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| 1 | |
Which of the following is described as the process of determining how a particular cost behaves? |
| | A) | Cost prediction |
| | B) | Cost behavior |
| | C) | Cost estimation |
| | D) | Cost prevention |
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| 2 | |
Which of the following is a forecast of cost at a particular level of activity? |
| | A) | Cost prediction |
| | B) | Cost behavior |
| | C) | Cost estimation |
| | D) | Cost prevention |
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| 3 | |
Which of the following refers to the relationship between cost and activity? |
| | A) | Cost prediction |
| | B) | Cost behavior |
| | C) | Cost estimation |
| | D) | Cost prevention |
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| 4 | |
Which describes the flow of the linear relationship between cost behavior, cost prediction, and cost estimation? |
| | A) | Cost behavior → Cost prediction → Cost estimation |
| | B) | Cost prediction → Cost behavior → Cost estimation |
| | C) | Cost estimation → Cost prediction → Cost behavior |
| | D) | Cost estimation → Cost behavior → Cost prediction |
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| 5 | |
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Which of the following is correct with respect to each activity and the cost classification of that activity? |
| | A) | Activity A: Fixed cost. Activity B: Variable cost. Activity C: Semivariable cost |
| | B) | Activity A: Variable cost. Activity B: Fixed. Activity C: Semivariable cost |
| | C) | Activity A: Fixed cost. Activity B: Semivariable cost. Activity C: Variable cost |
| | D) | Activity A: Semivariable cost. Activity B: Fixed cost. Activity C: Variable cost |
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| 6 | |
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Which of the Activities is a variable cost? |
| | A) | Activity A |
| | B) | Activity B |
| | C) | Activity C |
| | D) | Activity D |
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| 7 | |
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Which of the Activities is most likely a semivariable cost? |
| | A) | Activity A |
| | B) | Activity B |
| | C) | Activity C |
| | D) | None of the above |
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| 8 | |
Which of the following statements is false, as at it relates to the relevant range of operations? |
| | A) | Fixed costs remain unchanged in total, but decrease per unit with increases in activity levels. |
| | B) | Total variable costs change in direct proportion to activity. |
| | C) | Variable costs per unit remain unchanged with increases in activity levels. |
| | D) | Curvilinear costs do not have a relevant range of operations. |
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| 9 | |
Which of the following cost behaviors can be described as increases in small steps, instead of continually? |
| | A) | Fixed costs |
| | B) | Step-variable costs |
| | C) | Variable costs |
| | D) | Step-fixed costs |
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| 10 | |
A manufacturing firm normally operates an 8-hour shift during the winter months, with one line supervisor. During the spring months, an additional 8-hour shift is added. During the summer months, one more additional 8-hour shift is added. With each increase in an 8-hour shift, a line supervisor is hired. The cost of line supervisors is, therefore, which type of cost? |
| | A) | Fixed costs |
| | B) | Step-variable costs |
| | C) | Variable costs |
| | D) | Step-fixed costs |
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| 11 | |
Which of the following costs can exhibit a decreasing marginal cost and an increasing marginal cost? |
| | A) | Fixed costs |
| | B) | Step-variable costs |
| | C) | Curvilinear costs |
| | D) | Variable costs |
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| 12 | |
When using a semivariable cost behavior pattern to approximate a curvilinear cost, the approximation should be limited to which of the following? |
| | A) | Determining only the variable portion of the cost |
| | B) | The curvilinear costs within the relevant range of activity |
| | C) | All activity above the relevant range of activity |
| | D) | The approximate fixed cost portion |
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| 13 | |
Which of the following is an example of a committed cost? |
| | A) | Research and development |
| | B) | Depreciation on buildings |
| | C) | Advertising and promotion |
| | D) | Contributions to charities |
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| 14 | |
Which of the following is an example of a discretionary cost? |
| | A) | Research and development |
| | B) | Salaries of management personnel |
| | C) | Property taxes |
| | D) | Depreciation on buildings |
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| 15 | |
Which of the following is an engineered cost? |
| | A) | Research and development costs |
