Question 1

A disadvantage of engineering cost analysis is that:
A) its failure to produce a cost function
B) the information produced may not be reliable
C) it is not acceptable under GAAP
D) the information produced may not be timely

Accepted Answer

The answer of A disadvantage of engineering cost analysis is...

Question 2

These costs are determined by management as part of the periodic planning process to meet the organization's goals

Accepted Answer

The answer of These costs are determined by management as...

Question 3

In a linear regression, the x coefficient is the:
A) total cost
B) number of units produced
C) fixed cost per unit
D) variable cost per unit

Accepted Answer

The answer of In a linear regression, the x coefficient...

Question 4

The following data has been assembled for VaVaVoom Company. Use the high- low method. $$\begin{array} { l l } 
\text { Cost } & \text { Hours } \
\$ 24,400 & 2,000 \
34,000 & 2,600 \
31,280 & 2,450 \
36,400 & 3,000 \
44,160 & 3,900
\end{array}$$ 
The total fixed cost is:
A) $ \$ 21,360 $
B) $ \$ 3,600 $
C) $ \$ 10,112 $
D) $ \$ 26,672 $

Accepted Answer

The high-low method calculates the variable cost per hour as $(44,160 - 24,400) / (3,900 - 2,000) = 10$. Using the highest point, the fixed cost is $44,160 - (10 \times 3,900) = 3,600$.

Question 5

The following three data points appear to be: $$\begin{array} { l l } 
\text { Units } & \text { Costs } \
600 & \$ 700 \
650 & 700 \
700 & 700
\end{array}$$ 
A) a mixed
B) a step cost
C) a fixed cost
D) a variable cost

Accepted Answer

The costs remain constant at $700 regardless of the number of units, indicating a fixed cost.

Question 6

The following three data points appear to be: $$\begin{array} { l l } 
\text { Units } & \text { Costs } \
100 & \$ 400 \
110 & 440 \
120 & 480
\end{array}$$ 
A) a mixed
B) a step cost
C) a fixed cost
D) a variable cost

Accepted Answer

The costs increase proportionally with the increase in units, indicating a variable cost where cost per unit is constant.

Question 7

An activity analysis is used to:
A) identify relevant costs for decision making
B) choose an appropriate cost driver
C) classify costs
D) predict future costs

Accepted Answer

An activity analysis is primarily used to choose an appropriate cost driver by examining the relationship between activities and the resources consumed.

Question 8

In a small construction firm, another crew supervisor is added for every 10 workers employed. This is an example of a:
A) step cost
B) purely variable cost
C) mixed cost
D) discretionary fixed cost

Accepted Answer

Step costs are costs that remain constant over a range of activity but increase to a new level once a certain threshold is crossed, such as adding a supervisor for every 10 workers.

Question 9

A company could temporarily reduce or eliminate:
A) property taxes
B) bond interest payment
C) depreciation
D) advertising and promotion

Accepted Answer

Advertising and promotion expenses are discretionary and can be adjusted or eliminated temporarily without legal or contractual obligations, unlike property taxes, bond interest payments, or depreciation.

Question 10

is the application of cost measures to expected future activity levels to forecast future costs.
A) Measurement of cost behavior
B) Cost prediction
C) A cost function
D) Activity analysis

Accepted Answer

Cost prediction is the application of cost measures to expected future activity levels to forecast future costs.

Question 11

Bates Motel's cost function based on guest- days of occupancy for custodial cost is given as: Y = $30,000 + $7.50X. Bates Motel expects an occupancy level of 10,000 guest days. Bates Motel's expected total fixed cost is:
A) $30,000
B) $7.50
C) $75,000
D) $105,000

Accepted Answer

The total fixed cost is the constant term in the cost function, which is $30,000.

Question 12

have no obvious relationship to levels of output activity, but are determined as part of the periodic planning process.
A) Capacity costs
B) Engineered costs
C) Discretionary fixed costs
D) Committed fixed costs

Accepted Answer

Discretionary fixed costs are determined during the planning process and do not have a direct relationship with output levels.

Question 13

Managers should apply two principles to obtain accurate and useful cost functions. These principles are:
A) plausibility and believability
B) believability and validity
C) reliability and validity
D) plausibility and reliability

Accepted Answer

The answer of Managers should apply two principles to obtain...

Question 14

contain elements of both fixed- and variable- cost behavior.
A) Mixed costs
B) Discretionary fixed costs
C) Step costs
D) Committed fixed costs

Accepted Answer

Mixed costs contain elements of both fixed and variable cost behavior, as they have a fixed component and a variable component that changes with the level of activity.

Question 15

In the mixed- cost function, Y = $59,000 + $7.70X, the $7.70 stands for:
A) number of units of the cost driver
B) total fixed cost
C) total cost
D) variable cost per unit of cost driver

Accepted Answer

The $7.70 represents the variable cost per unit of the cost driver in the mixed-cost function.

Question 16

Examples of this type of cost are mortgage payments, property taxes, and insurance

Accepted Answer

The answer of Examples of this type of cost are...

Question 17

The process of identifying appropriate cost drivers and their effects on the costs of making a product or providing a service is called:
A) cost measurement
B) activity analysis
C) cost prediction
D) budgeting

Accepted Answer

Activity analysis is the process of identifying appropriate cost drivers and their effects on the costs of making a product or providing a service.

