1) Company "Y" has two service departments, DA and DB, and two production departments, P1 and P2.

	Services provided to:
Departments Costs	DA $92,000	DB $60,000	P1	P2
		15%	35	50
	20%		55	25

Required:

Allocate reciprocated Costs of DA and DB to departments.

	A.	DA ($17,010; $39,691; $56,701) and DB ($13,402; 36,855.5; $16,752.5)
	B.	DA ($16,082; $37,525; $53,608) DB ($15,216; 41,845; $19,020)
	C.	DA ($16,500; $35,000; $50,000) DB ($10,000; $27,500; $12,500)
	D.	None of them

What are the linear cost function equations for each of the following conditions? Use Y for estimated costs and X for activity of the cost driver

Direct manufacturing labor is $20 per hour; Direct materials cost $26 per cubic yard; Annual rent is $55,000

	A.	Y = $20 X; Y = $26X; Y = $55,000
	B.	X =$ 20Y; X = $26Y; X= $55,000
	C.	Y = $20; Y = $26, Y = $55,000
	D.	None of these

The Company "X" uses the high-low method to estimate the cost function. The information for 2017 is provided below:

Machine-hours Labor Costs

Highest observation of cost driver 300 $20,000

Lowest observation of cost driver 200 $ 15,000

What is the slope coefficient per machine-hour and what is the constant for the estimating cost equation?

	A.	$50.00 and 5,000
	B.	$56.66 and 70.58
	C.	$40.00 and 3,000
	D.	None of them

Floss Corporation contains the following data in the table below. Floss Corporation is trying to use high-low method in measuring the cost functions.

Month	Cost	Hours
Jan	$52,100	5,140
Feb	$44,000	3,600
March	$16,100	1,200
April	$51,100	5,100
May	$12,100	1,140
June	$37,000	2,700

What is the estimated total cost with an operating level of 3100 hours?

	A.	31,700
	B.	33,470
	C.	31,408
	D.	None of them

A linear cost function can represent:

	A.	All these answers are correct
	B.	mixed cost behaviors
	C.	fixed cost behaviors
	D.	variable cost behaviors

At the Company"Z" the cost of the library and information center has always been charged to the various departments based upon number of employees. Recently, opinions gathered from the department managers indicate that the number of engineers within a department might be a better predictor of library and information center costs.

Total library and information center costs are $200,000

Department 1 2 3

Number of employees 25 50 12

The number of engineers 0 17 2

Which cost estimation method is being used by Company Z?

	A.	Conference method
	B.	Quantitative analysis method
	C.	Industrial engineering method
	D.	Account analysis method

The Industrial Engineering Method

	A.	All these answers are correct
	B.	Estimates cost functions by analyzing the relationship between inputs and outputs in physical terms
	C.	Very thorough and detailed, but also costly and time-consuming
	D.	Also called the work-measurement method

The account analysis method estimates cost functions:

	A.	by classifying cost accounts as variable, fixed, or mixed based on qualitative analysis
	B.	using time-and-motion studies
	C.	at a high cost, which renders it seldom used
	D.	in a manner that cannot be usefully combined with any other cost estimation methods