MS 02 - WRAP Up

Question 1

Which of the following costs is most likely a variable cost?
a. P 60 total costs at 10 units; P 60 total costs at 20 units
b. P 3 per unit at 10 units; P 3 per unit at 20 units
c. P 24 per unit at 1 unit; P 12 per unit at 2 units
d. P 4 per unit at 10 units; P 3 per unit at 20 units

Answer 1

b. P 3 per unit at 10 units; P 3 per unit at 20 units

Question 2

In cost analysis using the line equation Y = a + bX, “a” (total fixed cost) is regarded as the
a. Dependent variable
b. Independent variable
c. Slope of the line
d. Y-axis intercept

Answer 2

d. Y-axis intercept

Question 3

A company has developed a production cost function for its lone product: Y = 50 + 3X, where X is based on the number of labor hours. Based on a relevant range of 10 to 20 labor hours, what is the estimated production cost at zero (0) labor hour?
a. P 50
b. P 80
c. P 110
d. The exact amount cannot be determined without additional information

Answer 3

d. The exact amount cannot be determined without additional information

Question 4

When compared to the high-low method, the graphic approach to cost estimation is usually
a. Less accurate
b. More representative
c. Less representative
d. Equally representative

Answer 4

b. More representative

Question 5

What is the appropriate range for the coefficient of determination (r2)?
a. 0 to +1
b. 0 to -1
c. - 1 to 0
d. -1 to +1

Answer 5

a. 0 to +1

Question 6

Which of the following corresponds to (1) line of VISUAL FIT method and (2) line of BEST FIT method?
a. (1) High-low method (2) Scattergraph method
b. (1) High-low method (2) Least-squares regression method
c. (1) Scattergraph method (2) Least-squares regression method
d. (1) Least-squares regression method (2) Scattergraph method

Answer 6

c. (1) Scattergraph method (2) Least-squares regression method

Question 7

What cost segregation method gives the most mathematically precise cost estimate?
a. Scatter diagram method
b. Least-squares regression method
c. High-low method
d. Withdrawal method

Answer 7

b. Least-squares regression method

Question 8

Using statistical normal relationships, the least-squares method uses which of the following equations?

a. y = na + bx
b. y = na + bx
c. ∑y = a + bx2
∑y = na + b∑x
d. ∑y = na + b∑x
∑xy = a∑x + b∑x^2

Answer 8

d. ∑y = na + b∑x
∑xy = a∑x + b∑x^2

Question 9

Simple regression analysis involves the use of
a. One dependent variable and one independent variable
b. One dependent variable and many independent variables
c. Many dependent variables and one independent variable
d. Many dependent variables and many independent variables

Answer 9

a. One dependent variable and one independent variable

Question 10

Under Cost-Volume-Profit (CVP) analysis, a mixed cost should be:
a. Disregarded
b. Treated as a fixed cost
c. Treated as a variable cost
d. Separated into fixed & variable components

Answer 10

d. Separated into fixed & variable components