Chapter 6 - Hard Questions Flashcards
A management accountant performs a linear regression of maintenance cost vs. production using a computer spreadsheet. The regression output shows an “intercept” value of $322,897. How should the accountant interpret this information?
Y=322897
x=0
4.
Which of the following is a characteristic of a flexible budget?
provides budgeted numbers for various activity levels
Using regression analysis, Fairfield Co. graphed the relationship of its cheapest product line’s sales with its customers’ income levels, to reveal that the lower the level of customer income, the higher sales volume experienced:
If there is a strong statistical relationship between the sales and customers’ income levels, which of the following numbers best represents the correlation coefficient for this relationship?
-0.93
A company is considering acquiring a derivative to hedge a risk associated with an investment it is currently holding. Which of the following coefficients of variation would indicate that the hedge will be effective?
-0.91
Rishard Corporation has a cash flow hedge that has increased in value by $60,000 during the year. The hedge is highly effective, and 95% of the change is expected to offset changes in future cash flows on the hedged transaction. How will Rishard report the $60,000 increase?
57k to OCI, rest to I/S.
Ineffective portions will eventually gp against income, obvioisly. Thankfully most went to OCI, which was one of the points of the entering into the hdge in the first place
Which of the following is not a theory that describes the reasons for differences in the yields that are associated with interest rates?
Behavioral finance throy - that has to do with stocks.
Theories that WOULD descrbe reasons:
Market segmentation
liquidity preference
expectations
Which of the following techniques effectively measures improvements in product quality as a result of internal failure costs?
Tracking # of products reworked
NOT
inspection of in-house goods
recoridng number of rpducts returned over time (measure quality, but not quality as a result of internal failure. These procuts are good, already external)
tracking warranty expenses over time
Nonfinancial performance measures are important to engineering and operations managers in assessing the quality levels of their products. Which of the following indicators can be used to measure product quality?
returns and allowances
Number and types of cusotmer compalints
Which of the following amounts would most likely be subject to the control of the profit center’s manager?
contribution margin.
onlys reps costs in contribution margin - not other expenses like:
depreciation
salary
corporate allocations
Each of the following business functions is considered part of a company’s value chain, except
accounting
these are:
customer service
marketing
RD
