Question 1

At an output level of 1,000 bicycles, per unit total cost is calculated to be:

Accepted Answer

A)  $100.00.
B)  $101.50.
C)  $125.00.
D)  $126.32.
E)  $131.58.F) All of the above
G) C) and D) C

Question 2

Which of the following is not used for evaluating a regression analysis?

Accepted Answer

A)  Correlation.
B)  T-value.
C)  R-Squared.
D)  Standard error.
E)  Multicollinearity.F) C) and D)
G) A) and E)

Question 3

The learning curve in cost estimation is a good example of:

Accepted Answer

A)  Non-linear cost behavior.
B)  Machine-intensive production.
C)  Simple regression.
D)  A random variable.
E)  Efficient labor.F) A) and D)
G) A) and B)

Question 4

The t statistic for the independent variable:

Accepted Answer

A)  Is statistically significant at less than 5% risk
B)  At 11.46, is statistically significant
C)  At 52.78, is too large to be statistically significant
D)  Lies somewhere between 6.49 and 7.063E) A) and C)
F) B) and C)

Question 5

The p-value measures:

Accepted Answer

A)  The probability that the regression equation is reliable.
B)  The statistical significance of the dependent variable.
C)  The risk that a particular independent variable has only a chance relationship to the dependent variable.
D)  The confidence range around the regression prediction.E) A) and D)
F) All of the above

Question 6

Using the high-low method, total monthly fixed cost is calculated to be (round to nearest dollar) :

Accepted Answer

A)  $757.
B)  $687.
C)  $756.
D)  $733.
E)  $717.F) A) and C)
G) C) and D)

Question 7

Accurate cost estimates are required by strategic management for all except:

Accepted Answer

A)  To facilitate strategic positioning analysis.
B)  To facilitate target costing and life-cycle costing.
C)  To facilitate value-chain analysis.
D)  Accounting internal control.E) B) and C)
F) A) and D)

Question 8

The identification of cost drivers is perhaps the most important step in developing the cost estimate because:

Accepted Answer

A)  It is the first step in cost estimation.
B)  It is the final step in cost estimation.
C)  There may be a number of relevant drivers, some not immediately obvious.
D)  The other steps are easier to execute.
E)  It requires much more time than the other steps.F) C) and D)
G) B) and E)

Question 9

Which one the following is a variable that takes on values of 1, 2, 3, … for each period in sequence?

Accepted Answer

A)  Dummy variable.
B)  Price change index.
C)  Trend variable.
D)  Dependent variable.
E)  Independent variable.F) A) and C)
G) B) and C) C

Question 10

A company using regression analysis to correlate income to a variety of sales indicators found that the relationship between the number of sales managers in a territory and net income for the territory had a correlation coefficient of -1. Which is the best description of this situation?

Accepted Answer

A)  More sales managers should be hired.
B)  Imperfect negative correlation.
C)  Perfect inverse correlation.
D)  There is no correlation at all.E) B) and C)
F) A) and B)

Question 11

Which of these job characteristics would result in the learning curve having less of an effect?

Accepted Answer

A)  Repetitive tasks.
B)  Working on an assembly line.
C)  Use of robotics and computer-aided manufacturing.
D)  Activities where teaching and learning take place.E) All of the above
F) A) and D)

Question 12

Technology and complexity issues often lead management to simplify and to:

Accepted Answer

A)  Use linear estimation methods.
B)  Use volume-based costing and nonlinear estimation methods.
C)  Use volume-based costing methods.
D)  Use nonlinear estimation methods.
E)  Use activity-based costing and volume-based costing methods.F) None of the above
G) A) and C)

Question 13

Which of the following is not usually influenced by learning curve analysis?

