Management Accounting Information for Creating and Managing Value Kim Langfield Smith 8th Edition -Test bank
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Sample Test
Chapter 03 Test Bank – Static KEY
1.
The relationship between cost and activity is called:
1. cost
prediction.
2. cost
behaviour.
C.
cost analysis.
1. cost
approximation.
2. Forecasting
a cost at a particular level of activity is called:
1. cost
estimation.
2. cost
prediction.
3. cost
behaviour.
4. cost
functions.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.4 Describe the different roles that cost driver analysis
can play in management accounting
Topic: Cost Behaviour Patterns
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Topic: Cost Behaviour Patterns
3.
A cost that has both a fixed and variable component is called a:
1. step-fixed
cost.
2. step-variable
cost.
3. semivariable
cost.
4. discretionary
cost.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.5 Define and analyse the
behaviour of the following types of costs: variable, fixed, step-fixed,
semivariable (or mixed) and curvilinear
Learning Objective: 3.7 Define and provide examples of
engineered, committed and discretionary costs
Topic: Mixed/Semivariable Costs
4.
A cost that remains unchanged in total as the activity level (or cost driver)
changes is called a:
1. fixed
cost.
2. variable
cost.
3. step-fixed
cost.
4. step-variable
cost.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.2 Explain the concept of
cost drivers, including volume-based and non-volume-based cost drivers
Learning Objective: 3.5 Define and analyse the behaviour of the
following types of costs: variable, fixed, step-fixed, semivariable (or mixed)
and curvilinear
Topic: Fixed Costs
5.
A cost that changes in total in direct proportion to a change in the cost
driver is a:
1. variable
cost.
2. fixed
cost.
3. semivariable
cost.
4. step-variable
cost.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.2 Explain the concept of
cost drivers, including volume-based and non-volume-based cost drivers
Learning Objective: 3.5 Define and analyse the behaviour of the
following types of costs: variable, fixed, step-fixed, semivariable (or mixed)
and curvilinear
Topic: Variable Costs
6.
A manufacturer plans to increase production within the relevant range of
activity. What behaviour can the company expect for each of the following?
|
A.
|
B.
|
C.
|
D.
7. Variable
cost per unit:
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.3 Introduce the unit,
batch, product and facility level hierarchy of costs and cost drivers
Learning Objective: 3.5 Define and analyse the behaviour of the
following types of costs: variable, fixed, step-fixed, semivariable (or mixed)
and curvilinear Learning Objective: 3.6 Explain the importance of the relevant
range when using a cost behaviour pattern for cost prediction
Topic: Cost Behaviour Patterns
A.
increases in direct proportion to changes in the cost driver.
1. decreases
in direct proportion to changes in the cost driver.
2. remains
unchanged as the level of the cost driver changes.
3. increases,
but not in direct proportion to changes in the cost driver.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.2 Explain the concept of
cost drivers, including volume-based and non-volume-based cost drivers
Learning Objective: 3.5 Define and analyse the behaviour of the
following types of costs: variable, fixed, step-fixed, semivariable (or mixed)
and curvilinear
Topic: Variable Costs
8.
Fixed costs per unit:
1. are
unrelated to activity levels.
2. change
as activity varies.
3. remain
unchanged as activity level changes. D. None of the answers is correct.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.5 Define and analyse the
behaviour of the following types of costs: variable, fixed, step-fixed,
semivariable (or mixed) and curvilinear
Topic: Fixed Costs
9.
Costs that remain fixed over wide ranges of activity but jump to a different
amount outside that range are called:
1. step-fixed
costs.
2. step-variable
costs.
3. semivariable
costs.
4. curvilinear
costs.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.4 Describe the different
roles that cost driver analysis can play in management accounting
Learning Objective: 3.5 Define and analyse the behaviour of the
following types of costs: variable, fixed, step-fixed, semivariable (or mixed)
and curvilinear
Topic: Mixed/Semivariable Costs
10.
The fixed costs per unit are $10 when a company makes 10,000 units. What are
the per unit fixed costs when 12,500 units are produced? A. $6.00
12.
$12.00
13.
$10.00
14.
D. $
8.00
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.5 Define and analyse
the behaviour of the following types of costs: variable, fixed, step-fixed, semivariable
(or mixed) and curvilinear
Topic: Variable Costs
11.
The variable costs per unit are $4 when a company makes 10,000 units. What are
the per unit variable costs when 8,000 units are produced?
6. $6.00 B. $4.00 C.
$4.50 D. $5.00
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.5 Define and analyse
the behaviour of the following types of costs: variable, fixed, step-fixed,
semivariable (or mixed) and curvilinear
Topic: Variable Costs
12.
Total costs are $140,000 when 10,000 units are made. Of this amount, variable
costs are $4 per unit. What are the total costs when 8,000 units are produced?
1. $140,000
B. $136,000 C. $132,000
D. $124,000
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.5 Define and analyse
the behaviour of the following types of costs: variable, fixed, step-fixed,
semivariable (or mixed) and curvilinear
Topic: Cost Behaviour Patterns
13.
Total costs are $80,000 when 8,000 units are made. Of this amount, variable
costs are $48,000. What are the total costs when 10,000 units are produced?
1. $
92,000
B.
$ 98,000 C. $100,000 D. $108,000
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.5 Define and analyse
the behaviour of the following types of costs: variable, fixed, step-fixed,
semivariable (or mixed) and curvilinear
Topic: Cost Behaviour Patterns
14.
Which per unit cost does the slope of the total cost line represent?
