ACC 320 Chapter 10

Which of the following is step to overcome problems related to data collection for estimating cost function

The analyst should remove the inflationary effects

Which of the following is not a nonlinear cost function

a step cost function

Which of the following best describes a step variable cost function

a step cost function in whcih cost remains the same over narrow ranges of the level of activity in each relevant range

If machine maintenance is schedulued at a time when production is at a low level then

an understanding of operations is needed to determine an appropriate cost driver

A plot of data that results in one extreme observation most likely indicates that

an unusual event such as a plant shutdown occurred during that month

The conference method estimates cost functions

based on analysis and opinions gathered from various departments

The account analysis method estimates cost functions

by classifying cost accounts as variable fixed or mixed based on qualitative analysis

The high-low method

calculates the slope coefficient using only two observed values within the relevant range and their respective costs

A plot of cost driver data and cost data may show all but the following:

cause- and effect relationship

When using the high low method, the two observations used are the high and low observation of the

cost driver

Which of the following statements is true of choosing cost drivers under activity based costing

cost drivers are independent variables

A step cost functions indicates that there are

costs that remain the same over various ranges of activity but increases by discrete amounts as the level of activity increases

The cost to be predicted and managed is referred to as the

dependent variable

When using the high-low method, the numerator of the equation that determines the slope is the

difference between the costs associated with highest and lowest observations of the cost driver

Data collection problems arise when

fixed and variable costs are not separately identified and both are allocated to products on a per unit basis

Which of the following is a problem related to cost analysis

fixed costs are allocated as if they are variable costs

The learning curve models presented in the text examine

how efficiency increases as more units are produced

Why is choosing the correct cost driver to estimate indirect manufacturing costs important

identifying the wrong driver can elad management to incorrect and costly decisions

Which of the folowing is an example of time- series data

indirect labor costs and machine hours in a manufacturer's assembly department each month for the last 12 months

A step variable cost function

is often approximated with a continous variable cost function

In the estimation of a cost function using quantitative analysis, the independent variable

is the factor used to predict the dependent variable

Which of the following statements is true of linear cost function

it present variable cost as a slope coefficient

Which of the following is an example of nonlinear cost function

learning curves

Goodness- of- fit measures how well the perdicted values in a cost estimating equation

match the actual cost observations

A cost function is a

mathematical description of how a cost changes with changes in teh level of an activity relating to that cost

Regression analysis

measures the average amount of change in the dependent variable associated with a unit change in one or more independent variables

An experience curve

measures the decline in cost per unit as production decreases for various value chain functions such as marketing as production increases

The ideal database for estimating cost functions contains

numerous cost driver obsercation

Cross- sectional data analysis includes

ovbservingn different entities during the same time period

which of the following represents cross sectional data

personnel costs of a month at 10 different organizations

The slope of the line of regression is the

rate at which the dependent variable varies

If cost accountants decide to use production of prior periods as a cost driver for repair cost of the current period they understand that

repair costs tend to lag periods of high production

Which of the following statements show a difference between simple regression and multiple regression

simple regression uses only one dependent and one independent variable, whereas multiple regression uses one dependent and more than one independent variable

A learning curve function

that measures the decline in labor-hours per unit due to workers becoming better at a job

A cost driver should be measurable and have an economically plausible relationship with the dependent variable which means

that the relationship is based on a cause and effect criterion and makes economic sense to management

Which cost estimation method would involve analyzing direct labor subsidary accounts adn classifying cost as variable, fixed, or mixed to derive cost estimation formulas

the account analysis method

With a step fixed-cost function

the cost remains the same over wide ranges of the activity in each relevant range

Which of the following is learning curve model

the cumulative average time-learning model and the incremental unit time learning model

Which cost estimation method uses time and motion studies to reveal that to make a high quality men's suit jacket, it takes of 3 hours of direct labor effort per jacket and 5 minutes of salaried manager to perform quality control

the industrial engineering method

Which cost estimation method uses a formal statistical method such as regression analysis to develop cost functions based on past data

the quantitative analysis method

Which of the following statements is true of activity based costing

there is a clear cause and effect relationship beetween costs adn teh cost driver in the long run

Which of the following is a step followed by an analyst to overcome problems related to data collection for estimating cost function

to eliminate unusual observations if extreme values of observation occur

As a result of learning curve,

unit costs DECREASES as productivity increases and the unit cost function behaves NON LINEARLY

Quantitative analysis methods estimate cost functions

using a formal mathematical method to fit cost functions to past data observations

Time series data analysis includes

using a variety of time periods to measure the dependent vvariable of the same entity

Crimson services inc. employs 8 individuals. They are all paid $16.50 per hour. how would total costs of personnel be classified

variable costs