Questions

Question 1

Which of the following measures of activity would be the most probable cost driver for Data Processing?

1. Number of transactions processed.
2. Number of calls to toll-free customer telephone line. 
3. Number of new employees hired.
4. Hours of Computer Processing Unit (CPU).

Question 2

Select the incorrect statement:

1. It is possible to use a linear cost equation to predict costs as long as volumes remain within the relevant range.
2. The relevant range is the normal volume of activity.
3. On the relevant range, managers can assume that the total fixed costs is constant.
4. The relevant range refers to the volumes of activity for which a given linear cost equation is valid

Question 3

CoffeeDrop produces and sells bags of coffee. Its management accountant has determined that if the company produces 700 bags in a month, the average operating cost per unit (including both fixed and variable operating expenses) is C4.93 per bag. If the company produces 1,000 bags in a month, the average operating cost per unit is C4.35 per bag instead. What is the variable cost per bag?

1. €4.35
2. €3.00
3. €4.93
4. €4.64

Question 4

Olivia Grey is the management accountant of Paddle, a company producing tablets. She gathered the following information about the total overhead cost over the past four periods:

In addition, Olivia also decomposed the total overhead costs incurred in May between its different subcomponents:

What is the amount of fixed indirect labor costs? Hint: use the high-low method

1. €150,521.67.
2. €151,500.00.
3. €98,501.38.
4. €81,050.13.

Question 5

To estimate the parameters of a cost equation with only one cost driver and using the linear regression, what are the minimum requirements in terms