Question Details

A steeply sloped regression line indicates



1) Goodness-of-fit measures how well the predicted values in a cost estimating equation ________.
A) match the cost driver 
B) determine the level of activity 
C) match the actual cost observations 
D) rely on the independent variable 


2) A steeply sloped regression line indicates ________.
A) a strong relationship between the cost driver and costs 
B) a greater proportion of fixed costs than variable costs 
C) an increase in number of units produced during the period
D) a strong relationship between fixed cost and variable cost


3) The smaller the residual terms, the ________. 
A) better is the fit between the actual cost observations and estimated costs
B) weaker the relationship between the cost driver and costs 
C) more the number of units produced during the period
D) stronger the relationship between fixed cost and variable cost


4) Which of the following statements is true of activity-based costing?
A) There is a clear cause-and-effect relationship between costs and the cost driver in the long run.
B) There is no variety of cost drivers and cost pools. 
C) The system focuses on activities in together and not on individual activities.
D) A single cost driver should be identified for all the activities.

5) Which of the following statements is true of choosing cost drivers under activity-based costing? 
A) All the cost drivers should be unit-level cost drivers.
B) There should be a clear cause-and-effect relationship between cost drivers and cost pools.
C) Cost drivers are independent variables. 
D) A single cost driver should be identified for all the activities.




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