Cost Accounting Chapter 10 quiz
The McCool Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. McCool Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation. Cost Hours $24,700 5,000 26,000 5,500 34,000 7,500 45,370 10,300 38,000 9,500 What is the estimated total cost at an operating level of 9,000 hours? $40,300 $35,100 $39,644 $44,460
a
The account analysis method estimates cost functions ________. by classifying cost accounts as variable, fixed, or mixed based on qualitative analysis in a manner that cannot be usefully combined with any other cost estimation methods using time-and-motion studies at a high cost, which renders it seldom used
a
A learning curve is a function ________. that is linear that measures the decline in labor-hours per unit due to workers becoming better at a job where unit costs increase as productivity increases that increases at a greater rate as workers become more familiar with their tasks
b
Goodness-of-fit measures how well the predicted values in a cost estimating equation ________. rely on the independent variable match the actual cost observations match the cost driver determine the level of activity
b
Jackson Inc., incurred total indirect manufacturing labor costs of $500,000. The company is labor intensive. Total labor hours during the period were 5,000. Using qualitative analysis, the manager and the management accountant determine that over the period the indirect manufacturing labor costs are mixed costs with only one cost driver-labor-hours. They separated the total indirect manufacturing labor costs into costs that are fixed ($110,000 based on 8,000 hours of labor) and costs that are variable ($390,000) based on the number of labor-hours used. The company has estimated 7,000 labor hours during the next period. What will be the total cost for the estimated 7,000 hours? $547,500 $656,000 $451,250 $700,000
b
Quantitative analysis methods estimate cost functions ________. using the time-and-motion studies using a formal mathematical method to fit cost functions to past data observations using the pooling of knowledge from each value chain function based on analysis and opinions gathered from various departments
b
As a result of learning curve, ________. unit costs decrease as productivity increases and the unit-cost function behaves linearly unit costs increase as productivity increases and the unit-cost function behaves linearly unit costs decrease as productivity increases and the unit-cost function behaves nonlinearly unit costs increase as productivity increases and the unit-cost function behaves nonlinearly
c
Place the following steps in order for estimating a cost function using quantitative analysis. A = Plot the data B = Collect data on the dependent variable and the cost driver. C = Choose the dependent variable D = Identify the independent variable, or cost driver E = Estimate the cost function A D C E B E D C B A C D B A E D C E A B
c
Uninder Company uses the high-low method to estimate the cost function. The information for 2015 is provided below: Machine-hours Labor Costs Highest observation of cost driver 550 $22,000 Lowest observation of cost driver 250 $ 13,000 What is the estimated cost function for the above data? y = 13,000 + 43.75X y = 16,500 + 52X y = 5,500 + 30X y = 22,000 + 40X
c
Which of the following is a nonlinear cost function? increase in revenues with increase in sales in units variable cost of $5 per unit learning curve function total fixed cost of $25,000
c
Which of the following statements shows a difference between simple regression and multiple regression? Simple regression uses only one dependent variable and more than one independent variables, whereas multiple regression uses more than one dependent variable and only one independent variable. Simple regression uses only the independent variables, whereas multiple regression uses only dependent variables. Simple regression uses only one dependent and one independent variable, whereas multiple regression uses one dependent and more than one independent variable. Simple regression uses more than one dependent and independent variables, whereas multiple regression uses only one dependent and independent variable.
c
A finance manager has to select one of the four different suppliers of raw materials. The total cost functions under the four options are given below. Assume the quality of the raw material to be the same, which of the following is preferred by the finance manager? y = 200 + 4.70X y = 200 + 5.50X y = 200 + 5X y = 200 + 4.50X
d
A steeply sloped regression line indicates ________. a strong relationship between fixed cost and variable cost a greater proportion of fixed costs than variable costs an increase in number of units produced during the period a strong relationship between the cost driver and costs
d
For February, the cost components of a picture frame include $0.30 for the glass, $0.75 for the wooden frame, and $0.80 for assembly. The assembly desk and tools cost $500. Two hundred fifty frames are expected to be produced in the coming year. What cost function best represents these costs? y = 1.05 + 500X y = 3.85 + 600X y = 1.85 + 500X y = 500 + 1.85X
d
Jackson Inc., incurred total indirect manufacturing labor costs of $500,000. The company is labor intensive. Total labor hours during the period were 5,000. Using qualitative analysis, the manager and the management accountant determine that over the period the indirect manufacturing labor costs are mixed costs with only one cost driver-labor-hours. They separated the total indirect manufacturing labor costs into costs that are fixed ($110,000 based on 8,000 hours of labor) and costs that are variable ($390,000) based on the number of labor-hours used. The company has estimated 7,000 labor hours during the next period. What will be the total variable cost for the estimated 7,000 hours? $700,000 $437,500 $341,250 $546,000
d
The McCool Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. McCool Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation. Cost Hours $24,700 5,000 26,000 5,500 34,000 7,500 45,370 10,300 38,000 9,500 What is the cost function? y = $34,000 + $4.94X y = $45,370 + $4.19X y = $24,700 + $4.40X y = $5,200 + $3.90X
d
Time-series data analysis includes ________. using the highest and lowest observation observing different entities during the same time period comparing information in different cost pools using a variety of time periods to measure the dependent variable
d
To complete the first setup on a new machine took an employee 300 minutes. Using an 85% cumulative average-time learning curve indicates that the second setup on the new machine is expected to take ________. 277.50 minutes 255 minutes 127.50 minutes 210 minutes
d
Variable cost per labor-hour is $8.50. Fixed cost is $10,500. Calculate the total cost for 350 labor hours. Machine hours during the period are 50. $3,400 $10,925 $13,900 $13,475
d
When using the high-low method, the two observations used are the high and low observations of the ________. fixed cost component slope coefficient direct cost cost driver
d
