1. 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? (Points : 2)

More sales managers should be hired. Imperfect negative correlation. Perfect inverse correlation. There is no correlation at all.

Question 2.2. Accurate cost estimates are required by strategic management for all except: (Points : 2)

To facilitate strategic positioning analysis. To facilitate target costing and life-cycle costing. To facilitate value-chain analysis. Accounting internal control.

Question 3.3. A measure of the statistical reliability of each independent variable is: (Points : 2)

Correlation. t-value. R-Squared. Standard error. Multicollinearity.

Question 4.4. Which of the following is not a correct pairing of estimated costs and its related cost driver? (Points : 2)

Fuel expense for a delivery truck; miles driven. Heating expense for a building; temperature to be maintained in the building. Product design cost; number of design elements. Sustainability cost in a manufacturing plant; machine-hours. None of the above is correct.

Question 5.5. The calculation of an amount given different levels of a factor that influences that amount is called: (Points : 2)

Sales-value analysis. What-if analysis. Factor analysis. Cost analysis.

Question 6.6. Which of the following factors is not involved in studying cost/volume/profit (CVP) relationships? (Points : 2)

Desired profit, expressed on an after-tax basis. Variable cost per unit. Total fixed costs. Product (or service) mix. Actual sales volume.

Question 7.7. Which one of the following is not included as a factor in CVP analysis? (Points : 2)

Total fixed costs. Variable cost per unit. Desired (targeted) profit. Selling price per unit. Expected production level.

Question 8.8. CVP analysis using activity-based costs will tend to shift some costs from fixed to variable classifications, resulting in: (Points : 2)

Lower breakeven sales. Higher breakeven sales. Higher or lower breakeven sales, depending on batch size. A higher contribution margin per unit. A lower contribution margin per unit.

Question 9.9. Maintaining a constant production level in a firm has the advantage of: (Points : 2)

Minimizing the amount of inventory held. Allowing a stable employment level. Meeting customers' changing expectations in terms of demand volume. Supporting the organization's move to JIT (just-in-time). Allowing the firm to compete successfully as a differentiator.

Question 10.10. Which of the following is NOT true regarding the use of linear compensation plans? (Points : 2)

Such plans encourage "gaming" behavior on the part of managers. Such plans strongly link managerial compensation to the agreed-upon budget. Under such plans, managerial reward is independent of budgetary targets. Under such plans, managerial reward is based principally on actual performance. Under such plans, managerial reward is based on what managers actually do, not what they do relative to what they say they can do.

Question 11.11. A plan that states the units or costs of merchandise to be purchased by a retailer or wholesaler during the budget period is called a: (Points : 2)

Production budget. Merchandise purchases budget. Accounts payable budget. Cash payments budget. Cost of goods sold budget.

Question 12.12. Which of the following is NOT a characteristic of Kaizen Budgeting? (Points : 2)

These budgets reflect continuous-improvement standards. These budgets adjust required resource demands based on targeted efficiency and productivity gains. This approach to budgeting can be used in conjunction with both traditional and activity-based budgeting. The approach can be used internally, but not for external purposes (e.g., in budgeting supplier costs).

Question 13.13. For a simple regression analysis model that is used to allocate factory overhead, an internal auditor finds that the intersection of the line of best fit for the overhead allocation with the y-axis is $5,000. The slope of the line is .20. The independent variable, factory wages, amounts to $900,000 for the month. What is the estimated amount of factory overhead to be allocated for the month? (Points : 2)

$65,000. $180,000. $230,000. $92,500. $185,000.

Question 14.14. Fresplanade Co. had the following historical pattern for its credit sales: 75% collected in the month of sale 12% collected in the first month after sale 8% collected in the second month after sale 3% collected in the third month after sale 2% uncollectible The sales on open account (credit sales) have been budgeted for the last six months of the year as shown below: July $72,000 August $84,000 September $96,000 October $108,000 November $120,000 December $102,000 The estimated total cash collections by Fresplanade Co. during October from accounts receivable is: (Points : 2)

$113,160. $101,400. $143,640. $125,640. $102,420.

Question 15.15. Thompson Refrigerators Inc. needs to prepare pro forma financial statements for the next fiscal year. To do so, the company must forecast its total overhead cost. The actual machine hours and total overhead cost are presented below for the past six months. MONTH TOTAL O/H MACHINE HOURS Jan $ 8,258 2,134 Feb 8,006 2,045 Mar 8,387 2,276 Apr 8,832 2,743 May 8,921 2,834 June 7,841 2,034 Using the high-low method, total monthly fixed overhead cost is calculated to be: (Points : 2)

$5,095.10 $5,462.80 $5,661.90 $5,875.30 $5,966.40