Question Details

An inaccurate cost function with a constant that is estimated



1) An inaccurate cost function with a slope coefficient that is estimated too low may most likely result in ________.
A) predicting total costs that are too high 
B) initiating cost cutting measures when they are unnecessary 
C) evaluating a weak manager as having strong performance 
D) promoting a product that is actually more profitable than budgeted 

2) An inaccurate cost function with a constant that is estimated too high may most likely result in ______.
A) evaluating a weak manager as providing strong performance 
B) promoting a product that is actually less profitable than budgeted 
C) predicting total costs that are too low 
D) replicating processes that are truly cost saving 


3) Which of the following is true if the constant in the cost function is low compared to the last year? 
A) total variable costs have decreased
B) production has increased
C) the sales commission percentage has decreased 
D) total fixed cost have decreased 


4) Which of the following is true if a slope coefficient in a cost function is decreased from the last year?
A) fixed cost per unit has decreased 
B) variable cost per unit has decreased
C) production has decreased 
D) contribution margin has decreased 

5) If machine maintenance is scheduled at a time when production is at a low level, then ________.
A) low production is the cost driver of high repair costs 
B) an understanding of operations is needed to determine an appropriate cost driver 
C) low production should be avoided since it is the cause of machine maintenance 
D) machine maintenance cannot be accurately predicted 



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