Accepted Answer

A)  Make-or-buy decisions.
B)  Cost-volume-profit analysis.
C)  Capital budgeting.
D)  Development of standard product costs.
E)  Theory of constraints.F) B) and D)
G) C) and D)

Question 14

Using the high-low-point method of analysis, the estimated variable cost per machine hour is:

Accepted Answer

A)  $0.40
B)  $0.20
C)  $0.90
D)  $0.10
E)  $0.70F) C) and D)
G) C) and E)

Question 15

At an output level of 1,000 bicycles, per unit variable cost is calculated to be:

Accepted Answer

A)  $100.00.
B)  $101.50.
C)  $125.00.
D)  $126.32.
E)  $131.58.F) C) and D)
G) C) and E)

Question 16

If the pistons are manufactured by Marshall Co., the average direct labor hours per unit for the first 800 pistons (including the pilot run)  produced is calculated to be (use five decimal places in calculating the average time) :

Accepted Answer

A)  0.20926.
B)  0.21408.
C)  0.22528.
D)  0.23056.
E)  0.24797.F) A) and B)
G) B) and D)

Question 17

Which of the following five steps (out of six)  of cost estimation is out of order?

Accepted Answer

A)  Step 1: Define the cost object to be estimated.
B)  Step 2: Determine the cost driver(s) .
C)  Step 3: Collect relevant data on the cost of the cost object and the cost driver.
D)  Step 4: Evaluate the accuracy of the cost estimate.
E)  Step 5: Graph the data.F) C) and E)
G) None of the above

Question 18

A p-value of less than _______ is typically considered statistically significant.

Accepted Answer

A)  .5
B)  .05
C)  .005
D)  5E) A) and B)
F) A) and C) B

Question 19

How should the cost function be properly stated?

Accepted Answer

A)  Y = $2,025 + $2.50H.
B)  Y = $3,890 + $2.00H.
C)  Y = $4,085 + $2.00H.
D)  Y = $5,260 + $2.50H.E) C) and D)
F) B) and D)

Question 20

A company allocates its variable factory overhead based on direct labor hours. During the past three months, the actual direct labor hours and the total factory overhead allocated were as follows:  Based upon this information, monthly fixed factory overhead was:

Accepted Answer

A)  $30,000.
B)  $50,000.
C)  $46,667.
D)  $33,333.E) B) and C)
F) A) and D)

Exam 8: Cost Estimation

At an output level of 1,000 bicycles, per unit total cost is calculated to be:

Correct AnswerverifiedC

Which of the following is not used for evaluating a regression analysis?

Correct AnswerverifiedShow Answer

The learning curve in cost estimation is a good example of:

Correct AnswerverifiedShow Answer

The t statistic for the independent variable:

Correct AnswerverifiedShow Answer

The p-value measures:

Correct AnswerverifiedShow Answer

Using the high-low method, total monthly fixed cost is calculated to be (round to nearest dollar) :

Correct AnswerverifiedShow Answer

Accurate cost estimates are required by strategic management for all except:

Correct AnswerverifiedShow Answer

The identification of cost drivers is perhaps the most important step in developing the cost estimate because:

Correct AnswerverifiedShow Answer

Which one the following is a variable that takes on values of 1, 2, 3, … for each period in sequence?

Correct AnswerverifiedC

A company using regression analysis to correlate income to a variety of sales indicators found that the relationship between the number of sales managers in a territory and net income for the territory had a correlation coefficient of -1. Which is the best description of this situation?

Correct AnswerverifiedShow Answer

Which of these job characteristics would result in the learning curve having less of an effect?

Correct AnswerverifiedShow Answer

Technology and complexity issues often lead management to simplify and to:

Correct AnswerverifiedShow Answer

Which of the following is not usually influenced by learning curve analysis?

Correct AnswerverifiedShow Answer

Using the high-low-point method of analysis, the estimated variable cost per machine hour is:

Correct AnswerverifiedShow Answer

At an output level of 1,000 bicycles, per unit variable cost is calculated to be:

Correct AnswerverifiedShow Answer

If the pistons are manufactured by Marshall Co., the average direct labor hours per unit for the first 800 pistons (including the pilot run) produced is calculated to be (use five decimal places in calculating the average time) :

Correct AnswerverifiedShow Answer

Which of the following five steps (out of six) of cost estimation is out of order?

Correct AnswerverifiedShow Answer

A p-value of less than _______ is typically considered statistically significant.

Correct AnswerverifiedB

How should the cost function be properly stated?

Correct AnswerverifiedShow Answer

A company allocates its variable factory overhead based on direct labor hours. During the past three months, the actual direct labor hours and the total factory overhead allocated were as follows: Based upon this information, monthly fixed factory overhead was:

Correct AnswerverifiedShow Answer

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C

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C

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B

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