Deck 2: Cost Behaviour

Question 1

Which activity driver explains changes in costs as the number of units produced changes?

A)non-unit-level drivers
B)activity-based cost drivers
C)unit-level drivers
D)batch-level drivers

Answer 1

C

Question 2

Which of the following costs is a variable cost?

A)supervisors' salaries
B)research and development
C)materials used in production
D)rent

Answer 2

C

Question 3

A manufacturing company pays an assembly line worker $10 per hour.What is the proper classification of this labour cost?

A)fixed cost
B)semi-variable cost
C)variable cost
D)mixed cost

Answer 3

C

Question 4

Which activity driver explains changes in costs as factors other than changes in units produced?

A)functional-based cost drivers
B)non-unit-based cost drivers
C)unit-based cost drivers
D)variable-based cost drivers

Question 5

In a traditional cost management system,what is the only type of driver that cost behaviour is assumed to be driven by?

A)unit-based cost drivers
B)non-unit-level cost drivers
C)activity-based cost drivers
D)variable-based cost drivers

Question 6

What are direct materials an example of?

A)fixed cost
B)variable cost
C)step cost
D)mixed cost

Question 7

Which of the following would be an example of a unit-based cost driver?

A)engineering orders
B)direct labour hours
C)inspection hours
D)material moves

Question 8

Fixed cost per unit is $9 when 20,000 units are produced and $6 when 30,000 units are produced.What is the total fixed cost when nothing is produced?

A)$15
B)$120,000
C)$180,000
D)$270,000

Question 9

When the volume of activity increases within the relevant range,how does the fixed cost per unit respond?

A)It decreases.
B)It decreases at first,then increases.
C)It increases at first,then decreases.
D)It increases.

Question 10

What does cost behaviour analysis focus on?

A)how costs react to changes in profit
B)how costs change over time
C)how costs react to changes in activity level
D)how costs act in the long term

Question 11

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)total direct material costs
B)a consultant paid $75 per hour with a maximum fee of $1,200
C)employees who are paid $10 per hour and guaranteed a minimum weekly wage of $200
D)rent on exhibit space at a convention

Question 12

What is a supervisor's salary of $2,000 per month an example of?

A)fixed cost
B)variable cost
C)step cost
D)mixed cost

Question 13

When are costs valid for analysis?

A)When costs reach a level above the relevant range,they are considered appropriate for analysis.
B)When linear estimates of an economist's curvilinear cost function are within the relevant range,they are valid for analysis.
C)When costs reach a level below the relevant range,they are considered appropriate for analysis.
D)When the nonlinear relevant range is ignored only those costs outside this range may be considered for analysis.

Question 14

Holly Corporation has the following costs for 1,000 units: $$\begin{array} { l c c } & \text { Total Cost } & \text { Cost per Unit } \\\text { Direct materials } & 7,500 & 1.50 \\\text { Direct labour } & 3,500 & 7.50\\\text { Depreciation an building }& 30,000 & 30.00 \\\end{array}$$ What is the total amount of direct materials for 100 units?

A)$1.50
B)$3.00
C)$150.00
D)$225.00

Question 15

As the volume of activity increases within the relevant range,how does the variable cost per unit respond?

A)It decreases.
B)It decreases at first,then increases.
C)It remains the same.
D)It increases.

Question 16

What is the term for the range of activity within which a linear cost function is valid?

A)normal range
B)relevant range
C)activity range
D)fixed range

Question 17

Refer to the figure.Which graph represents fixed costs?

A)I
B)II
C)III
D)IV

Question 18

The direct material cost is $10,000 when 2,000 units are produced.What is the direct material cost for 2,500 units produced?

A)$8,000
B)$10,000
C)$12,500
D)$15,000

Question 19

Which statement best describes how fixed and variable costs behave per unit and in total?

A)Both costs are constant when considered on a per-unit basis.
B)Both costs are constant when considered on a total basis.
C)Fixed costs are constant in total and variable costs are constant per unit.
D)Variable costs are constant in total and fixed costs are constant per unit.

