1. (TCO 1) Troy Company derived the following costs relationship from a regression analysis of its monthly manufacturing overhead cost.
Y = $80,000 + $12X
where: Y = monthly manufacturing overhead cost
and       X = machine hours.
The standard time required to manufacture one 6-unit case of Troy’s single product is 4 machine hours. Troy applies manufacturing overhead to production on the basis of machine-hours, and its normal annual production is 50,000 cases.
Troy’s estimated variable manufacturing overhead cost for a month in which scheduled production is 10,000 cases would be
 (Points : 6)

      $80,000.
      
$480,000.
      
$160,000.
      
$320,000.

 

2. (TCO 1) Three criteria to use in identifying cost drivers from the potentially large set of independent variables that can be included in a regression model are (Points : 6)

      goodness of fit, size of the intercept term, and specification analysis.
      
independence between independent variables, economic plausibility, and specification analysis.
      
economic plausibility, goodness of fit, and significance of independent variable.
      
spurious correlation, expense of gathering data, and multicollinearity.

 

3. (TCO 3) The best opportunity for cost reduction is (Points : 6)

      during the manufacturing phase of the value chain.
      
during the product/process design phase of the value chain.
      
during the marketing phase of the value chain.
      
during the distribution phase of the value chain.

 

4. (TCO 3) Each month, Haddock Company has $275,000 total manufacturing costs (20% fixed) and $125,000 distribution and marketing costs (36% fixed). Haddock’s monthly sales are $500,000. The markup percentage on variable costs to arrive at the existing (target) selling price is (Points : 6)

      20%.
      
40%.
      
80%.

      66.666%.

 

5. (TCO 3) Which of these do antitrust laws on pricing not cover? (Points : 6)

      Collusive pricing
      
Dumping
      
Peak-load pricing
      
Predatory pricing

 

 

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    COST ACCOUNTING WEEK 4 QUIZ Solution
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