Exam (elaborations)
ACCT 3100 ch. 2 Exam( elaboration) Questions & answers
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ACCT 3100 ch. 2 Exam( elaboration) Questions & answers
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ACCT3100
ch.
2
***In
a
regression
equation,
fixed
costs
are
represented
by
the
-
ANS-slope
***In
a
regression
equation,
variable
costs
are
represented
by
the
-
ANS-intercept
***In
most
accounting
information
systems,
costs
are
often
recorded
and
coded
so
they
can
be
summarized
based
on
different
-
ANS-Cost
objects
***Past
cost
information,
although
accurate
in
predicting
future
costs,
may
be:
I.
Unavailable;
II.
Irrelevant;
III.
Outdated.
-
ANS-I,
II,
and
III
***The
total
cost
of
materials,
where
the
supplier
charges
$9/lb
if
0-1000
pounds
are
purchased,
$8/lb
if
1001-2000
pounds
are
purchased
and
$7
if
2001
or
more
pounds
are
purchased,
is
a
-
ANS-Mixed
cost
***The
total
cost
of
salaries
of
production
supervisors,
where
2
supervisors
are
needed
for
each
8-hour
shift,
where
the
relevant
range
is
0
units
to
the
number
of
units
that
can
be
produced
at
full
capacity
using
2
8-hour
shifts
is
a
-
ANS-Stepwise
linear
cost
***Which
of
the
following
is
an
alternative
name
for
a
cost
driver
in
a
regression
analysis?
-
ANS-Dependent
variable
***Which
of
the
following
is
an
alternative
name
for
the
cost
being
predicted
in
a
regression
analysis?
-
ANS-Independent
variable
***Which
of
the
following
statements
is
false?
-
ANS-Useful
cost
information
is
rarely
available
from
the
accounting
information
system
A
firm
has
the
capacity
to
produce
3,100
units
per
week.
At
80%
capacity,
the
average
total
cost
per
unit
is
$12.50
and
the
average
variable
cost
per
unit
is
$7.50.
What
is
the
total
fixed
cost
per
week,
assuming
the
firm
is
still
operating
within
its
relevant
range?
-
ANS-$12,400
A
firm
s
production
is
expected
to
show
an
85%
learning
rate.
The
first
unit
took
200
hours
to
produce.
The
second
unit
will
take
-
ANS-170
hours
A
high
adjusted
R-square
for
the
regression
of
a
cost
against
a
cost
driver
indicates
-
ANS-The
cost
driver
explains
a
high
percentage
of
the
variation
of
the
cost
A
manager
might
use
this
method
to
create
a
graph
of
cost
behavior
without
any
statistical
techniques
-
ANS-Scatter
plot A
p-value
of
1%
for
the
intercept
term
in
a
regression
of
a
cost
driver
against
a
cost
indicates
-
ANS-Both
a
and
b
(The
true
fixed
costs
are
statistically
significantly
different
from
zero
and
there
is
only
a
1%
chance
the
true
fixed
costs
are
zero)
A
p-value
of
89%
for
the
slope
coefficient
in
a
regression
of
a
cost
driver
against
a
cost
indicates
-
ANS-None
of
the
above
(The
true
variable
costs
are
statistically
significantly
different
from
zero,
There
is
only
an
11%
chance
the
true
variable
costs
are
zero,
The
relationship
between
the
cost
and
the
cost
driver
is
nonlinear)
A
regression
of
total
selling
expenses
against
number
of
units
sold
yields
an
intercept
of
178,024
and
a
slope
of
12.3.
This
indicates
that
-
ANS-All
of
the
above
(Total
fixed
selling
expenses
are
predicted
to
be
178,024
Variable
selling
expenses
are
predicted
to
be
$12.30/unit
Total
selling
expenses
are
predicted
to
be
$190,324
when
1000
unites
are
sold)
A
scatter
plot
is
especially
useful
when
managers
wish
to
-
ANS-Study
the
relationship
between
a
cost
and
a
potential
cost
driver
After
estimating
a
past
cost
function,
managers:
I.May
need
to
update
it
for
future
changes;
II.
Have
all
of
the
information
they
need
to
predict
future
costs;
III.May
or
may
not
use
it
to
estimate
future
costs.
-
ANS-I
and
III
only
All
of
the
following
are
assumptions
for
developing
and
using
a
cost
linear
function
except
-
ANS-Past
costs
rarely
need
updating
to
be
good
predictors
of
future
costs
All
of
the
following
are
examples
of
variable
costs
except
-
ANS-The
cost
to
lease
a
manufacturing
plant
if
the
cost
object
is
the
product
manufactured
All
of
the
following
are
true
about
analysis
at
the
account
level
except
-
ANS-It
requires
very
little
judgement
to
determine
cost
behavior
All
of
the
following
are
true
about
average
cost
per
unit
except
-
ANS-Average
costs
are
usually
good
estimates
of
future
costs
An
organization's
accountant
is
estimating
next
period's
total
overhead
costs.
She
performed
two
regression
analyses,
one
based
on
direct
labor
hours
and
the
other
based
upon
machine
hours.
The
results
were:
Total
overhead
=
$150,000
+
$4
x
direct
labor
hours
Adjusted
R-square
=
0.65
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