Question 20

Which statement best describes cost behaviour?

A)In the long run,all costs are fixed.
B)Variable costs decrease in total in relation to the activity driver.
C)Total fixed costs increase or decrease inversely in relation to the activity driver.
D)Unit variable cost remains the same in relation to the activity.

Question 21

Which of the following is an example of improved managerial control and decision making under the activity-based resource usage model?

A)knowing the best way to use excess activity capacity in the system
B)maximizing individual unit performance
C)increasing the allocation of costs
D)focusing on managing costs rather than activities

Question 22

When a firm acquires the resources needed to perform an activity,what is it obtaining?

A)practical capacity
B)resource usage
C)activity capacity
D)unused capacity

Question 23

What type of cost is incurred for the acquisition of short-run activity capacity,usually as the result of yearly planning?

A)discretionary fixed expenses
B)committed fixed expenses
C)mixed costs
D)step-variable costs

Question 24

Which of the following is an example of a committed fixed expense?

A)depreciation on a factory building
B)supervisor's salary
C)direct labour
D)insurance on a building

Question 25

What does a steep slope in the variable cost line indicate?

A)a low variable cost per unit
B)a high influence of activity on total variable costs
C)a low influence of activity on total variable costs
D)a large amount of fixed costs

Question 26

If production volume increases from 8,000 to 10,000 units,how will the costs respond?

A)Total costs will increase by 20 percent.
B)Total costs will increase by 25 percent.
C)Total variable costs will increase by 25 percent.
D)Mixed and variable costs will increase by 25 percent.

Question 27

What is not a characteristic of flexible resources?

A)They are supplied as needed.
B)They are acquired from outside sources and do not require a long-term commitment.
C)They have no unused capacity.
D)They are supplied in advance of usage.

Question 28

What is an equipment lease that specifies a payment of $5,000 per month plus $8 per machine hour used an example of?

A)a fixed cost
B)a variable cost
C)a step cost
D)a mixed cost

Question 29

What do mixed costs,by definition,contain?

A)product and period costs
B)fixed and variable costs
C)direct and indirect costs
D)controllable and non-controllable costs

Question 30

What type of incurred cost provides long-term activity capacity,usually as the result of strategic planning?

A)discretionary fixed expenses
B)committed fixed expenses
C)mixed costs
D)step-variable costs

Question 31

If all the activity capacity acquired is not used,what is this an example of?

A)practical capacity
B)activity capacity
C)unused capacity
D)ideal capacity

Question 32

What is acquired from outside sources,where the terms of acquisition do NOT require any long-term commitment for any given amount of the resource?

A)flexible resources
B)committed resources
C)discretionary fixed expenses
D)committed fixed expenses

Question 33

What is the term for the efficient level of activity performance?

A)activity capacity
B)practical capacity
C)unused capacity
D)acquired capacity

Question 34

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 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)a consultant paid $100 per hour with a maximum fee of $2,000
C)employees who are paid $15 per hour and guaranteed a minimum weekly wage of $300
D)rent on exhibit space at a convention

Question 35

When is the linearity assumption most likely to be a close approximation for an underlying nonlinear cost function?

A)within a relevant range of activity
B)over the long run
C)for short-run periods
D)at lower levels of activity only

Question 36

Adams Corporation rents a truck for a flat fee plus an additional charge per mile.What type of cost is the rent?

A)fixed cost
B)mixed cost
C)variable cost
D)step cost

Question 37

Which of the following is an example of a discretionary fixed expense?

A)direct labour
B)depreciation on a factory building
C)insurance on a building
D)property taxes on a factory building

Question 38

Boss Company currently leases a delivery van from Check 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 van,which can be leased from David,Inc.,for a fee of $600 per month plus $0.05 per mile.All operating costs and fuel are included in the rental fees.Which delivery van would it be economically preferable to lease?

