1. TF,03.001 Costs can display variable, fixed, or mixed behavior, and it important that they are classified accurately. True False 2. TF.03.011 Methods of estimating costs used by companies include the industrial engineering method, the account analysis method, and the instant decision method. True False 3. TF.03.013 The account analysis method can be used to estimate costs by ciassifying accounts in the general ledger as variable. True False 4. TF.03.020 An alternative measure of goodness of fit is the coefficient of determination. True ; False 5. TF.03.021 Finding a strong statistical association between an activity cost and an activity driver can provide evidence to managers about the correctness of a driver selection. True ,, False 6. TF.03.019 The percentage of variability in the dependent variable explained by an independent variable (Le. measure of activity output) is called the coefficient of correlation. True False 7. TF.03.018 A feature of regression routines, not provided by the scatter plot of highwlow methods, is to provide information to and in the assessment of reliability of the estimated costs formula. True False 8. MC.03.066 Cost behavior analysis focuses on how costs a. react to changes in activity level. b. change over time. c. react to changes in profit. cl. both "react to changes in profit\" and "change over time". 9. MC.03.067 The drivers that explain changes in costs as units produced change are called: a. Nonunit-level drivers b.1Activity based cost drivers c. Unit~level drivers d. All of these choices are correct. 10. MC.O3.068 Drivers that explain changes in costs as factors other than changes in units produced are called: a. Non-unit-based cost drivers {\"45 b. Functional based cost drivers (3. Unitbased cost drivers 0. None of these choices are correct. 11. MC.03.176 The following computer printout estimated overhead costs using multiple regression: is for Hm) Std. error Parameter Estimate Parameter = O Pr > t giparameter Intercept 1000 1.96 0.0250 510.204 Setup hours 25 81.96 0.0001 0.305 if or parts 100 9.50 0.0001 10.527 R Square (R2) 0-94 Standard Error (Se) 75.00 Observations 160 During the year the company used 1,000 setup hours and 500 parts. What is the predicted overhead cost? " a. $2,500 if) b. $76,000 ' c. $75,000 0. None of these choices are correct. 12. MC.03.159 The following computer printout estimated overhead costs using regression: t for H(O) Std. error Parameter Estimate Parameter a 0 Pr > t gparameter Intercept 100.41 4.81 0.0003 20.88 DLH 14.05 6.78 0.0001 2.07 R Square (R2) 0.80 Standard Error 25.03 (Se) Observations 17 Please find the following statistical table degrees of degrees 0f 95% 99% freedom .. . freed\" ,. ' . 2. 201 3.106 2 179 3 055 1 771 2.160 3. 055 N N u. During the last accounting period 10,000 DLH were worked. The hypothesis tests of the cost parameters indicate(s) that {I} a. the slope is significantly different from zero. I b. the intercept is significantly different from zero. c. both the slope and intercept are significant. cl. both the slope and intercept are not significant. 13. MC,03.160 The following computer printout estimated overhead costs using regression: t for H(0) Parameter Std. error Estimate Parameter = 0 Prat Intercept 100.41 of parameter 4.81 0.0003 DLH 20.88 14.05 6.78 0.0001 2.07 R Square (R2) 0.80 Standard Error (Se) 25.03 Observations 17 Please find the following statistical table degrees of 90% 5% 99% degrees of freedom freedom 90% 95% 39% 6.314 12.708 53.657 11 1.796 2 2.920 2.201 3.106 1.303 9.925 12 1.782 2.179 3.055 2.353 3.182 5.841 13 1.771 2.160 3.055 2.132 2.776 4.604 14 1.761 2.145 3.012 2.015 2.571 4.032 15 1.753 2.131 2.947 1.943 2.447 3.707 16 1.746 2.120 2.92: 1.895 2.365 3.499 17 1.740 2.110 2.898 1.860 2.306 3.355 18 1.734 2.101 2.878 1.833 2.262 3.250 19 1.729 2.093 2.861 1.812 2.228 3.169 20 .725 2.086 2.845 During the last accounting period 10,000 DLH were worked. Find the t-value for a 90 percent confidence level. a. 6.314 b. 1.740 O C. 2.920 d. 1.753 14. MC.03.161 The following computer printout estimated overhead costs using regression: t for H(0) Std, error Parameter Estimate Parameter = 0 Prat Intercept of parameter 100.41 4.81 0.0003 20.88 DLH 14.05 6.78 0.0001 2.07 R Square (R2 ) 0.80 Standard Error (Se 25.03 Observations 17 Please find the following statistical table degrees of degrees of freedom 90% 95% 99% freedom 90% 95% 99% 6.314 12.708 63.657 11 1. 