1. Fixed
2. Variable
C.
Semivariable
1. Step-variable
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.5 Define and analyse
the behaviour of the following types of costs: variable, fixed, step-fixed,
semivariable (or mixed) and curvilinear
Topic: Linear Cost Behaviour
15.
The level of activity within which fixed costs remain unchanged is called the:
1. extreme
range.
2. relevant
range.
C.
activity range.
1. relevant
range AND activity range.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.5 Define and analyse the
behaviour of the following types of costs: variable, fixed, step-fixed,
semivariable (or mixed) and curvilinear Learning Objective: 3.6 Explain the
importance of the relevant range when using a cost behaviour pattern for cost
prediction
Topic: Linear Cost Behaviour
16.
The relevant range is that range of activity where:
1. management
may not find it important to concern itself.
2. management
does not expect the firm to operate.
3. fixed
costs remain unchanged.
4. the
expected costs exceed the benefits from the activity.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.4 Describe the different
roles that cost driver analysis can play in management accounting
Learning Objective: 3.5 Define and analyse the behaviour of the
following types of costs: variable, fixed, step-fixed, semivariable (or mixed)
and curvilinear Learning Objective: 3.6 Explain the importance of the relevant
range when using a cost behaviour pattern for cost prediction
Topic: Linear Cost Behaviour
17.
Within the relevant range of activity, costs:
1. can
be estimated with reasonable accuracy.
2. exhibit
decreasing marginal cost patterns.
3. exhibit
increasing marginal cost patterns. D. None of the answers is correct.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.6 Explain the
importance of the relevant range when using a cost behaviour pattern for cost
prediction
Topic: Linear Cost Behaviour
18.
|
As a
firm begins to operate outside the relevant range, the accuracy of cost
estimates for fixed and variable costs: A.
|
B.
|
C.
|
D.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.5 Define and analyse
the behaviour of the following types of costs: variable, fixed, step-fixed,
semivariable (or mixed) and curvilinear Learning Objective: 3.6 Explain the
importance of the relevant range when using a cost behaviour pattern for cost
prediction
Topic: Linear Cost Behaviour
19.
Which of the following describes a cost-estimation method that involves a
careful examination of the ledger accounts?
1. Least
squares regression
2. Visual
fit
3. Account
classification
4. Multiple
regression
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.4 Describe the different roles that cost driver analysis
can play in management accounting
Learning Objective: 3.8 Describe the following approaches to
cost estimation: managerial judgment (including account classification), the
engineering method, and quantitative analysis (including
high-low, and simple and multiple regression) Topic: Account
Classification Method/Account Analysis
20.
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?
1. Least
squares regression
2. High-low
3. Visual
fit
D.
Multiple regression
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.4 Describe the different roles that cost driver analysis
can play in management accounting
Learning Objective: 3.8 Describe the following approaches to
cost estimation: managerial judgment (including account classification), the
engineering method, and quantitative analysis (including
high-low, and simple and multiple regression) Learning
Objective: 3.9 Estimate cost functions using the high-low method and regression
analysis
Topic: Visual-Fit Method
21.
Within the relevant range, a curvilinear cost function can be graphed as a:
1. straight
line.
2. set
of straight lines.
3. solid
line.
4. curved
line.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.5 Define and analyse the
behaviour of the following types of costs: variable, fixed, step-fixed,
semivariable (or mixed) and curvilinear Learning Objective: 3.6 Explain the
importance of the relevant range when using a cost behaviour pattern for cost
prediction
Topic: Linear Cost Behaviour
22.
The method of cost estimation that fits a cost line between two data points is:
1. least
squares regression.
2. high–low.
C.
account classification.
1. multiple
regression.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.8 Describe the following approaches to
cost estimation: managerial judgment (including account classification), the
engineering method, and quantitative analysis (including
high-low, and simple and multiple regression) Learning
Objective: 3.9 Estimate cost functions using the high-low method and regression
analysis
Topic: High-low Method
23.
The method of cost estimation that minimises the sum of the squared deviations
between the cost line and the data points is:
1. least
squares regression.
2. visual
fit.
3. account
classification.
4. None
of the answers is correct.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.8 Describe the following approaches to
cost estimation: managerial judgment (including account classification), the
engineering method, and quantitative analysis (including
high-low, and simple and multiple regression) Learning Objective:
3.9 Estimate cost functions using the high-low method and regression analysis
Topic: Least-Squares Regression Method
24.
In regression analysis, the variable that is being predicted is:
1. the
independent variable.
2. the
dependent variable.
3. the
explanatory variable.
4. the
dependent variable AND the explanatory variable.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.4 Describe the different
roles that cost driver analysis can play in management accounting Learning
Objective: 3.9 Estimate cost functions using the high-low method and regression
analysis
Topic: Least-Squares Regression Method
25.
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 Engineering made 2,400 copies and paid a total of $162 in rent
in September and in October they
paid $195 for 3,500 copies. Determine Technical Engineering’s
variable cost per copy.
1. $0.06
B. $0.04 C. $0.03
D. $0.01
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.5 Define and analyse
the behaviour of the following types of costs: variable, fixed, step-fixed,
semivariable (or mixed) and curvilinear
Learning Objective: 3.8 Describe the following approaches to
cost estimation: managerial judgment (including account classification), the
engineering method, and quantitative analysis (including
high-low, and simple and multiple regression) Learning
Objective: 3.9 Estimate cost functions using the high-low method and regression
analysis
Topic: Variable Costs
26.
