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 Faise 3. TF.03.013 The account analysis method can be used to estimate costs by classifying accounts in the general ledger as variable. True Faise 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 cast and an activity driver can provide evidence to managers about the correctness of a driver selection. 6. TF.03.019 True False The percentage of variability in the dependent variable explained by an independent variable (i.e. 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 high-low methods, is to provide information to end in the assessment of reliability of the estimated costs formule. Trus 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. d. 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. Non-unit-level drivers b. Activity based cost drivers c. Unit-level crivers d. All of these choices are correct. 10. MC.03.068 Drivers that explain changes in costs as factors other than changes in units produced are called: 11. MC.03.176. a. Non-unit-based cost drivers. b. Functional based cost drivers. c. Unit-based cost drivers d. None of these choices are correct. The following computer printout estimated overhead costs using multiple regression: Parameter Intercapt Setup hours. # of parts Estimate 1000 t for H(0) Parameter=0 Pr>t 1.96 0.0250 25 81.96 0.0001 100 9.50 0.0001 R Square (R2) 0.94 Standard Error (5) 75.00 160 Std. error of parameter 510.204 0.305 10.527 Observations During the year the company used 1,000 setup hours and 500 parts. What is the predicted overhead cost? a. $2,500 b. 576,000 c. $75,000 d. None of these choices are correct.. 12. MC.03.159 The following computer printout estimated overhead costs using regression: t for H(0) Parameter Estimate Parameter=0 Prt Std. error of parameter Intercept 100.41 4.81 0.0003 DLH 14.05 6.78 0.0001 20.88 2.07 R Square (R2) 0.80 Standard Error 25.03 (Se) 17 Observations Please find the following statistical table degrees of i freedom 90% 95% 99% degrees of freedom 90% 95% 99% 6.314 12.708 63.657 11 1.796 2.201 3.106 2.920 4.303 9.925 1.782 2.179 3.055 3 2.353 3.102 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 2.921 1.895 2.355 3.499 17 1.740 2.110 2.898 8 1.860 2.306 3.355 18 1,734 2.101 2.878 9 1.833 2.252 3.250 19 1.729 2.093 2.861 10 1.812 2.228 3.169 20 1.725 2.086 2.845 During the last accounting period 10,000 DLH were worked. The hypothesis tests of the cost parameters indicate(s) that) a. the slope is significantly different from zero. b. the intercept is significantly different from zero. c. both the slope and intercept are significant. d. both the slope and intercept are not significant. 13. MC.03.160 The following computer printout estimated overhead costs using regression: Parameter t for H(0) Estimate Intercept 200.41 DLH 14.05 R Square (R2) Standard Error (Se) Observations Please find the fallowing statistical table Parameter Q 4.81 Pri 0.0003 Std. error 20.99 of parameter 6.78 0.0001 2.07 0.80 25.03 17 degrees of freedom 90% 95% 99% degrees of 90% 95% 99% freedom 6.314 2.920 12.708 4.303 63.657 11 1.796 2.201 3.106 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 6 1.943 2.447 3.707 16 1.746 2.120 2.921 7 1.695 2.365 3.499 17 1.740 2.110 2.898 8 1.560 2.306 3.355 18 1.734 2.101 2.879 9 1.833 2.262 3.250 19 1.729 2.093 2.861. 10 1.912 2.228 3.169 20 1.725 2.086 2,845 During the last accounting period 10,000 DLH were worked. Find the t-value for o 90 percent confidence level. a. 6.314 b. 1.740 c. 2.920 d. 1.753. 14. MC.03.161 The following computer printout estimated overhead costs using regression: t for H(0) Parameter Estimate Intercept 100.41 CLH 14.05 R Square (R2) Standard Error (Sa) Observations Please find the following statistical table. Std. error Parameter 0 4.81 6.78 Przt 0.0003 0.0001 of parameter 20.88 2.07 0.80 25.03 17 degrees of freedom 90% 6.314 95% 12.708 99% degrees of freedom 90% 95% 99% 63.657 11 1.796 2.201 3.106 2 2.920 4.303 9.925 12 1.782 2.179 3.055 3 2.353 3.182 5.841 13 1.771 2.160 3.055 4 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 6 1.943 2,447 3.707 16 1.746 2.120 2.921 1.895 2.365 3.499 17 2.740 2.110 2.838 8 1.060 2.306 3.355 18. 1.734 2.101 2.878 9 1.833 2.262 3.250 19 1.729 2.093 2.861 10 1.812 2.228 3.169 20 1.725 2.085 2.845 During the last accounting period 10,000 DLH were worked. What is the confidence interval for the predicted overhead cost rounded to the nearest whole number for a 90 percent confidence level? a. predicted value between 87,000 and 130,500 b. 