Question : Objective 10.1 1) Which of the following statements related to assumptions : 1216885

 

 

 

Objective 10.1

 

1) Which of the following statements related to assumptions about estimating linear cost functions is FALSE?

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 behavior within the relevant range of the cost driver.

D) A high correlation between two variables ensures that a cause-and-effect relationship exists.

 

2) A high correlation between two variables s and t indicates that:

A) s may cause t, or t may cause s

B) both may be affected by a third variable

C) the correlation may be due to random chance

D) All of these answers are correct.

 

3) Which of the following does NOT represent a cause-and-effect relationship?

A) Material costs increase as the number of units produced increases.

B) A company is charged 40 cents for each brochure printed and mailed.

C) Utility costs increase at the same time that insurance costs increase.

D) It makes sense that if a complex product has a large number of parts it will take longer to assemble than a simple product with fewer parts.

4) Bennet Company employs 30 individuals. Eighteen employees are paid $14 per hour and the rest are salaried employees paid $4,000 a month. How would total costs of personnel be classified?

A) variable

B) mixed

C) a variable cost within a relevant range

D) a fixed cost within a relevant range

 

5) McGuinness Company employs 8 individuals. They are all paid $14.50 per hour. How would total costs of personnel be classified?

A) variable

B) mixed

C) a variable cost within a relevant range

D) a fixed cost within a relevant range

 

6) For February, the cost components of a picture frame include $0.25 for the glass, $.65 for the wooden frame, and $0.80 for assembly. The assembly desk and tools cost $400. 1,000 frames are expected to be produced in the coming year. What cost function best represents these costs?

A) y = 1.70 + 400X

B) y = 400 +1.70X

C) y = 2.10 + 1,000X

D) y = .90 + 400X

7)  The cost components of a heater include $35 for the compressor, $12 for the sheet molded compound frame, and $80 per unit for assembly. The factory machines and tools cost is $55,000. The company expects to produce 1,500 heaters in the coming year. What cost function best represents these costs?

A) y = 1,500 + 127X

B) y = 1,500 +55,000X

C) y = 55,000 + 1,500X

D) y = 55,000 +127X

 

8) A linear cost function can represent:

A) mixed cost behaviors

B) fixed cost behaviors

C) variable cost behaviors

D) All of these answers are correct.

 

9) The cost function y = 2,000 + 6X:

A) has a slope coefficient of 2,000

B) has an intercept of 6

C) is a straight line

D) represents a fixed cost

 

10) The cost function y = 150 + 10X:

A) has a slope coefficient of 150

B) has an intercept of 150

C) is a nonlinear

D) represents a fixed cost

 

 

 

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