A)David,Inc.is economically preferable to a lease from Check Enterprises regardless of the monthly use.
B)Check Enterprises is economically preferable below 1,000 miles per month.
C)Check Enterprises is economically preferable to a lease from David,Inc.,regardless of the monthly use.
D)Check Enterprises is economically preferable above 1,000 miles per month.

Question 39

What type of expense results when organizations acquire many multi-period service capacities by paying cash up front or by entering into an explicit contract that requires periodic cash payments?

A)managed fixed expenses
B)committed fixed expenses
C)discretionary fixed expenses
D)period expenses

Question 40

What is characteristic of committed resources?

A)They are supplied as needed.
B)They are acquired from outside sources and do not require a long-term commitment.
C)They may exceed the demand for their usage.
D)They are free to purchase as much or as little as is needed.

Question 41

A hospital requires one nurse for each eight patients.What type of cost is this an example of?

A)a fixed cost
B)a variable cost
C)a step cost
D)a mixed cost

Question 42

In the formula Y = F + VX,what does X refer to?

A)the slope
B)the intercept
C)the dependent variable
D)the independent variable

Question 43

In the formula Y = F + VX,what does F refer to?

A)the slope
B)the intercept
C)the dependent variable
D)the independent variable

Question 44

What is characteristic of the scatterplot method of cost estimation?

A)The scatterplot method is influenced by extreme observations.
B)The scatterplot method requires the use of judgment.
C)The scatterplot method uses the least-squares method.
D)The scatterplot method is superior to other methods in its ability to distinguish between discretionary and committed fixed costs.

Question 45

How are total costs computed?

A)Fixed costs + (Variable costs per unit * Unit volume)
B)(Fixed costs per unit * Unit volume)+ Variable costs
C)Fixed costs per unit + (Variable costs per unit * Unit volume)
D)(Fixed costs per unit * Unit volume)+ Variable costs per unit

Question 46

In the formula Y = F + VX,what does Y refer to?

A)the slope
B)the intercept
C)the dependent variable
D)the independent variable

Question 47

Which of the following decision-making tools would NOT be useful in determining the slope and intercept of a mixed cost?

A)linear programming
B)least-squares method
C)high-low method
D)scattergraphs

Question 48

Under what circumstances might the high-low method give unsatisfactory results?

A)if the data points all fall on a line
B)if volume of activity is heavy
C)if volume of activity is light
D)if the points are unrepresentative

Question 49

Which of the following is NOT an advantage of the method of least squares over the high-low method?

A)A statistical method is used to mathematically derive the cost function.
B)Only two points are used to develop the cost function.
C)The squared differences between actual observations and the line (cost function)are minimized.
D)All the observations have an effect on the cost function.

Question 50

What are salaries paid to shift supervisors an example of?

A)step-variable cost
B)step-fixed cost
C)variable cost
D)mixed cost

Question 51

In the formula Y = F + VX,what does V refer to?

A)the slope
B)the intercept
C)the dependent variable
D)the total variable costs

Question 52

Which cost behaviour method may use time and motion studies to determine the activities and amounts for cost behaviour analysis?

A)account analysis method
B)industrial engineering method
C)regression analysis
D)high-low method

Question 53

The following cost functions were developed for manufacturing overhead costs: $$\begin{array} { l l } \text { Manufacturing Overhead Cost } & \text { Cost Function } \\\text { Electricity } & \$ 200 + \$ 20 \text { per direct labour hour } \\\text { Maintenance } & \$ 400 + \$ 30 \text { per direct labour hour } \\\text { Supervisors' salaries } & \$ 20000 \text { per month } \\\text { Indirect materials } & \$ 16 \text { per direct labour hour }\end{array}$$ If June production is expected to be 2,000 units requiring 3,000 direct labour hours,what would be the estimated manufacturing overhead costs?

A)$20,733
B)$152,600
C)$198,000
D)$218,600

Question 54

Which of the following is an example of a step-fixed cost?

