11) The coefficient of determination (r2) measures the percentage of variation in Y explained by X (the predictor variable).
12) Which of the following is an equation of a variable cost function?
A) Y = ax + bx
B) Y = a + bx
C) Y = b
D) Y = a
E) Y = bx
13) Which of the following describes the intercept in a linear cost function?
A) the component of fixed costs that, within the relevant range, does not vary with changes in the level of the cost driver
B) the component of fixed costs that, within the relevant range, does vary with changes in the level of the cost driver
C) the component of variable costs that, within the relevant range, does not vary with changes in the level of the cost driver
D) the component of variable costs that, within the relevant range, does vary with changes in the level of the cost driver
E) the sum of the components of both fixed and variable costs that, within the relevant range, do not vary with changes in the level of the cost driver
14) For April, the month just ended, the cost components to make tapes were $2 per tape plus fixed costs of $10,000. One thousand tapes were produced. For May the cost to make tapes will be $2.20 per tape plus fixed costs of $10,000. Fifteen hundred tapes are expected to be produced. What are the estimates for the intercept and slope coefficient for May, respectively?
A) $2.00 and $10,000.00
B) $2.20 and $10,000.00
C) $10,000.00 and $2.00
D) $10,000.00 and $2.20
E) $22,000 and $10,000
15) The cost function y = 1,000 + 5X
A) has a slope coefficient of 1,000.
B) has an intercept of 5.
C) is a straight line.
D) represents a fixed cost.
E) is missing the slope coefficient.
16) Which of the following statements related to assumptions about estimating linear cost functions is true?
A) Variations in a single cost driver explain variations in total costs.
B) A cost object is anything for which a separate measurement of costs is desired.
C) A linear function approximates cost behaviour at all ranges of production.
D) Correlation refers to the relationship between fixed and variable costs.
E) The graph of total costs does not form a straight line within the relevant range because of variable costs.
17) Which of the following statements regarding a linear cost function is true?
A) When there are only fixed costs, total material costs increase as the number of units produced increases.
B) The slope coefficient of a mixed cost line intersects the vertical axis at zero.
C) The relationship between the cost driver and the fixed cost is represented by the cost-benefit relationship.
D) It is easier to identify a single measure of benefit in a more heterogeneous cost pool.
E) A linear cost function for manufacturing overhead can be graphed when the reported benefit received can be paired with the corresponding dollar value of the cost pool.
18) Brandt Cheque Encoders employs 30 individuals. Ten employees are paid $10 per hour for 173 hours a month and the rest are salaried employees paid $6,000 a month. How would total costs of personnel be classified?
A) variable and fixed
B) a fixed cost within a relevant range
C) a variable cost within a relevant range
D) a mixed cost
E) a fixed cost
Use the information below to answer the following question(s).
Raymaster is a small computer software company which uses the account analysis method and has hired you to perform some management advisory services. The company sold 2,500 high quality payroll programs last year.
Cost of goods sold
$600,000
Store manager’s salary
80,000
Secretary’s salary
40,000
Operating costs (Store)
120,000
Sales Personnel 4 employees
Salary
$29,000 each
Commissions of 15% of sales
?
Advertising and promotion per year
20,000
Sales
1,200,000
19) What is the variable cost per unit sold?
A) $180,000
B) $320
C) $312
D) $240
E) $72
20) What is the total budgeted cost per unit sold?
A) $240.00
B) $288.00
C) $358.40
D) $362.40
E) $462.40
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