evaluated. 
D)  Cost behaviour is always assumed to depend on more than one cost driver AND costs and benefits of using sophisticated and costly cost-estimation methods must be evaluated. 
A)  Cost behaviour is always assumed to depend on more than one cost driver. 
B)  Cost behaviour patterns are curvilinear. 
C)  Costs and benefits of using sophisticated and costly cost-estimation methods must be evaluated. 
D)  Cost behaviour is always assumed to depend on more than one cost driver AND costs and benefits of using sophisticated and costly cost-estimation methods must be evaluated.

Question 19

The level of activity within which fixed costs remain unchanged is called the:

Accepted Answer

A)  extreme range 
B)  relevant range 
C)  activity range 
D)  relevant range AND activity range 
A)  extreme range 
B)  relevant range 
C)  activity range 
D)  relevant range AND activity range

Question 20

Which of the following are problems frequently encountered in data collection?

Accepted Answer

A)  Outliers 
B)  Missing data 
C)  Mismatched time periods 
D)  All of the given answers 
A)  Outliers 
B)  Missing data 
C)  Mismatched time periods 
D)  All of the given answers

When a manager notices an outlier during the cost estimation process,the appropriate response is to:

The relevant range is that range of activity where:

Which of the following are valid reasons for a firm not using objective techniques? i.Data may not be available ii.Cost estimates are sufficiently accurate for the firm's purposes. iii.Accountants may be ignorant of appropriate techniques.iv.The firm gives low priority to cost estimation.

Fixed costs per unit:

Within the relevant range of activity,costs:

The Longreach Toy Factory has determined machine hours to be the cost driver of the company's electricity costs.During the first six months of the year,the company incurred the following electricity costs: Using the high-low method,estimate the variable cost per machine hour:

Which of the following would always be a mixed (semivariable)cost for a firm?

Variable cost per unit:

Which of the following statements are assumptions underlying cost estimation?

Which of the following increases as volume of activity decreases?

For a manufacturer of kitchens,which of the following would you expect to be a direct cost?

In which approach to costs estimation,is task analysis used?

For a fixed cost,as volume increases:

Which of the following describes a method of cost estimation in which a cost line is drawn through a scatter diagram to help the analyst visualise the relationship between cost and activity?

Which of the following statement/s is/are true concerning cost estimation methods?

The level of activity within which fixed costs remain unchanged is called the:

Which of the following are problems frequently encountered in data collection?

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

Filters

Exam 3: Cost Behaviour, Cost Drivers and Cost Estimation

When a manager notices an outlier during the cost estimation process,the appropriate response is to:

The relevant range is that range of activity where:

Which of the following are valid reasons for a firm not using objective techniques? i.Data may not be available ii.Cost estimates are sufficiently accurate for the firm's purposes. iii.Accountants may be ignorant of appropriate techniques.iv.The firm gives low priority to cost estimation.

Fixed costs per unit:

Within the relevant range of activity,costs:

The Longreach Toy Factory has determined machine hours to be the cost driver of the company's electricity costs.During the first six months of the year,the company incurred the following electricity costs: Using the high-low method,estimate the variable cost per machine hour:

Which of the following would always be a mixed (semivariable)cost for a firm?

Variable cost per unit:

Which of the following statements are assumptions underlying cost estimation?

Which of the following increases as volume of activity decreases?

For a manufacturer of kitchens,which of the following would you expect to be a direct cost?

In which approach to costs estimation,is task analysis used?

For a fixed cost,as volume increases:

Which of the following describes a method of cost estimation in which a cost line is drawn through a scatter diagram to help the analyst visualise the relationship between cost and activity?

Which of the following statement/s is/are true concerning cost estimation methods?

The level of activity within which fixed costs remain unchanged is called the:

Which of the following are problems frequently encountered in data collection?

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

Filters