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Cost Function and Behavior – MCQs
138 questions. Click to practice.
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1.
In quantitative cost function estimation, what is the final and most important step?
assess the variable factor
assess the cost driver
assess the price determinant
assess the demand factor
2.
In quantitative cost function analysis, what does the Regression Analysis Method take into account?
Every data point available
A single data point
Two data points only
Exactly four data points
3.
When estimating cost functions, changes in a single activity level correspond to which of the following?
associated total costs
associated fixed costs
associated variable costs
associated cost per unit
4.
Given that the unexplained variation is 456,870 and the total variation amounts to 955,000, what is the coefficient of determination?
0.453
0.479
0.522
0.543
None of the above
5.
In regression analysis, given that the observed cost is 85 and the error term (disturbance) is 25, what is the predicted cost value?
110
125
60
70
None of the above
6.
What is the name of the line that connects data points representing the minimum and maximum values of a cost driver?
straight line
curved line
horizontal line
vertical line
7.
Within the relevant range, which type of cost function remains constant over small intervals of activity?
Fixed cost function
Step variable cost function
Variable cost function
Step fixed cost function
Mixed cost function
8.
What is the result of increasing the production volume?
Increased expenses for repairs
Greater costs for equipment setup
Reduced repair expenses
Elevated setup charges
9.
Given a cost difference of $7,000 and a machine hour difference of 18,000, what is the value of the slope coefficient?
2.571
0.39
0.2571
3.39
10.
When the coefficients remain consistent across two accounting periods, which method is used to estimate a single cost relationship?
Information related to fixed costs
Data pertaining to cost drivers
A combined set of data
Data associated with cost objects
11.
Given a residual error of 25 and a predicted cost of 50, what is the actual observed cost?
100
25
50
75
12.
Which assumption in specification analysis asserts that each observation's residual is unique and not shared with any other observation's residual?
independence of residuals
dependence of residuals
independence of correlation
none of these
13.
In a regression model, if the actual cost is 62 and the estimated cost is 29, what is the value of the error term?
33
91
81
43
14.
What is another term for the predicted values used to assess the goodness of fit?
coefficient of determination
index coefficient
residual coefficient
prediction coefficient
fit coefficient
15.
Given that the difference in costs between the highest and lowest values of a cost driver is $8,000, and the difference in the cost driver itself is 40 machine hours, what is the value of the slope coefficient?
$16,000
$200
$400
$20,000
None of the above
16.
In step cost functions, how is the cost incremented?
by fixed increments
by equal values
in a linear fashion
in a nonlinear manner
17.
In a linear cost function, how is the fixed cost classified?
constant
variable
exponential factor
base value
none of the above
18.
What term describes how well a cost driver explains the variation in cost?
Residual error magnitude
Accuracy of residuals
Poorness of model fit
Quality of model fit
Correlation coefficient
19.
What is the name of the vertical distance that represents the difference between the observed cost and the predicted cost for each data point?
residual term
positive component
negative component
squared difference
20.
How is the error term, also known as the disturbance or residual term, computed?
U equals A minus b
u equals A minus a
u equals Y minus y
u equals X minus x
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