1.

All of the following are cost analysis problems EXCEPT:

a. fixed costs are allocated as if they are variable costs
b. extreme observations are adjusted or removed
c. time periods differ for measuring items included in the dependent variable and
the cost driver(s)
d. homogeneous relationships between individual cost items in the dependent
variable pool and cost drivers may not be present

Answer: b Difficulty: 3 Objective: 8

Terms to Learn: cost estimation

2. The coefficient of determination is important in explaining variances in estimating

equations. For a certain estimating equation, the unexplained variation was given as
26,505. The total variation was given as 46,500. What is the coefficient of
determination for the equation?
a. 0.34
b. 0.43
c. 0.57
d. 0.66

Answer: b Difficulty: 2 Objective: A

Terms to Learn: coefficient of determination (r2) r2
= 1 - (26,505/46,500) = 0.43