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UNIT 3 QUIZ 1. Question : Which of the following provides the most accurate cost estimation? Student Answer: Regression analysis with R-squared of 0.12. Regression analysis with F value of 1.2 High-low method. Regression analysis with R squared of 0.89.
Question 2. Question : Data collected on the cost objects and cost drivers for cost estimation must be: Student Answer: Brief and limited. Exhaustive. Concrete. Consistent and accurate. Varied.
Question 3. Question : The independent variable in regression analysis is: Student Answer: The cost to be estimated. The cost driver used to estimate the value of the dependent variable. Hard to define because of its independence. Usually expressed as a range of values. Always a volume-based cost driver.
UNIT 3 QUIZ Question 4. Question : A range around the regression line within which the management accountant can rely that the actual value of the predicted cost will fall is referred to as: Student Answer: A relevant range. A goodness of fit. A confidence interval. A t-value A p-value.
Question 5. Question : The name for a variety of methods used to examine how an amount will change if factors involved in predicting that amount change is:
Student Answer: Sensitivity analysis. Contribution margin analysis. Factor analysis. Cost analysis. Cost-volume-profit analysis.
Question 6. Question : CVP analysis for revenue and cost planning has the primary objective of: Student Answer: Maximizing revenue. Minimizing costs. Both revenue maximization and cost minimization. Achieving a desired level of sales and profits. Consistently producing sales above the breakeven level.
Question 7. Question : The CVP profit-planning model assumes that over the relevant range of activity: Student Answer: Only revenues are linear. Only revenues and fixed costs are linear. Only revenues and variable costs are linear.
Variable cost per unit decreases because of increases in productivity. Both revenues and total costs are linear.
Question 8. Question : The degree of operating leverage (DOL), at any sales volume, is equal to: Student Answer: (Operating profit - fixed expenses) รท sales. (Sales - variable expenses) รท operating profit. Operating profit รท (fixed expenses - variable expenses). Sales รท (fixed expenses - operating profit). Fixed costs รท Total contribution margin. Question 9. Question : Sales forecasts are the first step in the budgeting process of a merchandising firm because: Student Answer: The revenue data are easiest to generate. Sales information is precise in amount. Sales personnel have the quickest access to data. Sales forecasts are the most objective of all budgeted activities. Almost all activities of a firm emanate from (i.e., are linked to) estimated sales demand.
UNIT 3 QUIZ Question 10. Question : All of the following represent alternative approaches to the traditional budget-preparation process except which one? Student Answer: Master budgeting. Kaizen budgeting. Continuous-improvement budgeting. Activity-based budgeting (ABB) Time-driven activity based budgeting (TDABB)
Question 11. Question : The type of compensation plan that focuses on the difference between actual performance (sales, operating income, etc.) and budgeted performance is refers to: Student Answer: The use of flexible budgets for performance evaluation. The use of the master budget for performance evaluation. The use of "rolling financial forecasts." The use of a fixed-performance contract. The use of a Kaizen forecast.
Question 12. Question : The act of encouraging non-value-adding actions on the part of
management in order to improve indicated performance is referred to as: Student Answer: Goal congruency. Gaming the performance indicator. The use of fixed-performance contract. Linear optimization analysis. The use of a relative-performance contract.
UNIT 3 QUIZ Question 13. Question : Stylish Sitting is a retailer of office chairs located in San Francisco, California. Due to increased market competition, the CFO of Stylish Sitting has grown worried about the firm's upcoming income stream. The CFO asked you to use the company financial information provided below. Sales Price $75.00 Per Unit Variable Costs: Invoice Cost 41.70 Sales Commission 18.30 Total Per Unit Variable Cost $60.00 Fixed Costs: Advertising $ 56,000 Rent 78,000 Salaries 226,000 Total Annual Fixed Costs $360,000
If 40,000 office chairs were sold, Stylish Sitting's operating income would be: Student Answer: $240,000. $280,000. $210,000. $340,000. $120,000.
UNIT 3 QUIZ Question 14. Question : 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, unit variable overhead cost is calculated to be: Student Answer: $1.35. $1.15
$1.40. $1.65. $1.25.
Question 15. Question : CalcuCo hired Effner & Associates to design a new computeraided manufacturing facility. The new facility was designed to produce 300 computers per month. The variable costs for each computer are $660 and the fixed costs total $74,700 per month. The average cost per unit, if the facility normally expects to operate at eighty-five percent of capacity, is calculated to be (round to nearest cent): Student Answer: $952.94. $909.00. $936.67. $971.25.