Cost Function And Behavior(Cost Accounting ) Questions and Answers

Question 1. An assumption, which states that there must be linear relationship between independent variable and dependent variable is
  1.    irrelevant range of linearity
  2.    relevant range of linearity
  3.    significant range
  4.    insignificant range
Explanation:-
Answer: Option B. -> relevant range of linearity
Answer: (b).relevant range of linearity
Question 2. The vertical difference, which measures distance between estimated and actual cost for every single observation is classified as
  1.    residual term
  2.    positive term
  3.    negative term
  4.    squared term
Explanation:-
Answer: Option A. -> residual term
Answer: (a).residual term
Question 3. In cost accounting, the conference, quantitative analysis and account analysis methods are considered as
  1.    cost estimation methods
  2.    price estimation methods
  3.    unit estimation method
  4.    variable estimation method
Explanation:-
Answer: Option A. -> cost estimation methods
Answer: (a).cost estimation methods
Question 4. The component of total cost, which never changes with change in level of production is classified as
  1.    fixed cost
  2.    constant
  3.    variable
  4.    both a and b
Explanation:-
Answer: Option A. -> fixed cost
Answer: (a).fixed cost
Question 5. The strength of relationship between cost driver and cost is considered as
  1.    badness of residual
  2.    goodness of residual
  3.    badness of fit
  4.    goodness of fit
Explanation:-
Answer: Option D. -> goodness of fit
Answer: (d).goodness of fit
Question 6. In the regression equation Y = $6000 + (per unit cost 'x' number of units), the '$6000' is a
  1.    constant
  2.    variable
  3.    expression
  4.    base and exponent
Explanation:-
Answer: Option A. -> constant
Answer: (a).constant
Question 7. The description in mathematical form to represent changes in cost, with level of activity related to that cost is classified as
  1.    cost function
  2.    revenue function
  3.    unit function
  4.    relative function
Explanation:-
Answer: Option A. -> cost function
Answer: (a).cost function
Question 8. In step cost functions, the cost is increased by
  1.    discrete amounts
  2.    same amounts
  3.    linear amounts
  4.    nonlinear amounts
Explanation:-
Answer: Option A. -> discrete amounts
Answer: (a).discrete amounts
Question 9. In linear cost function, the fixed cost is considered as
  1.    constant
  2.    variable
  3.    exponent
  4.    base
Explanation:-
Answer: Option A. -> constant
Answer: (a).constant
Question 10. The individual activities such as machine setups, material handling, customer service and distribution of products are a part of
  1.    activity based costing
  2.    margin based costing
  3.    goodness of costing
  4.    handling based costing
Explanation:-
Answer: Option A. -> activity based costing
Answer: (a).activity based costing
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