Question 1

Which of the following statements is false?

Accepted Answer

A)   A cost can be defined as a direct cost if the bookkeeping system can keep track of how much of the cost was consumed by the cost object
B)   Whether a cost is direct or indirect cannot be determined until the cost object has been defined
C)   If the cost object is a batch of 1000 units of production, then factory property taxes could be a direct cost if the bookkeeping system is detailed enough
D)   Some indirect costs might have been considered direct costs if a company had better technology for capturing informationE) B) and D)
F) All of the above

Question 2

The depreciation on a factory machine is a

Accepted Answer

A)   Fixed cost
B)   Variable cost
C)   Mixed cost
D)   Stepwise linear costE) None of the above
F) All of the above

Question 3

Learning curves lead to greater productivity over time.

Accepted Answer

A) True 
 B)False

Question 4

In a regression equation, variable costs are represented by the

Accepted Answer

A)   Slope
B)   Intercept
C)   Adjusted R-square coefficient
D)   t-statisticE) A) and D)
F) B) and C)

Question 5

All of the following are true about average cost per unit except

Accepted Answer

A)   Average cost equals variable cost per unit plus average fixed cost per unit
B)   Average costs are used in financial statements
C)   Average costs are usually irrelevant for decision making because they include a portion of fixed cost
D)   Average costs are usually good estimates of future costsE) A) and B)
F) None of the above

Question 6

In regression analysis, the Adjusted R-square statistic is used to evaluate how well the cost driver explains the behavior in the cost.

Accepted Answer

A) True 
 B)False

Question 7

Managers go through a series of questions to decide whether to use past costs to estimate future costs. Which of the following questions is least likely to be one of them?

Accepted Answer

A)   Is the cost relevant to the decision?
B)   Is the cost highly discretionary?
C)   Is the cost an engineered estimate?
D)   Is the cost expected to change?E) All of the above
F) B) and C)

Question 8

If you create a scatter plot of a cost against a cost driver

Accepted Answer

A)   You gain information about whether there is a seeming relation between the cost and cost driver
B)   For all costs, you will have completed your analysis
C)   You gain no new information about the relationship between the cost and cost driver
D)   You will not need to perform regression analysis to estimate the cost functionE) B) and D)
F) A) and B)

Question 9

The relevant range is defined as

Accepted Answer

A)   The period of time over which costs do not change
B)   The volume of production over which the cost assumptions hold
C)   The volume of production over which step-wise fixed costs increase
D)   The time period in which the level of production does not changeE) A) and B)
F) C) and D)

Question 10

In most accounting information systems, costs are often recorded and coded so they can be summarized based on different

Accepted Answer

A)   Cost drivers
B)   Cost objects
C)   Volumes of activity
D)   Independent variablesE) A) and C)
F) C) and D)

Question 11

Which cost estimation technique is useful in all situations?

Accepted Answer

A)   Analysis at the account level
B)   Regression analysis
C)   Two-point method
D)   No one method is useful in all situationsE) C) and D)
F) A) and B)

Question 12

A manager might use this method to create a graph of cost behavior without any statistical techniques

Accepted Answer

A)   Engineered estimate of cost
B)   High-low method
C)   Scatter plot
D)   Regression analysisE) All of the above
F) A) and B)

Question 13

Which of the follow is not an assumption when estimating a cost function over the relevant range of activity?

Accepted Answer

A)   Mixed costs will change in total
B)   Mixed costs will change per unit
C)   Variable costs will be constant in total
D)   Fixed costs will be constant in total.E) B) and C)
F) C) and D)

Question 14

If we are determining costs for a particular case at a law office, the cost of rent for the office would be

Accepted Answer

A)   A direct cost
B)   An indirect cost
C)   A mixed cost
D)   An irrelevant costE) A) and C)
F) All of the above

Question 15

When the cost object is a unit produced, lubricating oil for production machines would be a(n)

Accepted Answer

A)   Direct cost
B)   Indirect cost
C)   Sunk cost
D)   Opportunity costE) B) and C)
F) None of the above

Question 16

Which of the following could be defined as a cost object?

Accepted Answer

A)   A single unit of product in a manufacturing process
B)   A batch of products in a manufacturing process
C)   A business process, such as managing accounts receivable
D)   All of the aboveE) A) and C)
F) B) and C)

Question 17

Which of the following cost estimation techniques makes assumptions about the data being analyzed? I. Analysis at the account level
II. Two-point method
III. Regression analysis

Accepted Answer

A)   I only
B)   I and II only
C)   II and III only
D)   I, II, and IIIE) B) and C)
F) All of the above

Question 18

Steel used in the production of automobiles would generally be classified as a direct cost.

Accepted Answer

A) True 
 B)False

Question 19

The best source for determining historical costs is usually

Accepted Answer

A)   The Internet
B)   Interviews with managers
C)   The company's accounting information system
D)   Financial statementsE) A) and B)
F) B) and C)

Question 20

Which of the following are forms of regression analysis?

Accepted Answer

A)   Quantitative and qualitative
B)   Fixed and variable
C)   Simple and multiple
D)   Financial and managerialE) A) and C)
F) A) and D)

Exam 2: The Cost Function

The best source for determining historical costs is usually

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Learning curves lead to greater productivity over time.

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The depreciation on a factory machine is a

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Which of the follow is not an assumption when estimating a cost function over the relevant range of activity?

Correct AnswerverifiedShow Answer

In most accounting information systems, costs are often recorded and coded so they can be summarized based on different

Correct AnswerverifiedShow Answer

Which of the following could be defined as a cost object?

Correct AnswerverifiedShow Answer

A manager might use this method to create a graph of cost behavior without any statistical techniques

Correct AnswerverifiedShow Answer

Which cost estimation technique is useful in all situations?

Correct AnswerverifiedShow Answer

All of the following are true about average cost per unit except

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Which of the following cost estimation techniques makes assumptions about the data being analyzed? I. Analysis at the account level II. Two-point method III. Regression analysis

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Which of the following are forms of regression analysis?

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In regression analysis, the Adjusted R-square statistic is used to evaluate how well the cost driver explains the behavior in the cost.

Correct AnswerverifiedShow Answer

If you create a scatter plot of a cost against a cost driver

Correct AnswerverifiedShow Answer

If we are determining costs for a particular case at a law office, the cost of rent for the office would be

Correct AnswerverifiedShow Answer

In a regression equation, variable costs are represented by the

Correct AnswerverifiedShow Answer

Steel used in the production of automobiles would generally be classified as a direct cost.

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

Managers go through a series of questions to decide whether to use past costs to estimate future costs. Which of the following questions is least likely to be one of them?

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The relevant range is defined as

Correct AnswerverifiedShow Answer

When the cost object is a unit produced, lubricating oil for production machines would be a(n)

Correct AnswerverifiedShow Answer

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