Question 18

is a method in which the cost analyst draws a straight line through a plot of all the available data.
A) Engineering analysis
B) The least- squares regression method
C) Account analysis
D) The visual- fit method

Accepted Answer

The visual-fit method involves drawing a straight line through a scatter plot of data points to estimate the relationship between variables.

Question 19

The following data has been assembled for Zowie Company. Use the high- low method. $$\begin{array} { l l } 
\text { Cost } & \text { Hours } \
\$ 24,400 & 2,000 \
34,000 & 2,600 \
31,280 & 2,450 \
36,400 & 3,000 \
44,160 & 3,900
\end{array}$$ The total cost at an operating level of 2,850 hours is:
A) $25,692
B) $34,736
C) $32,016
D) $33,240

Accepted Answer

Using the high-low method, the variable cost per hour is calculated as (44,160 - 24,400) / (3,900 - 2,000) = $10.40. The fixed cost is then calculated using one of the points, for example, 44,160 - (10.40 * 3,900) = $3,600. The total cost at 2,850 hours is 3,600 + (10.40 * 2,850) = $33,240.

Question 20

Cost prediction is used to:
A) calculate annual gains and losses
B) estimate future costs
C) negotiate with supplies
D) calculate management compensation

Accepted Answer

Cost prediction is used to estimate future costs.

Quiz 3: Measurement of Cost Behavior

A disadvantage of engineering cost analysis is that:

These costs are determined by management as part of the periodic planning process to meet the organization's goals

In a linear regression, the x coefficient is the:

The following data has been assembled for VaVaVoom Company. Use the high- low method. $\begin{array} { l l } \text { Cost } & \text { Hours } \\\$ 24,400 & 2,000 \\34,000 & 2,600 \\31,280 & 2,450 \\36,400 & 3,000 \\44,160 & 3,900\end{array}$ The total fixed cost is:

The following three data points appear to be: $\begin{array} { l l } \text { Units } & \text { Costs } \\600 & \$ 700 \\650 & 700 \\700 & 700\end{array}$

The following three data points appear to be: $\begin{array} { l l } \text { Units } & \text { Costs } \\100 & \$ 400 \\110 & 440 \\120 & 480\end{array}$

An activity analysis is used to:

In a small construction firm, another crew supervisor is added for every 10 workers employed. This is an example of a:

A company could temporarily reduce or eliminate:

is the application of cost measures to expected future activity levels to forecast future costs.

Bates Motel's cost function based on guest- days of occupancy for custodial cost is given as: Y = $30,000 + $7.50X. Bates Motel expects an occupancy level of 10,000 guest days. Bates Motel's expected total fixed cost is:

have no obvious relationship to levels of output activity, but are determined as part of the periodic planning process.

Managers should apply two principles to obtain accurate and useful cost functions. These principles are:

contain elements of both fixed- and variable- cost behavior.

In the mixed- cost function, Y = $59,000 + $7.70X, the $7.70 stands for:

Examples of this type of cost are mortgage payments, property taxes, and insurance

The process of identifying appropriate cost drivers and their effects on the costs of making a product or providing a service is called:

is a method in which the cost analyst draws a straight line through a plot of all the available data.

The following data has been assembled for Zowie Company. Use the high- low method. $\begin{array} { l l } \text { Cost } & \text { Hours } \\\$ 24,400 & 2,000 \\34,000 & 2,600 \\31,280 & 2,450 \\36,400 & 3,000 \\44,160 & 3,900\end{array}$ The total cost at an operating level of 2,850 hours is:

Cost prediction is used to:

Quiz 3: Measurement of Cost Behavior

A disadvantage of engineering cost analysis is that:

These costs are determined by management as part of the periodic planning process to meet the organization's goals

In a linear regression, the x coefficient is the:

The following three data points appear to be: Units Costs 600$700650700700700\begin{array} { l l } \text { Units } & \text { Costs } \\600 & \$ 700 \\650 & 700 \\700 & 700\end{array} Units 600650700​ Costs $700700700​

The following three data points appear to be: Units Costs 100$400110440120480\begin{array} { l l } \text { Units } & \text { Costs } \\100 & \$ 400 \\110 & 440 \\120 & 480\end{array} Units 100110120​ Costs $400440480​

An activity analysis is used to:

In a small construction firm, another crew supervisor is added for every 10 workers employed. This is an example of a:

A company could temporarily reduce or eliminate:

is the application of cost measures to expected future activity levels to forecast future costs.

Bates Motel's cost function based on guest- days of occupancy for custodial cost is given as: Y = $30,000 + $7.50X. Bates Motel expects an occupancy level of 10,000 guest days. Bates Motel's expected total fixed cost is:

have no obvious relationship to levels of output activity, but are determined as part of the periodic planning process.

Managers should apply two principles to obtain accurate and useful cost functions. These principles are:

contain elements of both fixed- and variable- cost behavior.

In the mixed- cost function, Y = $59,000 + $7.70X, the $7.70 stands for:

Examples of this type of cost are mortgage payments, property taxes, and insurance

The process of identifying appropriate cost drivers and their effects on the costs of making a product or providing a service is called:

is a method in which the cost analyst draws a straight line through a plot of all the available data.

Cost prediction is used to:

The following three data points appear to be: $\begin{array} { l l } \text { Units } & \text { Costs } \\600 & \$ 700 \\650 & 700 \\700 & 700\end{array}$

The following three data points appear to be: $\begin{array} { l l } \text { Units } & \text { Costs } \\100 & \$ 400 \\110 & 440 \\120 & 480\end{array}$