ACC 3300 Exam 3

Which of the following statements is true about underapplied overhead? -Actual overhead was less than the actual cost of goods sold. -Estimated overhead was more than the actual cost of goods sold. -Actual overhead was more than the estimated overhead charged to the Work-in-Process account. -Actual overhead was less than the estimated overhead charged to the Work-in-Process account.

Actual overhead was more than the estimated overhead charged to the Work-in-Process account.

Which of the following is not a limitation of linear regression analysis? -Linear regression analysis assumes that there will be no changes in past performance in the future (for example, efficiency will not improve). -Linear regression analysis can only be used to predict performance that is within the range of data used to develop the regression equation. -Linear regression analysis assumes the relationship between the dependent variable and independent variable is linear. -Regression analysis cannot be used when it is difficult to accurately measure the impact of efficiency improvements.

Regression analysis cannot be used when it is difficult to accurately measure the impact of efficiency improvements.

In a simple linear regression equation where units produced is used to predict electricity costs, which of the following is true? -Units produced is the independent variable and electricity costs is the dependent variable. -Units produced is the dependent variable and electricity costs is the independent variable. -Units produced and electricity costs are both independent variables. -Units produced and electricity costs are both dependent variables.

Units produced is the independent variable and electricity costs is the dependent variable.

A time series analysis shows that company revenues decline during recessions and sales increase dramatically during expansions. This pattern is an example of: -an irregular pattern. -a seasonal pattern. -a trend line. -a cyclical pattern.

a cyclical pattern.

The regression equation is Y = a + bX. Which of the following is true? -b represents the amount of Y when X = 0. -X represents the dependent variable. -b represents fixed cost per unit. -a represents the amount of Y when X = 0.

a represents the amount of Y when X = 0.

A time series analysis shows a spike in revenues during the last quarter of every year. This pattern is an example of: -a seasonal pattern. -a cyclical pattern. -a trend line. -an irregular pattern.

a seasonal pattern.

A time series analysis shows that sales have risen steadily over the last ten years. This is an example of: -a trend line. -a cyclical pattern. -an irregular pattern. -a seasonal pattern.

a trend line.

The balanced scorecard provides an action plan for achieving competitive success by focusing management attention on critical success factors. All of the following are critical success factors commonly focused upon in the balanced scorecard except: -employee innovation and learning. -internal business processes. -financial performance measures. -competitor business strategies.

competitor business strategies.

Automite company is an automobile replacement parts dealer in a large metropolitan community. Automite is preparing its sales forecast for the coming year. Data regarding both Automite's and industry sales of replacement parts as well as both the used and new automobile sales in the community for the last 10 years have been accumulated. -correlation and regression analysis. -time series analysis. -simulation techniques. -statistical sampling.

correlation and regression analysis.

Regression analysis: -encompasses factors outside the relevant range. -estimates the dependent cost variable. -uses probability assumptions to determine total project costs. -estimates the independent cost variable.

estimates the dependent cost variable.

Learning curve analysis is a method for: -estimating declining costs based on increased learning. -calculating the learning rate of individuals based on previous work and educational experiences. -estimating increasing costs based on the limit in the amount of learning an individual can accomplish. -determining how many workers to hire based on education levels.

estimating declining costs based on increased learning.

A time series analysis: -is an objective function with time as the dependent variable. -is a regression analysis with time as the independent variable. -is an objective function with time as the independent variable. -is a regression analysis with time as the dependent variable.

is a regression analysis with time as the independent variable.

A manufacturing firm plans to bid on a special order of 80 units that will be manufactured in lots of 10 units each. The production manager estimates that the direct labor hours per unit will decline by a constant percentage each time the cumulative quantity of units produced doubles. The quantitative technique used to capture this phenomenon and estimate the direct labor hours required for the special order is: -the Markov process. -learning curve analysis. -linear programming analysis. -cost-profit-volume analysis.

learning curve analysis.

A company has accumulated data for the last 24 months in order to determine if there is an independent variable that could be used to estimate shipping costs. Three possible independent variables being considered are packages shipped, miles shipped, and pounds shipped. The quantitative technique that should be used to determine whether any of these independent variables might provide a good estimate for shipping costs is: -flexible budgeting. -linear programming. -variable costing. -linear regression.

linear regression.

A time series analysis of a business's sales show a decline in sales every summer, with a peak during the winter. These results could be: -a downward trend. -seasonal fluctuations. -cyclical fluctuations. -an upward trend.

seasonal fluctuations.