| | B) | Salaries of management personnel |
| | C) | Direct-material cost |
| | D) | Property taxes |
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| 16 | |
Sales personnel are paid a fixed, monthly salary and a commission of 5 percent of net sales. Cost estimation of the Sales Salaries Expense account might be accomplished most easily by which of the following methods? |
| | A) | Account-classification |
| | B) | Visual-fit |
| | C) | High-low |
| | D) | Least-squares regression |
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| 17 | |
Which of the following is false regarding the visual-fit method of cost estimation? |
| | A) | It results in a scatter-diagram |
| | B) | The resulting scatter-diagram provides little or no information about cost relationship outside the relevant range. |
| | C) | The visually-fit cost line is drawn through each of the plotted points. |
| | D) | It can be used when the cost analyst has no clear idea about the behavior of a cost item. |
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| 18 | |
The extreme observations in a scatter diagram of cost-activity relationships are known as which of the following? |
| | A) | Missing data |
| | B) | Outliers |
| | C) | Discretionary costs |
| | D) | Dependent variables |
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| 19 | |
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Use the high-low method of cost estimation to solve for the fixed and variable cost portions of this cost and select the appropriate answer. |
| | A) | Fixed cost: $ 6,000; variable cost: $1.20 per unit. |
| | B) | Fixed cost: $22,000; variable cost: $2.20 per unit. |
| | C) | Fixed cost: $10,000; variable cost: $1.20 per unit. |
| | D) | Fixed cost: $ 4,000; variable cost: $1.20 per unit. |
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| 20 | |
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Based on the information provided above, use the high-low method of cost estimation and determine the total cost at an activity level of 9,000 units. |
| | A) | $26,500 |
| | B) | $26,000 |
| | C) | $25,200 |
| | D) | $16,500 |
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| 21 | |
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Use the high-low method of cost estimation and determine the estimated total cost for July, which is budgeted for 9,000 units of activity. |
| | A) | $23,750 |
| | B) | $21,500 |
| | C) | $23,150 |
| | D) | $22,550 |
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| 22 | |
For the linear equation of Y = a + bX, Xis referred to as which of the following? |
| | A) | Independent variable |
| | B) | Fixed cost within the relevant range |
| | C) | Dependent variable |
| | D) | Relevant range |
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| 23 | |
For the linear equation of Y = a + bX, Y is referred to as which of the following? |
| | A) | Slope of the line |
| | B) | Fixed cost within the relevant range |
| | C) | Dependent variable |
| | D) | Relevant range |
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| 24 | |
For the linear equation of Y = a + bX, a is referred to as which of the following? |
| | A) | Slope of the line |
| | B) | Fixed cost within the relevant range |
| | C) | Reciprocal of Y |
| | D) | Independent variable |
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| 25 | |
Use the linear equation of Y = a + bX, where Y = $89,000, a = $35,000, and X = 3,000, and solve for b. |
| | A) | $16.00 |
| | B) | $18.00 |
| | C) | $15.00 |
| | D) | $5.00 |
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| 26 | |
To solve for total costs when two or more independent variables exist, you should use which of the following for cost estimation? |
| | A) | A simple regression equation. |
| | B) | The high-low method |
| | C) | A multiple regression equation. |
| | D) | A goodness of fit. |
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| 27 | |
Which of the following is a problem that frequently complicates the process of data collection for cost estimation? |
| | A) | Missing data |
| | B) | Inflation |
| | C) | Mismatched time periods |
| | D) | All of the above |
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| 28 | |
Which of the following cost estimation methods does not rely on historical data? |
| | A) | Account-classification |
| | B) | Visual-fit |
| | C) | Engineering |
| | D) | Least-squares regression |
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| 29 | |
Except for multiple-regression techniques, which are the two most important assumptions for simplifying cost estimation methods? |
| | A) | (1) Cost behavior depends on one activity variable and (2) cost behavior patterns are linear. |
| | B) | (1) Cost behavior depends on the industry and (2) the acceptance of the results. |
| | C) | (1) All costs are either fixed or variable and (2) all costs fall within the relevant range. |
| | D) | (1) The relevant range is reasonable and (2) all costs are discretionary. |
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