A)cost of disposable surgical scissors,which are purchased in increments of 100
B)cost of soaking solution to clean jewellery (each jar can soak 50 rings before losing effectiveness)
C)cost of tuition at $300 per credit hour up to 15 credit hours (hours taken in excess of 15 hours are free)
D)cost of disposable gowns used by patients in a hospital

Question 55

If at a given volume total costs and fixed costs are known,how are the variable costs per unit computed?

A)(Total costs - Fixed costs)/Unit volume
B)(Total costs/Unit volume)- Fixed costs
C)(Total costs * Unit volume)- (Fixed costs/Unit volume)
D)Total costs - (Fixed costs/Unit volume)

Question 56

English Corporation analyzed the relationship between total factory overhead and changes in direct labour hours.It found the following:
Y = $6,000 + $6X

What is the Y in the equation an estimate of?

A)total variable costs
B)total direct labour hours
C)total factory overhead
D)total fixed costs

Question 57

Assume the following information: $$\begin{array} { l c } \text { Volume } & \text { Total Cos } \\\hline 80 \text { units } & \$ 1,200 \\88 \text { units } & \$ 1,300 \\96 \text { units } & \$ 1,400\end{array}$$ What is the variable cost per unit?

A)$12.50
B)$13.75
C)$14.78
D)$15.00

Question 58

Which of the following is NOT a method of determining cost behaviour?

A)industrial engineering method
B)account analysis method
C)statistical and quantitative methods
D)confidence interval model

Question 59

In the formula Y = F + VX,what does VX refer to?

A)the total variable costs
B)the intercept
C)the dependent variable
D)the independent variable

Question 60

Which of the following is NOT a weakness of the high-low method?

A)Only two observations are used to develop the cost function.
B)The high and low activity levels may not be representative.
C)The method does not detect if the cost behaviour is nonlinear.
D)The method is relatively complex and difficult to apply.

Question 61

The following information was taken from a computer printout generated with the least-squares method for use in estimating overhead costs:
$\begin{array}{lr}\text { Slope } & 45 \\\text { Intercept } & 5,700 \\\text { Correlation coefficient } & .72 \\\text { Activity variable } & \text { Direct labour hours }\end{array}$
What is the cost formula?

A)Overhead = $5,700 - $45X
B)Overhead = $5,700 + $45X
C)Overhead = $5,700 + ($45 * 0.72)
D)Overhead = $5,700 * 0.72

Question 62

Hook Company wants to develop a cost estimating equation for its monthly cost of electricity.It has the following data: $\begin{array}{lcc}\text { Month } & \text { Cost of Electricity } & \text { Direct Labour Hours } \\\hline\text { January } & \$ 8,100 & 750 \\\text{April} & 9,000 & 850 \\\text { July } & 10,200 & 1,000 \\\text { October } & 8,700 & 800\end{array}$ 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 = $1,800 + $8.40X
D)Y = $2,400 + $8.40X

Question 63

The following information is available for electricity costs for the last six months of the year:
$$\begin{array} { l c c } \text { Month } & \text { Production Volume } & \text { Electricity Costs } \\\hline\text { July } & 1,400 & \$ 2,200 \\\text { August } & 2,800 & 5,400 \\\text { September } & 3,200 & 5,700 \\\text { October } & 1,750 & 3,900 \\\text { November } & 1,200 & 2,400 \\\text { December } & 2,100 & 4.050\end{array}$$

-Refer to the figure.Using the high-low method,what is the estimated variable cost per unit of production?

A)$1.26
B)$1.53
C)$1.65
D)$1.75

Question 64

In the method of least squares,what is the deviation?

A)the difference between the predicted and estimated costs
B)the difference between the predicted and average costs
C)the difference between the predicted and budgeted costs
D)the difference between the predicted and actual costs

Question 65

What is a characteristic of the cost function derived by the least-squares cost estimation method?

A)It is linear.
B)It is curvilinear.
C)It is parabolic.
D)It is quadratic.