Automite company is an automobile replacement parts dealer in a large metropolitan community. Automite is preparing its sales forecast for the coming year. Data regarding both Automite's and industry sales of replacement parts as well as both the used and new automobile sales in the community for the last 10 years have been accumulated. -simulation techniques. -statistical sampling. -time series analysis. -queuing theory.

time series analysis.

Multiple or departmental overhead rates are considered preferable to a single or plant-wide overhead rate when: -manufacturing is limited to a single product flowing through identical departments in a fixed sequence. -individual cost drivers cannot accurately be determined with respect to cause-and-effect relationships. -various products are manufactured that do not pass through the same departments or use the same manufacturing techniques. -the single or plant-wide rate is related to several identified cost drivers.

various products are manufactured that do not pass through the same departments or use the same manufacturing techniques.

In decision making under conditions of uncertainty, expected value refers to the: -present value of alternative actions. -weighted average of probable outcomes of an action. -potential effect of an alternative action. -probability of a given outcome from a proposed action.

weighted average of probable outcomes of an action.

Which of the following is not a benefit of regression analysis? -Regression analysis can be used to help predict costs at various levels of output. -Regression analysis can be used to separate a mixed cost into its fixed and variable components. -Regression analysis produces diagnostic statistics that can be used to evaluate the quality of the equation produced. -Regression analysis can be used to estimate the time and cost to perform an activity under the assumption that people become more efficient the more times they perform the task.

Regression analysis can be used to estimate the time and cost to perform an activity under the assumption that people become more efficient the more times they perform the task.

Which of the following concerning simple linear regression analysis is correct? -A lower coefficient of determination (R-squared) is preferred to a higher one since it measures the expected error in any estimate of the dependent variable. -A higher coefficient of determination (R-squared) is preferred to a lower one since it measures the amount of variability in the independent variable explained by changes in the dependent variable. -A higher coefficient of determination (R-squared) is preferred to a lower one since it measures the amount of variability in the dependent variable explained by changes in the independent variable. -A higher coefficient of determination (R-squared) is preferred to a lower one since it measures the statistical significance of the relationship between an independent variable and dependent variable.

A higher coefficient of determination (R-squared) is preferred to a lower one since it measures the amount of variability in the dependent variable explained by changes in the independent variable.

Which of the following statements is not true? -A multiple linear regression is likely to be more difficult to interpret than a simple linear regression model. -A multiple linear regression is likely to be more accurate than a simple linear regression model. -A multiple linear regression is likely to be less costly than a simple linear regression model to develop. -Multi-collinearity can be a problem in multiple linear regression but not in simple linear regression.

A multiple linear regression is likely to be less costly than a simple linear regression model to develop.

Dawson Manufacturing developed the following multiple regression equation, utilizing many years of data, and uses it to model, or estimate, the total cost of its product. Cost = FC + L(A) + M(B) Where: FC = total fixed costs L = labor rate per hour A= number of labor hours in the product M = material cost per pound B = number of machine hours in the product Which one of the following changes would have the greatest impact on invalidating the results of this model? -A significant reduction in factory overheads, which are a component of fixed costs -A large drop in material costs, as a result of purchasing the material from a foreign source -A significant change in the design of the product -Renegotiation of the union contract calling for much higher wage rates

A significant change in the design of the product

If manufacturing overhead is underapplied, how will the Cost of Goods Sold account be affected at the end of the period? -Cost of Goods Sold will be increased through an adjusting credit. -Cost of Goods Sold will be increased through an adjusting debit. -Cost of Goods Sold will be decreased through an adjusting debit. -Cost of Goods Sold will be decreased through an adjusting credit.

Cost of Goods Sold will be increased through an adjusting debit.

Finish the following sentence: Learning curve analysis is focused on the ____________ improvement of units rather than on the ____________ improvement of units. -Curved; flat -Cumulative average; individual -Individual; cumulative average -Flat; curved

Cumulative average; individual

At the end of the year, Ferguson Furniture has a Manufacturing Overhead account balance of $4,329 (cr.). This means that Ferguson: -Overapplied overhead to manufacturing jobs. -Underapplied overhead to manufacturing jobs. -Applied the exact amount of actual overhead to manufacturing jobs. -Did not apply overhead to manufacturing jobs.

Overapplied overhead to manufacturing jobs.