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 June July August September October Production Volume 75 115 190 60 135 Maintenance Costs $250 310 400 240 355 Using a computer or calculator, compute the estimate of variable cost per unit of production using the method of least aquarus. 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 incumed the following maintenance cost during a five month period: Month June July August September October Production Volume 75 115 190 60 135 Maintenance Costs $250 310 T 400 240 355 Using a computer or calculator, compute the estimate of the fixed partion of maintenance costs using the method of least squares.. Rounded to dollars, this value would be 17. MC.03.153 a. 5160 b. $66 c. $575 d. $166 The Stanford Company Incurred the following maintenance cost during a five month period: Month June July August September October Production Volume 75 115 190 60 135 Maintenance Costs $250 310 100 240 355 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. b. 5698. c. 5291. d. 5336. 18. MC.03.149 Spokane Corporation found its maintenance cost and sales dollars to be somewhat correlated. Last year's high and low cbservations were as follows: Maintenance Cost $45,000 $52,000 Sales $600,000 $800,000 What is the fixed portion of the maintenance cost? a. $28,000 b. $14,000 c. $60,000 d. $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 four-month period: Month May June Direct Labor Hours 3,600 4,800 Production Costs $15,000 17,500 ETT July August Total 6,000 4,800 19,200 20,000 17,500 $70,000 Let a b == - = Y = S Fixed production costs per month Variable production cnsis per direct labur hour Number of months Direct labor hours per month Total monthly production costs Summation Predict a cost for 5,000 labor hours. a. $17,700 b. $17,900 c. $30,400 d. $16,067 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 February May August November Cost of Electricity $8,100 9.000 10,200. 8.700 Direct Labor Hours 750 850 1,000 800 Using the high-low method, which of the following is the best equation? a. Y $900 $8.40X b. Y $900 + $12.00x c. Y$2,400+ $8.40X d. Y $1,800 - $8.40X 21. MC.03.140 Borron Enterprises has the following information about its truck fleet miles and operating costs: Year 2016 Miles 400,000 2017 480,000 2018 560,000 Operating Costs $256,000 280,000 320,000 What is the best estimate of total costs using the high-low method if the expected fleet mileage for 2018 is 500,000 miles? a. $256,000 b. 5296,000 c. $320,000 d. 5288,000 22. MC.03.138 The following information was available about supplies cost for the second quarter of the year: Month July August September Production Volume Supplies Cost 700 $3,185 1,600 600 7,100 2,700 Using the high-low method, the estimate of supplies cost at 1,000 units of production is a. $1,450. b. $4,900. c. $7,100. d. $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. $210,000 d. 515,000 24. MC.03.117 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 b. 7,500 change orders c. 6,500 change orders d. 3,500 change orders 25. MC.03.116. 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. a. 54 per change order b. $15 per change order c. $10 per change order c. $40 per change order 26. MC.03.098 Sonar 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 b. $420,000 c. $600,000 d. $620,000 27. MC.03.092 Marlowe Company currently leases a delivery truck from Burton Enterprises for a fee of $250 per month plus 50.40 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 e. 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, Inc., is economically preferable to a lease from Burton Enterprises regardless of the monthly use. d. Burton Enterprises is economically preferable above 1,000 miles per month. 28. MC.03.089 Assuring 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 or exhibit space at a convention c. a consultant paid $100 per hour with a maximum face of $2,000 d. 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? 2. $7,500 b. $3,000 c. $3,500 d. $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? 0000 a. employees who are paid $10 per hour and guaranteed a minimum weakly wage of $2.00 b. total direct material costs c. consultant paid $75 per hour with a maximum fee of $1,200 d. rent or exhibit space at a convention