GB 519 Unit 3 Quiz
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UNIT 3 QUIZ
1. Question : Which of the following provides the most accurate cost
Regression analysis with R-squared of 0.12.
Regression analysis with F value of 1.2
Regression analysis with R squared of 0.89.
Question 2. Question : Data collected on the cost objects and cost drivers for cost
estimation must be:
Brief and limited.
Consistent and accurate.
Question 3. Question : The independent variable in regression analysis is:
The cost to be estimated.
The cost driver used to estimate the value of the dependent
Hard to define because of its independence.
Usually expressed as a range of values.
Always a volume-based cost driver.
UNIT 3 QUIZ
Question 4. Question : A range around the regression line within which the management
accountant can rely that the actual value of the predicted cost will
fall is referred to as:
A relevant range.
A goodness of fit.
A confidence interval.
Question 5. Question : The name for a variety of methods used to examine how an
amount will change if factors involved in predicting that amount
Contribution margin analysis.
Question 6. Question : CVP analysis for revenue and cost planning has the primary
Both revenue maximization and cost minimization.
Achieving a desired level of sales and profits.
Consistently producing sales above the breakeven level.
Question 7. Question : The CVP profit-planning model assumes that over the relevant
range of activity:
Only revenues are linear.
Only revenues and fixed costs are linear.
Only revenues and variable costs are linear.
Variable cost per unit decreases because of increases in
Both revenues and total costs are linear.
Question 8. Question : The degree of operating leverage (DOL), at any sales volume, is
(Operating profit - fixed expenses) ÷ sales.
(Sales - variable expenses) ÷ operating profit.
Operating profit ÷ (fixed expenses - variable expenses).
Sales ÷ (fixed expenses - operating profit).
Fixed costs ÷ Total contribution margin.
Question 9. Question : Sales forecasts are the first step in the budgeting process of a
merchandising firm because:
The revenue data are easiest to generate.
Sales information is precise in amount.
Sales personnel have the quickest access to data.
Sales forecasts are the most objective of all budgeted
Almost all activities of a firm emanate from (i.e., are linked
to) estimated sales demand.
UNIT 3 QUIZ
Question 10. Question : All of the following represent alternative approaches to the
traditional budget-preparation process except which one?
Activity-based budgeting (ABB)
Time-driven activity based budgeting (TDABB)
Question 11. Question : The type of compensation plan that focuses on the difference
between actual performance (sales, operating income, etc.) and
budgeted performance is refers to:
The use of flexible budgets for performance evaluation.
The use of the master budget for performance evaluation.
The use of "rolling financial forecasts."
The use of a fixed-performance contract.
The use of a Kaizen forecast.
Question 12. Question : The act of encouraging non-value-adding actions on the part of
management in order to improve indicated performance is referred
Gaming the performance indicator.
The use of fixed-performance contract.
Linear optimization analysis.
The use of a relative-performance contract.
UNIT 3 QUIZ
Question 13. Question : Stylish Sitting is a retailer of office chairs located in San
Francisco, California. Due to increased market competition, the
CFO of Stylish Sitting has grown worried about the firm's
upcoming income stream. The CFO asked you to use the company
financial information provided below.
Sales Price $75.00
Per Unit Variable Costs:
Invoice Cost 41.70
Sales Commission 18.30
Total Per Unit Variable Cost $60.00
Advertising $ 56,000
Total Annual Fixed Costs $360,000
If 40,000 office chairs were sold, Stylish Sitting's operating
income would be:
Student Answer: $240,000.
UNIT 3 QUIZ
Question 14. Question : Thompson Refrigerators Inc. needs to prepare pro forma financial
statements for the next fiscal year. To do so, the company must
forecast its total overhead cost. The actual machine hours and total
overhead cost are presented below for the past six months.
MONTH TOTAL O/H MACHINE HOURS
Jan $ 8,258 2,134
Feb 8,006 2,045
Mar 8,387 2,276
Apr 8,832 2,743
May 8,921 2,834
June 7,841 2,034
Using the high-low method, unit variable overhead cost is
calculated to be:
Student Answer: $1.35.
Question 15. Question : CalcuCo hired Effner & Associates to design a new computeraided
manufacturing facility. The new facility was designed to
produce 300 computers per month. The variable costs for each
computer are $660 and the fixed costs total $74,700 per month.
The average cost per unit, if the facility normally expects to
operate at eighty-five percent of capacity, is calculated to be
(round to nearest cent):
Student Answer: $952.94.
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