Which of the following describes the process for determining the predetermined overhead rate using a normal costing system? -Actual annual overhead cost divided by actual annual operating activity in the application base -Estimated annual overhead cost divided by actual annual operating activity in the application base -Estimated annual overhead cost divided by estimated annual operating activity in the application base -Actual annual overhead cost divided by estimated annual operating activity in the application base

Estimated annual overhead cost divided by estimated annual operating activity in the application base

Henry Manufacturing, which uses direct labor hours to apply overhead to its product line, undertook an extensive renovation and modernization program two years ago. Manufacturing processes were reengineered, considerable automated equipment was acquired, and 60% of the company's nonunion factory workers were terminated. Which of the following statements would apply to the situation at Henry? I. The company's factory overhead rate has likely increased. II. The use of direct labor hours seems to be appropriate. III. Henry will lack the ability to properly determine labor variances. IV. Henry has likely reduced its ability to quickly cut costs in order to respond to economic downturns.

I and IV only.

Which of the following are the shortcomings of regression analysis? I. Regression analysis requires the collection of numerous data points to be accurate. II. The user must evaluate whether the relationship between the dependent and independent variables is reasonable. III. Regression analysis is limited to the use of one independent variable. IV. Regression analysis can be strongly influenced by outlying data points.

I, II, and IV only.

Which of the following is a benefit of learning curve analysis? -Learning curve analysis can be used to help predict costs at various levels of output. -Learning curve analysis assumes efficiency improvements are greatest when production begins and decrease as production increases. -Learning curve analysis produces diagnostic statistics that can be used to evaluate the quality of the analysis. -Learning curve analysis assumes all improvements in production efficiency are caused by employee learning.

Learning curve analysis assumes efficiency improvements are greatest when production begins and decrease as production increases.

Which of the following is a limitation of learning curve analysis? Learning curve analysis assumes that the percentage improvement from learning only fully occurs when production doubles. Learning curve analysis can only be used to predict performance that is within the range of data used in the analysis. Learning curve analysis assumes a decision-maker is risk neutral. Learning curve analysis assumes that there will be no changes in past performance in the future.

Learning curve analysis assumes that the percentage improvement from learning only fully occurs when production doubles.

Which of the following is not a limitation of learning curve analysis? -Learning curve analysis assumes that the percentage improvement from learning only fully occurs when production doubles. -Learning curve analysis cannot be used when it is difficult to accurately measure the impact of efficiency improvements. -Learning curve analysis assumes all improvements in production efficiency are caused by employee learning. -Learning curve analysis can only be used to predict performance that is within the range of data used to develop the analysis.

Learning curve analysis can only be used to predict performance that is within the range of data used to develop the analysis.

Which of the following is a benefit of linear regression analysis? -Linear regression analysis can be used to help predict costs at various levels of output. -Linear regression analysis assumes the relationship between the dependent variable and independent variable is linear. -Linear regression analysis can be used to predict performance that is within the range of data used to develop the regression equation. -Linear regression analysis can be used to estimate the time and cost to perform an activity under the assumption that people become more efficient the more times they perform the task.

Linear regression analysis can be used to help predict costs at various levels of output.

How does a multiple linear regression equation differ from a simple linear regression equation? -More than one independent variable is used to predict a dependent variable in a multiple linear regression equation but only one independent variable is used to predict a dependent variable in a simple linear regression equation. -More than one dependent variable is predicted by a multiple linear regression equation but only one dependent variable is predicted in a simple linear regression equation. -A multiple linear regression is likely to be less accurate than a simple linear regression model. -A multiple linear regression is likely to be less difficult to interpret than a simple linear regression model.

More than one independent variable is used to predict a dependent variable in a multiple linear regression equation but only one independent variable is used to predict a dependent variable in a simple linear regression equation.

If a firm has a significant overapplied overhead at the end of the period, then which of the following statements is true? -The accountant should credit overhead and debit a combination of cost of goods sold, WIP inventory, and finished goods inventory for the overapplied amount. -The accountant should debit overhead and credit a combination of cost of goods sold, work-in-process (WIP) inventory, and finished goods inventory for the overapplied amount. -The accountant should credit overhead and debit cost of goods sold for the overapplied amount. -The accountant should debit overhead and credit cost of goods sold for the overapplied amount.

The accountant should debit overhead and credit a combination of cost of goods sold, work-in-process (WIP) inventory, and finished goods inventory for the overapplied amount.