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 Engineering made 2,400 copies and paid a total of $162 in rent
in September and in October they
paid $195 for 3,500 copies. Determine Technical’s monthly fixed
fee.
1. $138
|
B. |
$ 90 |
|
C. |
$ 66 |
|
D. |
$ 55 |
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.8 Describe the
following approaches to cost estimation: managerial judgment (including account
classification), the engineering method, and quantitative analysis (including
high-low, and simple and multiple regression) Learning
Objective: 3.9 Estimate cost functions using the high-low method and regression
analysis
Topic: Fixed Costs
27.
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 2,400 copies and paid a total of $162 in rent in September
and in October they paid $195 for
3,500 copies. Determine the total amount that would be paid for
1,800 copies.
1. $120
B. $138 C. $144
D. $163
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Hard Learning Objective: 3.8 Describe the following
approaches to cost estimation: managerial judgment (including account
classification), the engineering method, and quantitative analysis (including
high-low, and simple and multiple regression) Learning
Objective: 3.9 Estimate cost functions using the high-low method and regression
analysis
Topic: Linear Cost Behaviour
28.
Yang Manufacturing makes a product called Yin. The relevant range of operations
is between 2,500 units and 10,000 units of Yin per month. Per unit costs at two
activity levels are as follows: 5,000 units at $17.00 per unit; 7,500 units at
$13.00 per unit. Determine the cost formula
that expresses the behaviour of Yang’s total costs:
1. Y =
$60,000 + $5X B. Y = $20,000 + $13X C. Y = $45,000 + $4X D. Y =
$40,000 + $9X
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Hard Learning Objective: 3.3 Introduce the unit,
batch, product and facility level hierarchy of costs and cost drivers
Learning Objective: 3.6 Explain the importance of the relevant
range when using a cost behaviour pattern for cost prediction Learning
Objective: 3.9 Estimate cost functions using the high-low method and regression
analysis
Topic: Linear Cost Behaviour
29.
Yang Manufacturing makes a product called Yin. The relevant range of operations
is between 2,500 units and 10,000 units of Yin per month. Per unit costs at two
activity levels are as follows: 5,000 units at $17.00 per unit; 7,500 units at
$13.00 per unit. Determine their total cost if
Yang produces 10,000 units.
1. $130,000
B. $125,000 C. $110,000
D. $100,000
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Hard Learning Objective: 3.3 Introduce the unit,
batch, product and facility level hierarchy of costs and cost drivers
Learning Objective: 3.6 Explain the importance of the relevant
range when using a cost behaviour pattern for cost prediction Learning
Objective: 3.9 Estimate cost functions using the high-low method and regression
analysis
Topic: Linear Cost Behaviour
30.
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:
Month Machine Hours
Electricity Cost
Jan
780 $8,200
Feb
720 $8,360
Mar
800 $8,950
Apr
900 $9,360
May
950 $9,625
Jun
920 $9,150
Using the high-low method, estimate the variable cost per
machine hour.
8. $8.38
9. $7.44
10.
$5.50
11.
None of the answers is correct.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.2 Explain the concept
of cost drivers, including volume-based and non-volume-based cost drivers
Learning Objective: 3.5 Define and analyse the behaviour of the
following types of costs: variable, fixed, step-fixed, semivariable (or mixed)
and curvilinear Learning Objective: 3.8 Describe the following approaches to
cost estimation: managerial judgment (including account classification), the
engineering method, and quantitative analysis (including
high-low, and simple and multiple regression) Learning
Objective: 3.9 Estimate cost functions using the high-low method and regression
analysis
Topic: High-low Method
31.
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:
Month Machine Hours
Electricity Cost
Jan
780 $8,200
Feb
720 $8,360
Mar
800 $8,950
Apr
900 $9,360
May
950 $9,625
Jun
920 $9,150
Using the high-low method, determine the cost formula that
expresses the cost behaviour of the company’s ElectricityCosts.
6. Y=
$3,735 + $6.20X B. Y= $1,664 + $8.38X C. Y= $4,760 + $5.00X D. Y=
$4,400 + $5.50X
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.2 Explain the concept of cost drivers,
including volume-based and non-volume-based cost drivers Learning Objective:
3.8 Describe the following approaches to cost estimation: managerial judgment
(including account classification), the engineering method, and quantitative
analysis (including
high-low, and simple and multiple regression) Learning Objective:
3.9 Estimate cost functions using the high-low method and regression analysis
Topic: High-low Method
32.
A regression model in which more than one independent variable is used to
predict the dependent variable is called a:
1. simple
regression model.
2. multiple
regression model.
3. dependent
model.
4. B and
C
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.8 Describe the following
approaches to cost estimation: managerial judgment (including account
classification), the engineering method, and quantitative analysis (including
high-low, and simple and multiple regression) Learning
Objective: 3.9 Estimate cost functions using the high-low method and regression
analysis
Topic: Multiple Regression Analysis
33.
Which of the following are problems frequently encountered in data collection?
1. Outliers
2. Missing
data
3. Mismatched
time periods
4. All
of the given answers
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.10 Explain some of the
issues that arise in estimating cost functions in practice, including data
collection problems, learning curve effects, and cost-benefit evaluations
Topic: Data Collection Problems
34.
Which of the following statements is true concerning cost estimation methods?
1. Cost
behaviour is always assumed to depend on more than one cost driver.
2. Cost
behaviour patterns are curvilinear.
3. Costs
and benefits of using sophisticated and costly cost-estimation methods must be
evaluated.