Question 66

The following computer printout estimated overhead costs using regression:
$\begin{array}{|l|l|l|l|l|l|l|l|}\hline\text { Degrees}&&&&\text { Degrees}\\\text { of}&&&&\text { of}\\\text { Freedom } & 90 \% & 95 \% & 99 \% & \text { Freedom } & 90 \% & 95 \% & 99 \%\\\hline 1 & 6.314 & 12.708 & 63.657 & 11 & 1.796 & 2.201 & 3.106 \\\hline 2 & 2.920 & 4.303 & 9.925 & 12 & 1.782 & 2.179 & 3.055 \\\hline 3 & 2.353 & 3.182 & 5.841 & 13 & 1.771 & 2.160 & 3.055 \\\hline 4 & 2.132 & 2.776 & 4.604 & 14 & 1.761 & 2.145 & 3.012 \\\hline 5 & 2.015 & 2.571 & 4.032 & 15 & 1.753 & 2.131 & 2.947 \\\hline 6 & 1.943 & 2.447 & 3.707 & 16 & 1.746 & 2.120 & 2.921 \\\hline 7 & 1.895 & 2.365 & 3.499 & 17 & 1.740 & 2.110 & 2.898 \\\hline 8 & 1.860 & 2.306 & 3.355 & 18 & 1.734 & 2.101 & 2.878 \\\hline 9 & 1.833 & 2.262 & 3.250 & 19 & 1.729 & 2.093 & 2.861 \\\hline 10 & 1.812 & 2.228 & 3.169 & 20 & 1.725 & 2.086 & 2.845 \\\hline\end{array}$ During the last accounting period 10,000 DLH were worked.

-Refer to the figure.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 75,600 and 125,600
B)predicted value between 100,557 and 100,644
C)predicted value between 100,600 and 175,648
D)predicted value between 175,648 and 200,000

Question 67

Lee Corporation manufactures and sells party items. The following representative direct labour hours and production costs are provided for a four-month period:
$\begin{array}{ccc} \text { Month } & \text { Direct Labour Hours } & \text { Production } \\\hline \text { January } & 3,600 & \$ 15,000 \\ \text { February } & 4,800 & 17,500 \\ \text { March } & 6,000 & 20,000 \\ \text { April } & 4,800 & 17,500 \\\text { Total } & 19.200 & \$ 70.000 \\\end{array}$ Let $\quad$ a = Fixed production costs per month
$\quad$ $\quad$ b = Variable production costs per direct labour hour
$\quad$ $\quad$ n = Number of months
$\quad$ $\quad$ X = Direct labour hours per month
$\quad$ $\quad$ Y = Total monthly production costs
$\quad$ $\quad$ s = Summation

-Refer to the figure.Using the high-low method,what is the cost formula for estimating costs?

A)Total cost = $2.08X
B)Total cost = $5,000 + 2.08X
C)Total cost = $7,500 + $2.08X
D)Total cost = $20,000 + $2.08X

Question 68

Baker Enterprises developed a cost function for manufacturing overhead costs of Y = $8,000 + $1.60X.What are the estimated manufacturing overhead costs at 10,000 units of production?

