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Unformatted text preview: between the cost driver and costs B) a greater proportion of fixed costs than variable costs C) an economically plausible relationship exists D) management should cut costs Answer: A Diff: 3 Terms: regression analysis, slope coefficient Objective: 5 AACSB: Reflective thinking 136) The smaller the residual term the: A) stronger the relationship between the cost driver and costs B) weaker the relationship between the cost driver and costs C) steeper the slope of the cost function D) gentler the slope of the cost function Answer: A Diff: 2 Terms: regression analysis, cost function Objective: 5 AACSB: Reflective thinking 137) When using activity-based costing all of the following are true EXCEPT that: A) all cost drivers should be output unit-level cost drivers B) there are a great number and variety of cost drivers and cost pools C) industrial engineering, conference, and regression analysis can be used to estimate slope coefficients D) the more cost pools, the greater the chance of estimation error Answer: A Diff: 2 Terms: cost function, cost estimation Objective: 5 AACSB: Reflective thinking 138) When evaluating and choosing cost drivers all of the following are true EXCEPT: A) the cost driver is economically plausible. B) there is a significance of effect of the independent variable C) there is an independent verification of the relationship by a committee of cost accountants D) there is a goodness of fit between the various data points and the regression line Answer: C Diff: 2 Terms: cost function, cost estimation Objective: 5 AACSB: Reflective thinking 139) Over the short run, a nonlinear cost function would MOST likely result from all of the following EXCEPT: A) quantity discounts for each additional 10,000 parts purchased B) purchasing another $250,000 printing machine to double production C) hiring a third production supervisor D) incurring greater total utility costs for each machine-hour of operation Answer: D Diff: 3 Terms: cost function, nonlinear cost function Objective: 6 AACSB: Analytical skills 140) Examples of nonlinear cost functions include all of the following EXCEPT: A) step vari...
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- Spring '08