4. 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.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.2 Explain the concept of cost drivers, including
volume-based and non-volume-based cost drivers Learning Objective: 3.3
Introduce the unit, batch, product and facility level hierarchy of costs and
cost drivers
Learning Objective: 3.5 Define and analyse the behaviour of the
following types of costs: variable, fixed, step-fixed, semivariable (or mixed)
and curvilinear
Topic: Methods of Cost Estimation
35.
If a very short time period, such as a week, is used for a regression study,
rather than a longer period such as a month:
1. coping
with inflation becomes more difficult.
2. accounting
measurement errors are more likely.
3. time
and motion studies will be required to supplement the cost and volume data.
4. coping
with inflation becomes more difficult AND time and motion studies will be
required to supplement the cost and volume data.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.10 Explain some of the
issues that arise in estimating cost functions in practice, including data
collection problems, learning curve effects, and cost-benefit evaluations
Learning Objective: 3.4 Describe the different roles that cost
driver analysis can play in management accounting
Topic: Methods of Cost Estimation
36.
In assessing the costs and benefits of using a particular cost driver, which of
the following must be taken into account?
1. The
availability of cost data.
1. The
time frame for analysing the cost behaviour.
iii. Whether it is a fixed or variable cost.
1. i
2. ii
3. i and
ii
D.
i and iii
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.10 Explain some of the issues that arise
in estimating cost functions in practice, including data collection problems,
learning curve effects, and cost-benefit evaluations
Learning Objective: 3.2 Explain the concept of cost drivers,
including volume-based and non-volume-based cost drivers Learning Objective:
3.5 Define and analyse the behaviour of the following types of costs: variable,
fixed, step-fixed, semivariable (or mixed) and curvilinear
Topic: Cost Behaviour Patterns
37.
In activity-based costing analysis, the manufacturing manager’s salary is classified
as a:
1. unit
cost.
2. batch
cost.
3. product
cost.
4. facility
cost.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.3 Introduce the unit,
batch, product and facility level hierarchy of costs and cost drivers Learning
Objective: 3.4 Describe the different roles that cost driver analysis can play
in management accounting
Topic: Cost Behaviour Patterns
38.
In activity-based costing analysis, direct materials are classified as a:
1. unit
cost.
2. batch
cost.
3. product
cost.
4. facility
cost.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.3 Introduce the unit,
batch, product and facility level hierarchy of costs and cost drivers Learning
Objective: 3.4 Describe the different roles that cost driver analysis can play
in management accounting
Topic: Cost Behaviour Patterns
39.
In activity-based costing analysis, setup costs are classified as a
1. unit
cost.
2. batch
cost.
C.
product cost.
1. facility
cost.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.3 Introduce the unit,
batch, product and facility level hierarchy of costs and cost drivers Learning
Objective: 3.4 Describe the different roles that cost driver analysis can play
in management accounting
Topic: Cost Behaviour Patterns
40.
In activity-based costing analysis, package design is classified as a:
1. unit
cost.
2. batch
cost.
3. product
cost.
D.
facility cost.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.3 Introduce the unit,
batch, product and facility level hierarchy of costs and cost drivers Learning
Objective: 3.4 Describe the different roles that cost driver analysis can play in
management accounting
Topic: Cost Behaviour Patterns
41.
In which approach to costs estimation is task analysis used?
1. Account
classification
2. Engineering
method
3. High-low
method D.
Managerial judgement
1. Account
classification
2. Engineering
method
3. High-low
method
D.
Managerial judgement
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.4 Describe the different
roles that cost driver analysis can play in management accounting
Learning Objective: 3.8 Describe the following approaches to
cost estimation: managerial judgment (including account classification), the
engineering method, and quantitative analysis (including
high-low, and simple and multiple regression) Learning
Objective: 3.9 Estimate cost functions using the high-low method and regression
analysis
Topic: Engineering Method of Cost Estimation
42.
In which approach to cost estimation is least squares used?
1. Engineering
method
2. High-low
method
3. Regression
analysis
4. Managerial
judgement
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.4 Describe the different roles that cost driver analysis
can play in management accounting
Learning Objective: 3.8 Describe the following approaches to
cost estimation: managerial judgment (including account classification), the
engineering method, and quantitative analysis (including
high-low, and simple and multiple regression) Learning
Objective: 3.9 Estimate cost functions using the high-low method and regression
analysis
Topic: Least-Squares Regression Method
43.
Which of the following statements are assumptions underlying cost estimation?
1. Cost
behaviour depends on one or a few activities.
2. All
costs are production driven.
3. There
is a strong correlation between the cost and the cost driver.
4. Cost
behaviour depends on one or a few activities AND there is a strong correlation between
the cost and the cost driver.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.2 Explain the concept of cost drivers,
including volume-based and non-volume-based cost drivers Learning Objective:
3.3 Introduce the unit, batch, product and facility level hierarchy of costs
and cost drivers
Learning Objective: 3.8 Describe the following approaches to
cost estimation: managerial judgment (including account classification), the
engineering method, and quantitative analysis (including
high-low, and simple and multiple regression) Topic: Cost
Behaviour Patterns
44.
Which of the following are valid reasons for a firm not using objective
techniques?
1. Data
may not be available.
1. Cost
estimates are sufficiently accurate for the firm’s purposes.
iii. Accountants may be ignorant of appropriate techniques.
1. The
firm gives low priority to cost estimation.