796 2.201 3.106 2.920 4.303 9.925 12 1.782 2.179 3.055 M A W N 2.353 3.182 5.841 13 1.771 2.160 3.055 2.132 2.176 4.604 14 1.761 2.145 3.012 2.015 2.571 4.032 15 1.753 2.131 2.947 1.943 2.447 3.707 16 1.746 2.120 2.921 1.895 2.365 3.499 17 1.740 2.110 2.898 1.860 2.306 3.355 18 1.734 2.101 2.878 1.833 2.262 3.250 19 1.729 2.093 2.861 1.812 2.228 3.169 20 1.725 2.086 2.845 During the last accounting period 10,000 DLH were worked. level? What is the confidence interval for the predicted overhead cost rounded to the nearest whole number for a 90 percent confidence O a. predicted value between 87,000 and 130,500b. predicted value between 140,644 and 140,731 c. predicted value between 140,557 and 140,644 d. None of these choices are correct. 15. MC.03.151 The Stanford Company incurred the following maintenance cost during a five month period: Month Production Volume Maintenance Costs June 75 $250 July 115 310 August 190 400 September 60 240 October 135 355 Using a computer or calculator, compute the estimate of variable cost per unit of production using the method of least squares. Rounded to two decimal places, this value would be a. $2.70. b. $1.23. C. $3.21. d. $1.31. 16. MC.03.152 The Stanford Company incurred the following maintenance cost during a five month period: Month Production Volume Maintenance Costs June 75 $250 July 115 310 August 190 400 September 60 240 October 135 355 Using a computer or calculator, compute the estimate of the fixed portion of maintenance costs using the method of least squares. Rounded to dollars, this value would be a. $160 O b. $66 O C. $575 d. $166 17. MC.03.153 The Stanford Company incurred the following maintenance cost during a five month period: Month Production Volume Maintenance Costs June 75 250 July 115 310 August 190 400 September 60 240 October 135 355 Using a computer or calculator, compute the estimate of maintenance costs at 100 units of production using the method of least squares. This value would be a. $321. O b. $698. C. $291. O d. $336. 18. MC.03.149 Spokane Corporation found its maintenance cost and sales dollars to be somewhat correlated. Last year's high and low observations were as follows: Maintenance Cost Sales $46,000 $600,000 $52,000 $800,000What is the fixed portion of the maintenance cost? a, $28,000 0. $14,000 c. $60,000 :1 T- 0. $52,000 19. MC,03.144 Longberry Corporation manufactures and sells party items. The following representative direct labor hours and production costs are provided for a fourmonth period: Month Direct Labor Hours Production Costs May 3,600 $15,000 June 4,800 17,500 July 6,000 20,000 August ._4 M LZM Total 19,200 $70,000 Let a 2 Fixed production costs per month 0 = Variable production costs per direct labor hour n = Number of months X 2 Direct labor hours per month Y = Total monthly production costs 3 = Summation Predict a cost for 5,000 labor hours. a. $17,700 0. $17,900 c. $30,400 0. $16,667 20. MC.03.141 The Ladder Company wants to develop a cost estimating equation for its monthly cost of electricity. It has the following data: Month Cost of Electricity Direct Labor Hours February $ 8,100 750 May 9,000 850 August 10,200 1,000 November 8,700 800 Using the highlow method, which of the following is the best equation? " a. Y = $900 + $8.40X if: D. Y = $900 + $12.00x c. Y = $2,400 + $8.40X d. Y = $1,800 + $8.40X 21. MC.03.140 Barron Enterprises has the following information about