Horn_CH_10TB 13

Answer false explanation findinganeconomically

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Unformatted text preview: Diff: 2 Terms: cost estimation, cost predictions Objective: 4 AACSB: Communication 36) Machine- more economically plausible cost driver of machine maintenance than number of direct manufacturing labor -hours. hours is a Answer: TRUE Diff: 2 Terms: cost function Objective: 5 AACSB: Reflective thinking 37) The smaller the vertical difference between actual costs and predicted costs the better the goodness of fit. Answer: TRUE Diff: 2 Terms: residual term, regression analysis Objective: 5 AACSB: Reflective thinking 38) Choosing an economically plausible cost driver for indirect costs is fairly simple and knowledge of operations is unnecessary. Answer: FALSE Explanation: Finding an economically plausible cost driver is not always simple and many times knowledge of operations is necessary. Diff: 2 Terms: cost function Objective: 5 AACSB: Reflective thinking 39) A flat or slightly sloped regression line indicates a strong relationship. Answer: FALSE Explanation: A flat or slightly sloped regression line indicates a weak relationship. Diff: 3 Terms: regression analysis Objective: 5 AACSB: Reflective thinking 40) When using an activity-based costing system, a batch-level cost must have a batch-level cost driver. Answer: TRUE Diff: 2 Terms: cost function, cost driver Objective: 5 AACSB: Reflective thinking 41) Activity- based costing systems use the quantitative analysis method exclusively for cost estimation because of its accuracy. Answer: FALSE Explanation: Because ABC systems have a great number and variety of cost drivers and cost pools it requires many cost relationships to be estimated. ABC systems use a variety of estimation methods industrial engineering, conference, and quantitative analysis. In making the choice of method to use, managers trade off detail, accuracy, feasibility, and costs of estimating cost functions. Diff: 2 Terms: cost function, cost driver Objective: 5 AACSB: Reflective thinking 42) Economic plausibility is an important criterion for choosing a cost driver. Answer:...
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