1. i and
ii
2. i, ii
and iii
3. ii,
iii and iv
4. i, ii
and iv
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.8 Describe the following approaches to
cost estimation: managerial judgment (including account classification), the
engineering method, and quantitative analysis (including
high-low, and simple and multiple regression) Topic: Data
Collection Problems
45.
Which of the following are important in estimating the cost of machine
maintenance?
1. The
relevant range
2. The
time period selected
3. The
cost driver selected
4. All
of the given answers
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.2 Explain the concept
of cost drivers, including volume-based and non-volume-based cost drivers
Learning Objective: 3.6 Explain the importance of the relevant range when using
a cost behaviour pattern for cost prediction
Learning Objective: 3.8 Describe the following approaches to
cost estimation: managerial judgment (including account classification), the
engineering method, and quantitative analysis (including
high-low, and simple and multiple regression) Topic: Methods of
Cost Estimation
46.
When using regression analysis to determine estimated costs, what criteria are
necessary to evaluate a particular regression line?
1. Closeness
to pre-analysis guess
2. Goodness
of fit
3. Coefficient
of determination
4. Goodness
of fit AND coefficient of determination
47.
In the regression formulaY = a + bX, b is:
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.4 Describe the different
roles that cost driver analysis can play in management accounting Learning
Objective: 3.9 Estimate cost functions using the high-low method and regression
analysis
Topic: Least-Squares Regression Method
A.
the slope of the line.
1. the
cost driver.
2. the
intercept on the vertical axis.
3. the
dependent variable.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.2 Explain the concept of
cost drivers, including volume-based and non-volume-based cost drivers Learning
Objective: 3.9 Estimate cost functions using the high-low method and regression
analysis
Topic: Least-Squares Regression Method
48.
Which of the following statements is most complete and correct?
1. Activity-based
costing uses non-volume-based cost drivers only.
2. Activity-based
costing uses volume-based cost drivers.
3. Activity-based
costing recognises that both volume-based and non-volume-based cost drivers may
be appropriate. D. None of the answers is correct.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.2 Explain the concept of
cost drivers, including volume-based and non-volume-based cost drivers Learning
Objective: 3.3 Introduce the unit, batch, product and facility level hierarchy
of costs and cost drivers
Topic: Treatment of Costs under Activity-Based Costing Model
49.
For a fixed cost, as volume increases:
1. the
cost behaviour depends on the type of fixed cost involved.
2. total
fixed costs remain constant and fixed costs per unit increase.
3. both
total fixed costs and fixed costs per unit remain constant.
4. total
fixed costs remain constant and fixed costs per unit decrease.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.5 Define and analyse the behaviour of the
following types of costs: variable, fixed, step-fixed, semivariable (or mixed)
and curvilinear
Topic: Fixed Costs
50.
Consider the following equation:
Total cost = fixed costs + (cost driver rate × cost driver
quantity) If a cost can be estimated using this equation, it is probably a:
1. fixed
cost.
2. variable
cost.
3. mixed
or semivariable cost.
4. non-linear
cost.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.2 Explain the concept
of cost drivers, including volume-based and non-volume-based cost drivers
Learning Objective: 3.5 Define and analyse the behaviour of the
following types of costs: variable, fixed, step-fixed, semivariable (or mixed)
and curvilinear
Topic: Mixed/Semivariable Costs
51.
Lawson Lumber uses the high–low method to estimate electricity cost, which
varies in relation to machine hours. Based on the following data, how would the
cost function be stated if X’ is the number of machine hours?
Month Electricity
expense
Machine Hours
Jun $
495 410
Jul $
500 400
Aug $
750 900
Sep $
610 500
1. $525
+ $0.35X B. $300
+ $0.50X C. $500 + $0.50X D. $470 + $0.35X
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.8 Describe the
following approaches to cost estimation: managerial judgment (including account
classification), the engineering method, and quantitative analysis (including
high-low, and simple and multiple regression) Learning
Objective: 3.9 Estimate cost functions using the high-low method and regression
analysis
Topic: High-low Method
52.
For a manufacturer of kitchens, which of the following would you expect to be a
fixed cost?
1. Hourly
labour cost of employee installing kitchens
2. Material
for kitchen benchtops
3. Adhesive
for benchtops
4. Rent
of factory premises
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.5 Define and analyse
the behaviour of the following types of costs: variable, fixed, step-fixed,
semivariable (or mixed) and curvilinear
Topic: Fixed Costs
53.
For a manufacturer of kitchens, which of the following would you expect to be a
direct cost?
1. Hourly
labour cost of employees installing kitchens
2. Material
for kitchen benchtops
3. Hourly
labour cost of employees installing kitchens AND material for kitchen benchtops
4. Rent
of factory premises
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.5 Define and analyse
the behaviour of the following types of costs: variable, fixed, step-fixed,
semivariable (or mixed) and curvilinear
Topic: Manufacturing costs versus non-manufacturing costs
54.
Which of the following increases as volume of activity decreases?
1. Fixed
cost per unit
2. Variable
cost per unit
3. Total
fixed cost
4. Total
variable cost
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.5 Define and analyse
the behaviour of the following types of costs: variable, fixed, step-fixed,
semivariable (or mixed) and curvilinear
Topic: Fixed Costs
55.
Which of the following is not an example of a cost driver for a delivery truck?
1. Location
of customers
2. Depreciation
C.
Litres of fuel used
1. Number
of customers
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.2 Explain the concept
of cost drivers, including volume-based and non-volume-based cost drivers
Topic: Cost Behaviour Patterns
56.
Which of the following is an example of an engineered cost?