its truck eet miles and operating costs: Year Miles Qperating Costs 2016 400,000 $256,000 2017 480,000 280,000 2018 560,000 320,000 What is the best estimate of total costs using the high-low method if the expected eet mileage for 2018 is 500,000 miles? a. $256,000 b. $296,000 0. $320,000 (1, $288,000 22. MC.03.138 The following information was available about supplies cost for the second quarter of the year: Month W Eggplies Cost July 700 $3,185 August 1,600 7,100 September 600 2,700 Using the high-low method, the estimate of supplies cost at 1,000 units of production is a. $4,460. ' ' 0. $4,900. c. $7,100. 1; 0. $2,700. 23. MC.03.118 The Sandoval Company has four process engineers that are each able to process 1,500 design changes. Last year 5,250 design changes were produced by the four engineers. Each engineer is paid $60,000 per year. What is the unused capacity in dollars? a. $60,000 , b. $30,000 c. $240,000 d. $15,000 24. MC.O3.117 Violet Company has five process engineers, and each of them can process 2,500 design changes. Last year 5,000 design changes were processed by the five engineers. Each engineer is paid $50,000 per year. Calculate the unused capacity. a. 4,500 change orders 0. 7,500 change orders c. 6,500 change orders 0. 3,500 change orders 25. MC.D3.116 The Sandoval Company has four process engineers that are each able to process 1,500 design changes. Last year 5,250 design changes were produced by the four engineers. Each engineer is paid $60,000 per year. Calculate the activity rate per change order. 5,} a. $4 per change order 5:} 0. $15 per change order V c. $10 per change order 6Q} 0. $40 per change order 26. MC.03.098 Sonor Systems undertakes its own machine maintenance. The depreciation on the equipment is $20,000 per year and operating cost is $2 per machine hour. Last year 275,000 machine hours were used to produce 100,000 units. If 300,000 machine hours had been worked last year, what would be the total machine maintenance cost? a. $220,000 {3 b. $420,000 a. $600,000 01. $620,000 27. MC.03.092 Marlowe Company currently leases a delivery truck from Burton Enterprises for a fee of $250 per month plus $0.40 per mile. Management is evaluating the desirability of switching to a modern, fuel-efficient truck, which can be leased from Goliath, Inc., for a fee of $600 per month plus $0.05 per mile. All operating costs and fuel are included in the rental fees. in general, a lease from a. Burton Enterprises is economically preferable to a lease from Goliath, Inc., regardless of the monthly use, b. Burton Enterprises is economically preferable below 1,000 miles per month. ? c. Goliath, 1nd, is economically preferable to a lease from Burton Enterprises regardless of the monthly Lise. ' d. Burton Enterprises is economically preferable above 1,000 miles per month. 28. MC.O3.089 Asuming costs are represented on the vertical axis and volume of activity on the horizontal axis, which of the following costs would be represented by a line that starts at the origin and reaches a maximum value beyond which the line is parallel to the horizontal axis? a. total direct material costs b. rent on exhibit space at a convention c. a consultant paid $100 per hour with a maximum fee of $2,000 cl. employees who are paid $15 per hour and guaranteed a minimum weekly wage of $300 29. MC.03.079 Direct material cost is $15,000 when 3,000 units are produced. What is the direct material cost when 1,500 units produced? a. $7,500 b. $3,000 c. $3,500 a. $6,000 30. MC'03.075 Assuming costs are represented on the vertical axis and volume of activity on the horizontal axis, which of the following costs would be represented by a line that is parallel to the horizontal axis? a. employees who are paid $10 per hour and guaranteed a minimum weekly wage of $200 b. total direct material costs c. a consultant paid $75 per hour with a maximum fee of $1,200 d. rent on exhibit space at a convention