If manufacturing overhead is underapplied and the amount is not considered significant, what effect does this have on the accounts of a manufacturing company at the end of the period? -The amount decreases Cost of Goods Sold through an adjusting credit. -The amount must be allocated to Work-in-Process Inventory, Finished Goods Inventory, and Cost of Goods Sold through an adjusting debit, and increases each of these accounts. -The amount increases Cost of Goods Sold through an adjusting debit. -The amount must be allocated to Work-in-Process Inventory, Finished Goods Inventory, and Cost of Goods Sold through an adjusting credit, and decreases each of these accounts.

The amount increases Cost of Goods Sold through an adjusting debit.

If manufacturing overhead is under-applied and the amount is considered significant, what effect does this have on the accounts of a manufacturing company at the end of the period? -The under-applied amount decreases cost of goods sold through an adjusting credit. -The under-applied amount increases cost of goods sold through an adjusting debit. -The under-applied amount should be allocated to work-in-process inventory, finished goods inventory, and cost of goods sold through an adjusting credit that decreases each of these accounts. -The amount should be allocated to work-in-process inventory, finished goods inventory, and cost of goods sold through an adjusting debit that increases each of these accounts.

The amount should be allocated to work-in-process inventory, finished goods inventory, and cost of goods sold through an adjusting debit that increases each of these accounts.

Which of the following concerning simple linear regression analysis is not correct? -A higher coefficient of determination (R-squared) is preferred to a lower one since it measures the amount of variability in the dependent variable explained by changes in the independent variable. A higher t-value for the independent variable coefficient is preferred to a lower one since it measures the statistical significance of the relationship between an independent variable and dependent variable. -If a new piece of energy-efficient equipment is purchased, a regression analysis performed using past data on energy usage and units produced is not valid for predicting energy usage and various levels of production. -The coefficient of the "intercept" resulting from a regression analysis where marketing expenditures ranging from $10,000 per month to $20,000 per month and sales ranging from $250,000 per month to $600,000 per month are used is the estimated sales when marketing expenditures are zero.

The coefficient of the "intercept" resulting from a regression analysis where marketing expenditures ranging from $10,000 per month to $20,000 per month and sales ranging from $250,000 per month to $600,000 per month are used is the estimated sales when marketing expenditures are zero.

Which of the following is a benefit of expected value computations? -The underlying probabilities used in the expected value formula are usually based on subjective judgments. -The expected value computation reduces multiple outcomes down to a single value, which is easily understood and can be entered into a budget plan. -The expected value computation is the most likely outcome in the future. -Expected value computations incorporate multiple possibilities, making them more representative of a certain future.

The expected value computation reduces multiple outcomes down to a single value, which is easily understood and can be entered into a budget plan.

Which of the following is the proper formula for computing the cumulative average?

The formula for calculating the cumulative average is Y = aXb where Y = cumulative average per unit, a = time required for first unit, X = cumulative number of units, and b = ln learning curve % ÷ ln 2.

The CFO of Maureen Systems prepares targets for future years using historical data. However, for the last two years, the company has failed to achieve the targeted results. In the current year, the board of directors has employed a team of analysts solely for the preparation of budgets. The new team uses a forecasted budget to set targets for the future years rather than carrying forward increases in past results based on historical data. Evaluate the validity of the new team's approach. -The new team's approach is better because the forecasted budget takes into account future conditions that were not present in past years. -The new team's approach is better because the forecasted budget quantifies the effect of unexpected adverse circumstances that may hinder achievement of targets. -The new team's approach is not better because the forecasted budget sets targets higher than previous years. -The new team's approach is not better because the increased historical targets should be the ideal target as they define and approach the capacity of an entity.

The new team's approach is better because the forecasted budget takes into account future conditions that were not present in past years.

In order to determine how its in-house training program is affecting its employees' performance rating, Maxis Tech performed a regression analysis with the following results: Performance rating = 0.2 + 0.05 hours of training R2 = 0.1 Given the above information, Maxis Tech can conclude that: -An employee's performance rating will be 0.35 if the employee receives only one hour of training. -The number of training hours received has a significant impact on an employee's performance rating. --There are factors other than number of training hours received that can better explain an employee's performance rating. -For every hour of training received, an employee's performance rating will decrease by 0.05.

There are factors other than number of training hours received that can better explain an employee's performance rating.