1. Direct
materials
2. Advertising
3. Insurance
4. Factory
supervisor’s salary
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.7 Define and provide
examples of engineered, committed and discretionary costs
Topic: Cost Classifications Based on Controllability
57.
Which term describes a cost resulting from the existence of the organisational
structure and premises used by the firm?
1. Discretionary
2. Fixed
3. Committed
D. Engineered
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.4 Describe the different
roles that cost driver analysis can play in management accounting Learning
Objective: 3.7 Define and provide examples of engineered, committed and
discretionary costs
Topic: Cost Classifications Based on Controllability
58.
Which of the following would always be a mixed (semivariable) cost for a firm?
1. Raw
materials because it includes direct and indirect materials
2. Direct
labour
3. Manufacturing
overhead
4. Raw
materials AND manufacturing overhead
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.5 Define and analyse
the behaviour of the following types of costs: variable, fixed, step-fixed,
semivariable (or mixed) and curvilinear
Topic: Mixed/Semivariable Costs
59.
An example of a discretionary cost for a firm that manufactures furniture is:
1. direct
material.
2. advertising.
3. labour.
4. glue
and nails.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.7 Define and provide
examples of engineered, committed and discretionary costs
Topic: Cost Behaviour Patterns
60.
Eldervale Winery is a producer of premium wine. Which of the following is an
example of a unit level cost?
1. The
cost of the labels on each bottle of wine
2. The
cost of designing the labels on a wine bottle
3. Advertising
costs
4. Costs
of delivering wine to customers
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.3 Introduce the unit,
batch, product and facility level hierarchy of costs and cost drivers
Topic: Batch Costing
61.
Which of the following statements about the coefficient of determination (also
called the R-squared) of a simple linear or multiple linear regression model is
correct?
1. R-squared
is a measure of economic plausibility.
2. The
higher the R-squared, the more confident we are when using a regression model
to predict costs.
3. R-squared
is a measure of data accuracy.
4. R-squared
is a useful measure only for simple regressions.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.8 Describe the following
approaches to cost estimation: managerial judgment (including account
classification), the engineering method, and quantitative analysis (including
high-low, and simple and multiple regression) Learning
Objective: 3.9 Estimate cost functions using the high-low method and regression
analysis
Topic: Least-Squares Regression Method
|
Multiple R |
0.83079 |
|
R Square |
0.69022 |
|
Adjusted R Square |
0.61277 |
|
Standard Error |
110.523 |
|
Observations |
6 |
ANOVA
df
SS
MS
F Significance
F Regression 1 1,08,866.93 1,08,866.9
8.912366 0.04052
Residual
4 48,861.07 12,215.27
Total
5 1,57,728
df
Coefficients
Standard
Error t
Stat P-value
|
Intercept |
242.51 |
366.393 |
0.662 |
0.544 |
|
Number of cargos |
1.74 |
0.583 |
2.985 |
0.04 |
|
Total |
5 |
1,57,728 |
|
|
Which of the following statements represent a valid conclusion
based on the above regression analysis output?
54.
54.4 per cent of transportation cost can be explained by the
number of cargos..
55.
The F-statistic is considered significant; therefore, the
relationship in the regression is unlikely to happen by chance.
56.
The p-value associated with the intercept suggests that the
delivery costs are entirely variable.
57.
Given the t-statistic, number of cargos is a poor cost driver of
delivery cost.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.11 After studying the
appendix, use Microsoft Excel(R) to estimate and evaluate a regression equation
Learning Objective: 3.2 Explain the concept of cost drivers, including
volume-based and non-volume-based cost drivers Learning Objective: 3.4 Describe
the different roles that cost driver analysis can play in management accounting
Learning Objective: 3.9 Estimate cost functions using the
high-low method and regression analysis
Topic: Least-Squares Regression Method
|
Multiple R |
0.83079 |
|
R Square |
0.69022 |
|
Adjusted R Square |
0.61277 |
|
Standard Error |
110.523 |
|
Observations |
6 |
ANOVA
df
SS
MS
F Significance
F Regression 1 1,08,866.93 1,08,866.9
8.912366 0.04052
Residual
4 48,861.07 12,215.27
Total
5 1,57,728
df
Coefficients
Standard
Error t
Stat P-value
|
Intercept |
242.51 |
366.393 |
0.662 |
0.544 |
|
Number of cargos |
1.74 |
0.583 |
2.985 |
0.04 |
Which of the following is an appropriate cost equation based on
the above regression output?
366.
Delivery costs = $366.39 + $0.58 x1, where x1 is the number of
cargos.
367.
Delivery costs = $0.662 + $2.985 x1, where x1 is the number of
cargos.
368.
Delivery costs = $242.51 + $1.74 x1, where x1 is the number of
cargos.
369.
Delivery costs = $48,861.07 + $1.74 x1, where x1 is the number
of cargos.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.11 After studying the
appendix, use Microsoft Excel(R) to estimate and evaluate a regression equation
Learning Objective: 3.4 Describe the different roles that cost driver analysis
can play in management accounting
Learning Objective: 3.9 Estimate cost functions using the
high-low method and regression analysis
Topic: Least-Squares Regression Method
64.
The following is an extract of a cost report for Big Whale Car Wash for the six
months from Jun to Nov. Management considers the activities in these six months
as within the relevant range for the purpose of cost estimation.
|
|
|
Car washing |
|
Number of |
labour costs |
|
|
Month |
cars washed |
($) |
|
Jun |
500 |
7,500 |
|
Jul |
520 |
7,800 |
|
Aug |
480 |
7,200 |
|
Sep |
510 |
7,650 |
|
Oct |
400 |
6,000 |
|
Nov |
600 |
9,000 |
The car washing labour cost is a:
1. variable
cost.
