1			Strategic management requires accurate estimation of costs for all but which one of the following applications?
			A)	to facilitate target costing
			B)	to facilitate strategic positioning analysis
			C)	to facilitate life cycle costing
			D)	to facilitate learning curve analysis
			E)	to facilitate value-chain analysis
2			The identification of cost drivers is perhaps the most important step in developing the cost estimate because:
			A)	it is the first step in cost estimation.
			B)	it is the final step in cost estimation.
			C)	there may be a number of relevant drivers, some not immediately obvious.
			D)	the other five steps are easier to execute.
			E)	it requires much more time than the other five steps.
3			What is the first step when using cost estimation?
			A)	Determine the cost drivers.
			B)	Define the cost object.
			C)	Select the estimation method.
			D)	Assess the accuracy of the estimate.
4			Herman Corporation has the following information for 2006 and 2007: 2006 2007 Utilities costs $30,000 $50,000 Units produced 1,000 2,000 Utilities is what type of cost?
			A)	Variable cost
			B)	Mixed cost
			C)	Step cost
			D)	Fixed cost

USE THE FOLLOWING INFORMATION TO ANSWER QUESTIONS 5, 6, AND 7:

Motor Company has the following information pertaining to a regression model.

Y = $6,000 + $10L + $50 M

Where	y = overhead costs
	L = direct labor hours
	M = machine hours
	R2 = .940
	Se = $1,700
t-values:
	L = 3.15
	M = 2.45
Observations	= 50

5			Which of the following statements is TRUE?
			A)	Goodness of fit is too small.
			B)	The slope parameter for direct labor hours is significant.
			C)	The slope parameter for machine hours is not significant.
			D)	The best estimate of overhead costs when direct labor hours and machine hours are 100 and 200, respectively, is $11,000.
6			What is the best estimate of overhead costs when direct labor hours and machine hours are 200 and 300, respectively?
			A)	$6,000
			B)	$17,000
			C)	$19,000
			D)	$23,000
7			What is the estimation error when actual overhead costs is $22,300 and direct labor hours and machine hours are 200 and 300, respectively?
			A)	$700
			B)	$4,300
			C)	$1,700
			D)	$6,000
8			_______________ is used to represent the presence or absence of a condition in a regression model:
			A)	A dummy variable
			B)	An independent variable
			C)	The estimation error
			D)	The unit variable cost
9			In regression analysis, what does the variable "X" stand for in the model Y = a + bX + e?
			A)	The amount of the dependent variable, the cost to be estimated.
			B)	The regression error, which is the distance between the regression line and the data point.
			C)	The value for the independent variable, the cost driver for the cost to be estimated; there may be one or more cost drivers.
			D)	The unit variable cost, also called the coefficient of the independent variable.
10			Regression analysis is better than the high-low method of cost estimation because regression analysis:
			A)	is more mathematical.
			B)	uses all the data points, not just two.
			C)	fits its data into a mathematical equation.
			D)	takes more time to do.
11			Which of the following is NOT a common non-linearity problem when using regression analysis?
			A)	Trend/Seasonality.
			B)	Outliers.
			C)	Data Shifts.
			D)	Mismatched Time Periods.
12			Extending the length of a time period in regression cost analysis and prediction will result in:
			A)	"averaging out" data.
			B)	confounding data.
			C)	increasing the explanatory power of the data.
			D)	better results because more data is being used.
			E)	more recording lags or cut-off errors.
13			The learning curve in cost estimation is a good example of:
			A)	non-linear cost behavior.
			B)	machine-intensive production.
			C)	simple regression.
			D)	a random variable.
			E)	inefficient labor.
14			Mean squared variance is the ratio of the amount of variance of a component to the number of:
			A)	data points utilized.
			B)	analyses requested.
			C)	degrees of freedom for that component.
			D)	iterations required in the calculations.
			E)	None of the above answers is correct.
15			What is an OK value for goodness of fit?
			A)	Should be greater than 2.0.
			B)	Should be small relative to the dependent variable.
			C)	Should be small.
			D)	Should be between 2.0 and 3.0.
			E)	Should be .75 or better.