Economics MCQs Part 2 Sample Assignment

8.

Fixed costs per unit:

10.

The fixed costs per unit are $10 when a company makes 10 000 units. What are the per unit fixed costs when 12 500 units are produced?

12.

Total costs are $140 000 when 10 000 units are made. Of this amount, variable costs are $4 per unit. What are the total costs when 8000 units are produced?

14.

Which per unit cost does the slope of the total cost line represent?

16.

The relevant range is that range of activity where:

18.

As a firm begins to operate outside the relevant range, the accuracy of cost estimates for fixed and variable costs:

21.

Within the relevant range, a curvilinear cost function can be graphed as a:

23.

The method of cost estimation that minimises the sum of the squared deviations between the cost line and the data points is:

25.

Technical Engineering presently leases a copying machine on a monthly basis. The lease agreement requires a fixed fee each month in addition to a charge per copy. Technical Engineering made 2400 copies and paid a total of $162 in rent in September and in October they paid $195 for 3500 copies. Determine Technical Engineering's variable cost per copy.

27.

Technical Engineering presently leases a copying machine on a monthly basis. The lease agreement requires a fixed fee each month in addition to a charge per copy. Technical made 2400 copies and paid a total of $162 in rent in September and in October they paid $195 for 3500 copies. Determine the total amount that would be paid for 1800 copies.

29.

Yang Manufacturing makes a product called Yin. The relevant range of operations is between 2500 units and 10 000 units of Yin per month. Per unit costs at two activity levels are as follows: 5000 units at $17.00 per unit; 7500 units at $13.00 per unit. Determine their total cost if Yang produces 10 000 units.

31.

The Longreach Toy Factory has determined machine hours to be the cost driver of the company's electricity costs. During the first six months of the year, the company incurred the following electricity costs:

Using the high–low method, determine the cost formula that expresses the cost behaviour of the company's electricity costs:

33.

Which of the following are problems frequently encountered in data collection?

35.

If very short time periods such as a week are used for a regression study, rather than longer periods such as a month:

37.

In activity-based costing analysis, the manufacturing manager's salary is classified as:

39.

In activity-based costing analysis, set-up costs are classified as:

41.

In which approach to costs estimation, is task analysis used?

43.

Which of the following statements are assumptions underlying cost estimation?

45.

Which of the following are important in estimating the cost of machine maintenance?

47.

In the regression formula Y = a + bX, b is:

49.

For a fixed cost, as volume increases:

51.

Lawson Lumber uses the high–low method to estimate electricity cost, which varies in relation to machine hours. Based on the following data, how would the cost function be stated if ‘X' is the number of machine hours?

53.

For a manufacturer of kitchens, which of the following would you expect to be a direct cost?

55.

Which of the following can always be physically traced to the cost object?

57.

Which term describes a cost resulting from the existence of the organisational structure and premises used by the firm?

59.

An example of a discretionary cost for a firm that manufactures furniture is:

61.

Which of the following statements about the coefficient of determination (R²) is correct?

64.

The following is an extract of a cost report for Big Whale Car Wash for the six months from June to November. Management considers the activities in these six months as within the relevant range for the purpose of cost estimation.

The car washing labour cost is a:

68.

When a manager notices an outlier during the cost estimation process, the appropriate response is to:

75.

Units produced 12 000 15 000
Direct materials $36 000 $45 000
Based on the above data, at the production level of 10 000 units, the fixed costs per unit are $5 per unit and if the firm produced 8000 units the fixed cost per unit would remain constant at $5.


True False

77.

Research and development costs are an example of discretionary costs.

True False

79.

Economic plausibility is one of the criteria used to evaluate a particular regression line.

True False

81.

Regression analysis is a superior statistical method to the high–low method because it utilises all data when determining the line of best fit.

True False

83.

Assume the costs of a service department are driven by the number of service orders and the equation for calculating the costs of a service department is y = $5 000 + $3x. The cost of the department if there were 6 000 orders would be $25 000.

True False