Question Details

The ideal database for estimating cost functions



1) The ideal database for estimating cost functions contains ________. 
A) numerous cost driver observations 
B) only the independent variable and not the dependent variable
C) cost driver observations spanning a narrow range 
D) a few values of the cost driver that are grouped closely together


2) Data collection problems arise when ________.
A) data are recorded electronically rather than manually 
B) accrual-basis costs are used rather than cash-basis costs 
C) fixed and variable costs are not separately identified and both are allocated to products on a per unit basis 
D) purely inflationary price effects are removed 


3) Which of the following is a step to overcome problems related to data collection for estimating cost function?
A) The analyst should remove the inflationary effects.
B) The analyst should consider fixed costs as variable.
C) The analyst should also use extreme values while calculating cost functions.
D) The analyst should not use accrual accounting.

4) Which of the following is a step followed by an analyst to overcome problems related to data collection for estimating cost function?
A) to use cash accounting
B) to consider fixed costs as variable costs and treat allocated fixed cost per unit as a variable cost
C) to eliminate unusual observations if extreme values of observations occur
D) to include the inflationary price effects in the data


5) Which of the following is a problem related to cost analysis?
A) fixed costs are allocated as if they are variable costs 
B) extreme observations are adjusted or removed 
C) a company keeps accounting records on the accrual basis
D) inflationary effects are removed




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