2. fixed
cost.
3. step-fixed
cost. D.
semivariable cost.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.4 Describe the different roles that cost driver analysis
can play in management accounting
Learning Objective: 3.5 Define and analyse the behaviour of the
following types of costs: variable, fixed, step-fixed, semivariable (or mixed)
and curvilinear Learning Objective: 3.6 Explain the importance of the relevant
range when using a cost behaviour pattern for cost prediction
Topic: Variable Costs
65.
The following is an extract of a cost report for Big Whale Car Wash for the six
months from Jun to Nov. Management considers the activities in these six months
as within the relevant range for the purpose of cost estimation.
|
|
|
Car washing |
|
Number of |
labour costs |
|
|
Month |
cars washed |
($) |
|
Jun |
500 |
8,000 |
|
Jul |
520 |
8,000 |
|
Aug |
480 |
7,000 |
|
Sep |
510 |
8,000 |
|
Oct |
400 |
7,000 |
|
Nov |
600 |
9,000 |
The car washing labour cost is a:
1. variable
cost.
2. fixed
cost.
3. step-fixed
cost.
4. semivariable
cost.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.4 Describe the different roles that cost driver analysis
can play in management accounting
Learning Objective: 3.5 Define and analyse the behaviour of the
following types of costs: variable, fixed, step-fixed, semivariable (or mixed)
and curvilinear Learning Objective: 3.6 Explain the importance of the relevant
range when using a cost behaviour pattern for cost prediction
Topic: Mixed/Semivariable Costs
66.
The following is an extract of a cost report for Big Whale Car Wash for the six
months from Jun to Nov. Management considers the activities in these six months
as within the relevant range for the purpose of cost estimation.
|
|
|
Car washing |
|
Number of |
labour costs |
|
|
Month |
cars washed |
($) |
|
Jun |
500 |
7,000 |
|
Jul |
520 |
7,200 |
|
Aug |
480 |
6,800 |
|
Sep |
510 |
7,100 |
|
Oct |
400 |
6,000 |
|
Nov |
600 |
8,000 |
The car washing labour cost is a:
1. variable
cost.
2. fixed
cost.
3. step-fixed
cost.
4. semivariable
cost.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.4 Describe the different roles that cost driver analysis
can play in management accounting
Learning Objective: 3.5 Define and analyse the behaviour of the
following types of costs: variable, fixed, step-fixed, semivariable (or mixed)
and curvilinear Learning Objective: 3.6 Explain the importance of the relevant
range when using a cost behaviour pattern for cost prediction
Topic: Mixed/Semivariable Costs
67.
Time and motion studies refers to
1. the
process in which managers use their judgment to estimate the time it takes to
carry out each individual work task, in order to estimate cost.
2. the
process in which employees complete timesheets each day; the timesheets then
form the basis for cost estimation.
3. the
process in which employees are observed when they undertake work tasks; these
observations are then used to estimate cost.
4. the
process in which the cost of work tasks are compared over time and across
different divisions.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.4 Describe the different roles that cost driver analysis
can play in management accounting
Learning Objective: 3.8 Describe the following approaches to
cost estimation: managerial judgment (including account classification), the
engineering method, and quantitative analysis (including
high-low, and simple and multiple regression) Topic: Methods of
Cost Estimation
68.
When a manager notices an outlier during the cost estimation process, the
appropriate response is to:
1. do
nothing: no response is required, unless multiple outliers are observed.
2. attempt
to identify the reasons for the outlier.
3. divide
the outlier by the standard deviation, before including the outlier in the
regression model.
4. re-collect
all the data, as an outlier indicates that the data has been corrupted.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.8 Describe the following approaches to
cost estimation: managerial judgment (including account classification), the
engineering method, and quantitative analysis (including
high-low, and simple and multiple regression) Learning
Objective: 3.9 Estimate cost functions using the high-low method and regression
analysis
Topic: Data Collection Problems
69.
An activity or factor that causes costs to be incurred is known as a
1. cost
prediction.
2. cost
estimation.
3. cost
driver.
D.
cost behaviour.
70.
The main reason for analysing cost behaviour is to
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.2 Explain the concept of cost drivers,
including volume-based and non-volume-based cost drivers
Topic: Cost Behaviour Patterns
A.
provide estimates of cost behaviour.
1. provide
estimates for cost predictions.
2. provide
a timeframe for analysing cost behaviour.
3. provide
estimates of cost behaviour for cost predictions.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.4 Describe the different roles that cost driver analysis
can play in management accounting
Topic: Objectives of Management Accounting
71.
When estimating cost behaviours, the appropriateness of the drivers can be
tested by measuring the strength of the relationship between
1. past
costs and their selected cost driver.
2. past
costs and future costs.
3. past
costs and predicted costs.
4. predicted
costs and their selected driver.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.2 Explain the concept of cost drivers,
including volume-based and non-volume-based cost drivers Learning Objective:
3.4 Describe the different roles that cost driver analysis can play in
management accounting
Topic: Methods of Cost Estimation
72.
To test the significance of a result using the regression equation as a whole
and to assess that the result is not due to random factors, management would
consider the result of the
1. standard
error.
2. adjusted
R-squared.
3. p-value.
D.
coefficient.
