1. Which cost estimation method does not use the company's cost information as its primary source of information about the relationship between total costs and activity levels?

Scattergraph.

High-low.

Account analysis.

Regression analysis.

Engineering estimates.

2. A description of an organization's values, definition of its responsibilities to stakeholders, and identification of its major strategies is called its:

business-level strategy.

mission statement.

performance objectives.

master budget.

3. The degree to which a good or service meets specifications is called:

conformance to specifications.

customer quality demands.

a conformance cost.

a compliance cost.

4. The controllability concept states that managers should be held responsible for:

all items over which they have decision-making authority.

costs and revenues, but not investments in assets used in their division.

only items that are allocated to their divisions on a per-unit basis.

fixed compensation items, but not contingent compensation items.

5. Employee involvement is important in an effective performance measurement system because it:

increases the employee's commitment to the organization and its objectives.

decreases the employee's reliance on financial performance measures.

increases the likelihood that goal congruence problems will occur.

decreases the chances of an unfavorable manufacturing cycle time.

6. Multinational firms often face conflicting pressures when developing transfer pricing policies. Tax avoidance results when:

inflated transfer prices are used to reduce the profits of divisions in high tax-rate countries.

inflated transfer prices are used to reduce the profits of divisions in low tax-rate countries.

cost-based transfer prices are used instead of market transfer prices in high tax-rate countries.

cost-based transfer prices are used instead of negotiated market transfer prices in low tax-rate countries.

7. Which of the following items would be classified as a batch-level cost in an activity-based cost management (ABM) system?

Indirect labor.

Production supervisor's salary.

Depreciation on factory building.

Machinery set-up costs.

Indirect labor.

Production supervisor's salary.

Depreciation on factory building.

Machinery set-up costs.