cost ch.10 ; not all Q's on here review on tophat too

Why is choosing the correct cost driver to estimate indirect manufacturing costs important? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Identifying the wrong driver can lead management to incorrect and costly decisions b Identifying the wrong driver can increase actual overhead costs c Identifying the wrong driver can increase the usage of the correct driver d Identifying the wrong driver can increase the direct costs of the cost object

a Identifying the wrong driver can lead management to incorrect and costly decisions

An experience curve is a function that measures the decline in cost per unit in various business functions of the value chain as the amount of these activities increases. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a TRUE b FALSE

a TRUE

In regression analysis, the term "goodness of fit" indicates the strength of the relationship between the cost driver and the costs. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a TRUE b FALSE

a TRUE

Simple regression analysis estimates the relationship between the dependent variable and one independent variable. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a TRUE b FALSE

a TRUE

Two common forms of quantitative analysis methods of cost estimation are the high-low method and regression analysis. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a TRUE b FALSE

a TRUE

When using the high-low method, the two observations used are the high and low observations of the ______. a cost driver b fixed cost component c slope coefficient d direct cost

a cost driver

Crimson Services, Inc., employs 8 individuals. They are all paid $16.50 per hour. How would total costs of personnel be classified? a variable cost b mixed cost c irrelevant cost d fixed cost

a variable cost

The dependent variable is a cost to be predicted and managed, whereas an independent variable or cost driver is the factor used to predict the dependent variable. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a TRUE b FALSE

a- True

The cost components of a heater include $35 for the compressor, $11 for the sheet molded compound frame, and $74 per unit for assembly. The factory machines and tools cost is $55,000. The company expects to produce 1,300 heaters in the coming year. What cost function best represents these costs? a y = 55,000 + 120X b y = 1,300 + 55,000X c y = 55,000 + 1,300X d y = 1,300 + 120X

ay = 55,000 + 120X Explanation Per unit costs: 35 + 11 + 74 = 120

An "economy of scale" function is an example of a linear cost function. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a TRUE b FALSE

b FALSE

The cost to be predicted and managed is referred to as the ______. . a independent variable b dependent variable c cost driver d regression

b dependent variable

What is a plausible explanation of a cost function has a slope coefficient of $30 for purchases of 1 to 1,000 units and $25 for production of 1,100 - 2,000 units, and $20 for production of 2,001 - 3,000 units Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a the fixed cost per unit has decreased because of efficiencies b economies of scale allowing for lower cost purchases with larger orders c their is a linear cost function in effect d contribution margins are decreasing

b economies of scale allowing for lower cost purchases with larger orders

As a result of learning curve, _____. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a unit costs increase as productivity increases and the unit-cost function behaves nonlinearly b unit costs decrease as productivity increases and the unit-cost function behaves nonlinearly c unit costs increase as productivity increases and the unit-cost function behaves linearly d unit costs decrease as productivity increases and the unit-cost function behaves linearly

b unit costs decrease as productivity increases and the unit-cost function behaves nonlinearly

For Heavy Manufacturing Company, labor-hours are 40,000 and wages $144,000 at the high point of the relevant range, and labor-hours are 24,000 and wages $96,000 at the low point of the relevant range.What is the slope coefficient? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a $3.75 b $3.00 c $3.60 d $4.00

b$3.00 Explanation Slope = ($144,000 − $96,000) / (40,000 − 24,000) = $3.00 per labor-hour

For Heavy Manufacturing Company, labor-hours are 48,000 and wages $156,000 at the high point of the relevant range, and labor-hours are 32,000 and wages $112,000 at the low point of the relevant range.What is the estimated total labor costs at Heavy Manufacturing Company when 11,400 labor-hours are used? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a $38,190 b $55,350 c $39,900 d $37,050

b$55,350 Explanation Slope = ($156,000 - $112,000) / (48,000 - 32,000) = $2.75Constant (using highest observation): $156,000 − ($2.75 × 48,000) = $24,000Constant (using lowest observation): $112,000 − ($2.75 × 32,000) = $24,000Total labor costs, y = $24,000 + ($2.75 × 11,400) = $55,350

The cost function y = 2,700 + 8X ______________. a has a slope coefficient of 2,700 b has an intercept of 8 c is a straight line d represents a fixed cost

c is a straight line

Which of the following is an example of nonlinear cost function? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a variable-cost functions b fixed-cost functions c learning curves d mixed cost functions

c learning curves

A cost function is a ______. a process of calculating present value of projected cash flows b process of allocating costs to cost centers or cost objects c mathematical description of how a cost changes with changes in the level of an activity relating to that cost d is a very thorough and detailed way to identifying a cost object when there is a physical relationship between inputs and outputs

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

When using the high-low method, the numerator of the equation that determines the slope is the ______. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a difference between the positive and negative values of dependent and independent variables b difference between the fixed cost and variable cost associated with the cost driver c difference between the high and low observations of the cost driver d difference between the costs associated with highest and lowest observations of the cost driver

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