A)$16,000
B)$17,600
C)$24,000
D)$26,000

Question 69

The following computer printout estimated overhead costs using regression:
$\begin{array}{|l|l|l|l|l|l|l|l|}\hline\text { Degrees}&&&&\text { Degrees}\\\text { of}&&&&\text { of}\\\text { Freedom } & 90 \% & 95 \% & 99 \% & \text { Freedom } & 90 \% & 95 \% & 99 \%\\\hline 1 & 6.314 & 12.708 & 63.657 & 11 & 1.796 & 2.201 & 3.106 \\\hline 2 & 2.920 & 4.303 & 9.925 & 12 & 1.782 & 2.179 & 3.055 \\\hline 3 & 2.353 & 3.182 & 5.841 & 13 & 1.771 & 2.160 & 3.055 \\\hline 4 & 2.132 & 2.776 & 4.604 & 14 & 1.761 & 2.145 & 3.012 \\\hline 5 & 2.015 & 2.571 & 4.032 & 15 & 1.753 & 2.131 & 2.947 \\\hline 6 & 1.943 & 2.447 & 3.707 & 16 & 1.746 & 2.120 & 2.921 \\\hline 7 & 1.895 & 2.365 & 3.499 & 17 & 1.740 & 2.110 & 2.898 \\\hline 8 & 1.860 & 2.306 & 3.355 & 18 & 1.734 & 2.101 & 2.878 \\\hline 9 & 1.833 & 2.262 & 3.250 & 19 & 1.729 & 2.093 & 2.861 \\\hline 10 & 1.812 & 2.228 & 3.169 & 20 & 1.725 & 2.086 & 2.845 \\\hline\end{array}$ During the last accounting period 10,000 DLH were worked.

-Refer to the figure.What is the model?

A)Overhead = 100.41 + 14.05 DLH
B)Overhead = 4.81 + 6.78 DLH
C)Overhead = 14.05 + 100.41 DLH
D)DLH = 4.81 + 6.78 Overhead

Question 70

The following information was available about supplies cost for the second quarter of the year: $$\begin{array} { c c c } \text { Month } & \text { Production Volume } & \text { Supplies Cost } \\\hline\text { April } & 700 & \$ 3,185 \\\text { May } & 1,600 & 7,100 \\\text { June } & 600 & 2,700\end{array}$$ Using the high-low method,what is the estimate of supplies cost at 1,000 units of production?

A)$2,700
B)$4,460
C)$4,900
D)$7,100

Question 71

The following computer printout estimated overhead costs using regression:
$\begin{array}{|l|l|l|l|l|l|l|l|}\hline\text { Degrees}&&&&\text { Degrees}\\\text { of}&&&&\text { of}\\\text { Freedom } & 90 \% & 95 \% & 99 \% & \text { Freedom } & 90 \% & 95 \% & 99 \%\\\hline 1 & 6.314 & 12.708 & 63.657 & 11 & 1.796 & 2.201 & 3.106 \\\hline 2 & 2.920 & 4.303 & 9.925 & 12 & 1.782 & 2.179 & 3.055 \\\hline 3 & 2.353 & 3.182 & 5.841 & 13 & 1.771 & 2.160 & 3.055 \\\hline 4 & 2.132 & 2.776 & 4.604 & 14 & 1.761 & 2.145 & 3.012 \\\hline 5 & 2.015 & 2.571 & 4.032 & 15 & 1.753 & 2.131 & 2.947 \\\hline 6 & 1.943 & 2.447 & 3.707 & 16 & 1.746 & 2.120 & 2.921 \\\hline 7 & 1.895 & 2.365 & 3.499 & 17 & 1.740 & 2.110 & 2.898 \\\hline 8 & 1.860 & 2.306 & 3.355 & 18 & 1.734 & 2.101 & 2.878 \\\hline 9 & 1.833 & 2.262 & 3.250 & 19 & 1.729 & 2.093 & 2.861 \\\hline 10 & 1.812 & 2.228 & 3.169 & 20 & 1.725 & 2.086 & 2.845 \\\hline\end{array}$ During the last accounting period 10,000 DLH were worked.

-Refer to the figure.What is the t-value for a 90 percent confidence level?

A)1.740
B)1.753
C)2.920
D)6.314

Question 72

The following information is available for electricity costs for the last six months of the year:
$$\begin{array} { l c c } \text { Month } & \text { Production Volume } & \text { Electricity Costs } \\\hline\text { July } & 1,400 & \$ 2,200 \\\text { August } & 2,800 & 5,400 \\\text { September } & 3,200 & 5,700 \\\text { October } & 1,750 & 3,900 \\\text { November } & 1,200 & 2,400 \\\text { December } & 2,100 & 4.050\end{array}$$

-Refer to the figure.What are the fixed costs?