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.11 After studying the
appendix, use Microsoft Excel(R) to estimate and evaluate a regression equation
Learning Objective: 3.4 Describe the different roles that cost driver analysis
can play in management accounting
Topic: Multiple Regression Analysis
73.
Truweight Ltd has introduced a new line of weight machines for the catering
industry which has required additional steps in the production line. During the
first two months of production the labour time for the weight machines was as
follows:
Cumulative output
Ave labour time per
unit
Total labour time
Month
(in
units) (in
hours)
(in hours)
Jan
10
100
1,000
Feb
20
90
1,800
The learning curve percentage is
1. 10
per cent.
2. 90
per cent.
C.
100 per cent.
1. 110
per cent.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.10 Explain some of the
issues that arise in estimating cost functions in practice, including data
collection problems, learning curve effects, and cost-benefit evaluations
Learning Objective: 3.12 After studying the appendix, describe the impact of
learning curve effects on the estimation of cost behaviour
Learning Objective: 3.3 Introduce the unit, batch, product and
facility level hierarchy of costs and cost drivers
Topic: Learning and Experience Curve
74.
Truweight Ltd has introduced a new line of weight machines for the catering
industry which has required additional steps in the production line. During the
first two months of production the labour time for the weight machines was as
follows:
64.
Cumulative output
Ave labour time per
unit
Total labour time
Month
(in
units) (in
hours)
(in hours)
Jan
10
100
1,000
Feb
20
90
1,800
The average labour time per unit for Feb was
1. 1,800
hours.
2. 100
hours.
3. 90
hours.
4. 80
hours.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Medium Learning Objective: 3.12 After studying the
appendix, describe the impact of learning curve effects on the estimation of
cost behaviour Learning Objective: 3.3 Introduce the unit, batch, product and
facility level hierarchy of costs and cost drivers
Topic: Variable Costs
75.
Which of the following statements is correct?
1. Cost
behaviour is the relationship between a cost and the level of activity or cost
driver.
1. Cost
estimation is the process of determining the cost behaviour of a particular
cost item.
iii. Cost prediction refers to the attempt to forecast costs at
a particular level of activity.
1. i
2. iii
3. ii
and iii
4. i, ii
and iii
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.2 Explain the concept of cost drivers,
including volume-based and non-volume-based cost drivers
Topic: Cost Behaviour Patterns
76.
Which of the following might be possible cost drivers for shop manager’s
salaries?
1. Shop
trading hours.
1. Lease
terms for shop premises.
iii. Hours worked by shop managers.
1. i
2. ii
3. i and
iii
D.
ii and iii.
77.
Which of the following statements is correct?
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.2 Explain the concept of cost drivers,
including volume-based and non-volume-based cost drivers
Topic: Cost Behaviour Patterns
i. Cost
behaviour is the relationship between a cost and the level of activity or cost
driver.
1. Cost
estimation is the process of determining the cost behaviour of a particular
cost item.
iii. Cost prediction refers to the attempt to forecast costs at
a particular level of activity.
1. i
2. iii
3. ii
and iii
4. i, ii
and iii
78.
Consider the following:
Units
produced
12,000 15,000 Direct material costs $36,000
$45,000
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.1 Explain the
relationships between cost estimation, cost behaviour and cost prediction
Learning Objective: 3.2 Explain the concept of cost drivers,
including volume-based and non-volume-based cost drivers
Topic: Cost Behaviour Patterns
Based
on the above data, the direct material costs for producing 7,000 units are
predicted to be $21,000.
TRUE
79.
Consider the following:
AACSB: Analytical Thinking AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.5 Define and analyse the
behaviour of the following types of costs: variable, fixed, step-fixed,
semivariable (or mixed) and curvilinear
Topic: Direct and Indirect Costs
Units
produced
12,000 15,000 Direct material costs $36,000
$45,000
Based
on the above data, at the production level of 10 000 units, the fixed costs per
unit are $5 per unit. If the firm produced 8000 units, the fixed cost per unit
would remain constant at $5.
FALSE
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.5 Define and analyse the
behaviour of the following types of costs: variable, fixed, step-fixed,
semivariable (or mixed) and curvilinear
Topic: Fixed Costs
80.
Relevant range is only important when determining fixed costs.
FALSE
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.6 Explain the importance
of the relevant range when using a cost behaviour pattern for cost prediction
Topic: Linear Cost Behaviour
81.
Research and development costs are an example of discretionary costs.
TRUE
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.7 Define and provide
examples of engineered, committed and discretionary costs
Topic: Controllable and Uncontrollable Costs
82.
If the cost of a complaints department is driven by the number of calls taken,
the calls are said to be the dependent variable.
FALSE
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.9 Estimate cost functions
using the high-low method and regression analysis
Topic: Dependent Variable
83.
Economic plausibility is one of the criteria used to evaluate a particular
regression line.
TRUE
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.10 Explain some of the
issues that arise in estimating cost functions in practice, including data
collection problems, learning curve effects, and cost-benefit evaluations
Learning Objective: 3.9 Estimate cost functions using the
high-low method and regression analysis Topic: Least-Squares Regression
MethodTopic: Multiple Regression Analysis
84.
Regardless of the approach taken to cost estimation, data collection will
affect how goodthe estimation is.
TRUE
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
Difficulty: Easy Learning Objective: 3.10 Explain some of the
issues that arise in estimating cost functions in practice, including data
collection problems, learning curve effects, and cost-benefit evaluations
Topic: Least-Squares Regression MethodTopic: Methods of Cost
Estimation
Topic: Multiple Regression Analysis
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