The residuals have a constant varianceThe variance of the goodness measure remains unchangedThe goodness-of-fit measure is stableThe standard error remains fixed

3.Which learning model forecasts a higher total cumulative time for producing additional units compared to the cumulative average-time learning model?

incremental unit time learning modelincremental price learning modelincremental unit average modelincremental cost learning model

4.What parameter is estimated using the high-low method?

linear parametercost parameterrate of change (slope)price parameter

5.If the slope coefficient is 0.75 and the change in machine hours amounts to 65,000, what is the resulting change in cost?

$86,667$48,750$85,000$55,000

6.Why is the slope coefficient of the cost function equal to zero?

Because it crosses the x-axis at the value oneBecause it intersects the y-axis at a fixed constantBecause it meets the x-axis at a constant valueBecause it passes through the y-axis at one

7.When estimating each cost pool within a cost function, which factor should be carefully considered?

hierarchy of cost objectsorganizational management levelspricing structure hierarchyhierarchy of costs

8.When analyzing the cause-and-effect link between cost levels and cost drivers, how are inflationary price influences eliminated by adjusting the cost?

price indexcost indexprofit indexcost driver indexnone of the above

9.Activity-based costing can be implemented effectively only when accountants identify which of the following for every activity?

the quality of each activitythe management process of each activitythe cost driver associated with each activitythe cost object linked to each activity

10.What term describes the concept that represents the learning curve in a wider context?

segmented curveconstant curvecombined curveexperience curvevariable curve

11.Which type of data ensures the normality of residuals assumption in a specific analysis?

actual price figuresactual cost figuresscaling factor datadepartmental data

12.What is the term for visually displaying cost driver information alongside associated costs?

plotting the datagraphing the expensescharting the cost driversdrawing a curved linemapping the figures

13.In a regression model, when the actual cost is 50 and the predicted cost is 7, what is the value of the error term?

57436747None of the above

14.In the context of specification analysis, how should the assumptions concerning residual states be characterized?

the least favorablestatistically independentcorrelatedfavorableunrelated

15.Which model describes the decrease in additional time required to produce the last unit each time the total output quantity doubles?

average incremental unit modelcost-based incremental learning modelincremental unit time learning modelprice-based incremental learning model

19.Which measure indicates the proportion of variation in the dependent variable 'Y' that is accounted for by the independent variable 'X'?

residual coefficientprediction coefficientdetermination coefficientindex coefficient

20.What do the minor residual values combined with a positive slope of the line signify?

negative correlationfavorable ratioinverse relationshipdirect relationshipno correlation

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How to prepare with Cost Function and Behavior MCQs

Work through questions topic by topic, then revisit any you answered incorrectly.
Read explanations carefully—they often cover facts that repeat across PPSC, FPSC, and NTS papers.
Pair subject practice with past papers to see how Cost Function and Behavior appears in real exam conditions.

Cost Function and Behavior

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Practice questions

1.What is the result of producing at a reduced production level?

2.In specification analysis, what assumption is made regarding the variance?