A)$100
B)$200
C)$420
D)$5,400

Question 73

Which of the following is an advantage of using the scatterplot method over the high-low method to estimate costs?

A)It is a statistical method to determine the "best fit."
B)A cost analyst can review the data visually and eliminate outliers.
C)The cost formula relies on the objective judgment of the analyst.
D)The cost formula can be determined simply by looking at two points of data.

Question 74

The following computer printout estimated overhead costs using regression:
$\begin{array}{|l|l|l|l|l|l|l|l|}\hline\text { Degrees}&&&&\text { Degrees}\\\text { of}&&&&\text { of}\\\text { Freedom } & 90 \% & 95 \% & 99 \% & \text { Freedom } & 90 \% & 95 \% & 99 \%\\\hline 1 & 6.314 & 12.708 & 63.657 & 11 & 1.796 & 2.201 & 3.106 \\\hline 2 & 2.920 & 4.303 & 9.925 & 12 & 1.782 & 2.179 & 3.055 \\\hline 3 & 2.353 & 3.182 & 5.841 & 13 & 1.771 & 2.160 & 3.055 \\\hline 4 & 2.132 & 2.776 & 4.604 & 14 & 1.761 & 2.145 & 3.012 \\\hline 5 & 2.015 & 2.571 & 4.032 & 15 & 1.753 & 2.131 & 2.947 \\\hline 6 & 1.943 & 2.447 & 3.707 & 16 & 1.746 & 2.120 & 2.921 \\\hline 7 & 1.895 & 2.365 & 3.499 & 17 & 1.740 & 2.110 & 2.898 \\\hline 8 & 1.860 & 2.306 & 3.355 & 18 & 1.734 & 2.101 & 2.878 \\\hline 9 & 1.833 & 2.262 & 3.250 & 19 & 1.729 & 2.093 & 2.861 \\\hline 10 & 1.812 & 2.228 & 3.169 & 20 & 1.725 & 2.086 & 2.845 \\\hline\end{array}$ During the last accounting period 10,000 DLH were worked.

-Refer to the figure.What do the hypothesis tests of the cost parameters indicate?

A)The slope is significantly different from zero.
B)The intercept is significantly different from zero.
C)Both the slope and intercept are not significant.
D)Both the slope and intercept are significant.

Question 75

The following computer printout estimated overhead costs using linear regression: Table of Selected Values: t Distribution
$\begin{array}{cccc} \text { Degrees of Freedom } & 90 \% & 95 \% & 99 \% \\\hline 15 & 1.753 & 2.131 & 2.947 \\ 16 & 1.746 & 2.120 & 2.921 \\ 17 & 1.740 & 2.110 & 2.898 \\18 & 1.734 & 2.101 & 2.878 \\19 & 1.729 & 2.093 & 2.861 \\\end{array}$ What is the interval around Y if 95 percent confidence is desired?

A)Y ± 20.024
B)Y ± 43.87759
C)Y ± 52.8133
D)Y ± 53.33893

Question 76

Greene Enterprises has the following information about its truck fleet miles and operating costs: $$\begin{array} { c c c } \text { Year } & \text { Miles } & \text { Operating Costs } \\\hline2010 & 400,000 & \$ 256,000 \\2011 & 480,000 & 280,000 \\2012 & 560,000 & 320,000\end{array}$$ What is the best estimate of total costs using the high-low method if the expected fleet mileage for 2008 is 500,000 miles?

A)$256,000
B)$288,000
C)$296,000
D)$320,000

Question 77

Kane Corporation found its maintenance cost and sales dollars to be somewhat correlated.Last year's high and low observations were as follows: $\begin{array}{cc}\text { Maintenance Cost } & \text { Sales } \\\hline\$ 36,000 & \$ 400,000 \\\$ 42,000 & \$ 600,000\end{array}$ What is the fixed portion of the maintenance cost?

