MC
4. The salaries you could be earning by working rather than attending college
are an example of
A. Misplaced Cost
B. Opportunity Cost
C. Sunk Cost
D. Outlay Cost
9. Sunk costs
A. Are relevant to long-term decisions but not to short-term decisions
B. Are relevant to decision making
C. Are subtitles for opportunity costs
D. In themselves are not relevant to decision making
22.Differential costs
A. Are avoidable by changing a course of action
B. Include direct materials and direct labor but not factory overhead
C. Vary with changes in operations
D. Include direct labor and overhead but not direct materials
23.Salaries of accounts receivable clerks when one clerical worker is needed for
every 750 accounts receivable is an example of
A. Fixed cost
B. A step-variable cost
C. Mixed cost
D. Curvilinear cost
High-Low method
24.These are among the methods of segregating fixed cost and variable costs
except:
A. Simple regression analysis
B. Scattergraph
C. Breakeven method
D. High-low method
25.Mat company estimated its material handling costs at two activity levels as
follows:
Kilos Handled Cost
80,000 P 160,000
60,000 132,000
What is Mats estimated cost of handling 75,000 kilos?
A. P 150,000
B. P 153,000
C. P 157,500
D. P 132,000
Scattergraph Model
27.All of the following are assumptions underlying the validity of linear
regression output except
A. The errors are normally distributed and their mean is zero.
B. Certainty.
C. The variance of the errors is constant.
D. The independent variables are not correlated with each other. (cma)
28.In determining the cost behavior in business, the cost function is often
expressed as Y= a + bx. Which one of the following cost estimation methods
should not be used in estimating fixed and variable costs for the equation?
A. Graphic method.
B. Hign-and-low-point method.
C. Simple regression
D. Multiple regressions. (cma)
The actual shipping costs for the month amounted to P 10,500. The
appropriate monthly flexible budget allowance for shipping costs for purposes
of performance evaluation would be
A. P 10,250
B. P 11,075
C. P 10,340
D. P 10, 460 (rpcpa)
33.The segregation of fixed costs and variable costs is key to proper cost
analysis. Regression analysis is a technique used for this purpose. Identify the
appropriate statements below on regression analysis:
1. It assumes that a change in value of a dependent variable is related to the
change in the value of an independent variable.
2. A linear relationship between direct cost and production volume can cause
a problem when using accounting data for regression analysis.
3. It attempts to find an equation for the linear relationship among variable
4. It establishes a cause and effect relationship.
A. All four statements are appropriate.
B. Statements 1,3 and 4 only.
C. Statements 1 and 3 only
D. Statements 2 and 4 only
35.Regression analysis is
A. Estimates the independent cost variable.
B. Uses probability assumptions to determine total project costs.
C. Estimated the dependent cost variable
D. Ignores the coefficient of determination
E. Encompasses factors outside the relevant range.
36.Multiple regression analysis
A. Establishes a cause and effect relationship
B. Is not a sampling technique
C. Involves the of independent variable only
D. Produces measures of probable error
37.Pyramid Company has the data relating total production costs to volume for
each quarter during the past five years. During this period, production
volume has varied substantially, the method of production has been relatively
unchanged and the cost behavior has been complex. What is the most
appropriate method for estimating future production cost?
A. Linear programming
B. Cost-volume-profit earnings approach
C. Time-series or trend regression analysis
D. Program evaluation review technique. (rpcpa)
40.Quality control program employs many tools for problem definition and
analysis. A scatter diagram is one of these tools. The objective of a scatter
diagram is to
A. Display a population of items for analysis.
B. Show frequency distribution in graphic form
C. Divide a universe of data into homogenous groups
D. Show the vital trend and separate trivial items. (cia)
Least-Squares method
41.The equation(s) for applying the least squares method of computation of
fixed and variable production costs can be expressed as
A. xy = ax + bx
B. y = na + b
C. b = a + bx
D. XY = ax + bx
E. Y = na + bx (aicpa)
Questions 42 through 48 are based on the following information. Below is an
examination of last years financial statements of Mackenzie Park Co., which
manufactures and sells trivets. Labor hours and production cost for the last 4
months of the years, which are representative for the year, were as follows
Labor Hours Total Production Cost
September 2,500 P 20,000
October 3,500 25,000
November 4,500 30,000
December 3,500 25,000
Totals 14,000 100,000
Based upon the information given using the least squares method of computation
with letters listed below, select the best answer for each question.
If: a = Fixed variable per month
b = Variable production cost per labor hour
n = Number of months
x = labor hours per month
y = total monthly production costs
= Summation
42. The cost function derived by the simple least squares method (aicpa)
A. Is linear.
B. Must be tested for minima and maxima.
C. Is parabolic
D. Indicates maximum costs at the functions point of inflection.
Coefficient of correlation
46. In regression analysis, the coefficient of determination is a measure of
A. The amount of variation in the dependent variable explained by the
independent variables.
B. The amount of variation in the dependent variable unexplained by the
independent variables.
C. The slope of the regression line.
D. The predicted value of the independent variable. (cia)
47. Using the regression analysis, Thump Company graphed the following
relationship of its cheapest product lines sales with its customers income levels:
Sales
(P)
If there is a strong statistical relationship between the sales and the customers
income levels, which of the following equation bet represents the correlation
coefficient for this relationship?
A. -9.00
B. -0.93
C. +0.93
D. +9.00 (aicpa)
48. Omaha Company asked a CPAs assistance in planning the use of multiple
regression analysis to predict district sales. An equation has been estimated based
upon historical data, and a standard of error has been computed. When regression
analysis based upon past periods is used to predict for a future period, the standard
of error associated with the predicted value, in relation to be standard error for the
base equation, will be
A. Smaller.
B. Larger.
C. The same.
Larger or smaller, depending upon the circumstances. (aicpa)