A)$12,000
B)$24,000
C)$30,000
D)$42,000

Question 78

Lee Corporation manufactures and sells party items. The following representative direct labour hours and production costs are provided for a four-month period:
$\begin{array}{ccc} \text { Month } & \text { Direct Labour Hours } & \text { Production } \\\hline \text { January } & 3,600 & \$ 15,000 \\ \text { February } & 4,800 & 17,500 \\ \text { March } & 6,000 & 20,000 \\ \text { April } & 4,800 & 17,500 \\\text { Total } & 19.200 & \$ 70.000 \\\end{array}$ Let $\quad$ a = Fixed production costs per month
$\quad$ $\quad$ b = Variable production costs per direct labour hour
$\quad$ $\quad$ n = Number of months
$\quad$ $\quad$ X = Direct labour hours per month
$\quad$ $\quad$ Y = Total monthly production costs
$\quad$ $\quad$ s = Summation

-Refer to the figure.How can the monthly production cost be expressed?

A)X = aY + b
B)Y = a + bX
C)X = a + bY
D)Y = b + aX

Question 79

The following computer printout estimated overhead costs using regression:
$\begin{array}{|l|l|l|l|l|l|l|l|}\hline\text { Degrees}&&&&\text { Degrees}\\\text { of}&&&&\text { of}\\\text { Freedom } & 90 \% & 95 \% & 99 \% & \text { Freedom } & 90 \% & 95 \% & 99 \%\\\hline 1 & 6.314 & 12.708 & 63.657 & 11 & 1.796 & 2.201 & 3.106 \\\hline 2 & 2.920 & 4.303 & 9.925 & 12 & 1.782 & 2.179 & 3.055 \\\hline 3 & 2.353 & 3.182 & 5.841 & 13 & 1.771 & 2.160 & 3.055 \\\hline 4 & 2.132 & 2.776 & 4.604 & 14 & 1.761 & 2.145 & 3.012 \\\hline 5 & 2.015 & 2.571 & 4.032 & 15 & 1.753 & 2.131 & 2.947 \\\hline 6 & 1.943 & 2.447 & 3.707 & 16 & 1.746 & 2.120 & 2.921 \\\hline 7 & 1.895 & 2.365 & 3.499 & 17 & 1.740 & 2.110 & 2.898 \\\hline 8 & 1.860 & 2.306 & 3.355 & 18 & 1.734 & 2.101 & 2.878 \\\hline 9 & 1.833 & 2.262 & 3.250 & 19 & 1.729 & 2.093 & 2.861 \\\hline 10 & 1.812 & 2.228 & 3.169 & 20 & 1.725 & 2.086 & 2.845 \\\hline\end{array}$ During the last accounting period 10,000 DLH were worked.

-Refer to the figure.What does the coefficient of determination in this model indicate?

A)The slope is 14.05,which is the variable costs.
B)The intercept is 100.41,which is the fixed costs.
C)Eighty percent of the variation in overhead variable is explained by DLH.
D)The slope is 14.05 and it is significant.

Question 80

Lee Corporation manufactures and sells party items. The following representative direct labour hours and production costs are provided for a four-month period:
$\begin{array}{ccc} \text { Month } & \text { Direct Labour Hours } & \text { Production } \\\hline \text { January } & 3,600 & \$ 15,000 \\ \text { February } & 4,800 & 17,500 \\ \text { March } & 6,000 & 20,000 \\ \text { April } & 4,800 & 17,500 \\\text { Total } & 19.200 & \$ 70.000 \\\end{array}$ Let $\quad$ a = Fixed production costs per month
$\quad$ $\quad$ b = Variable production costs per direct labour hour
$\quad$ $\quad$ n = Number of months
$\quad$ $\quad$ X = Direct labour hours per month
$\quad$ $\quad$ Y = Total monthly production costs
$\quad$ $\quad$ s = Summation

-Refer to the figure.What would the cost be for 5,000 labour hours?

A)$16,667
B)$17,700
C)$17,900
D)$30,400