Learning Curve
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CPA Auditing and Attestation (AUD) › Learning Curve
Given that demand exceeds capacity, that there is no spoilage or waste, and that there is full utilization of a constant number of assembly hours, the number of components needed for an assembly operation with an 80% learning curve should (1) Increase for successive periods (2) Decrease per unit of output
1
2
Neither
Both 1 and 2
Explanation
The learning curve relates to the efficiency with which productive resources, typically labor, are employed and it suggests that productivity will increase over time.
In a regression analysis, the coefficient of determination measures:
Goodness of fit
Economic plausibility
Independence of variables
Independence of residuals
Explanation
The coefficient of determination measures the proportion of the total variation in the dependent variable explained by the independent variable.
Multiple regression differs from simple regression in that it:
Allows the computation of the coefficient of determination
Has more dependent variables
Provides an estimated constant term
Has more independent variables
Explanation
This analysis is an expansion of simple regression because it allows consideration of more than one independent variable.
Which of the following labor costs for a manufacturing company is deducted from revenues in order to determine gross margin but is not deducted from revenues to determine contribution margin?
Manufacturing floor manager's salary
Hourly assembly worker's wages
Salesperson's commissions
Office manager's salary
Explanation
The manufacturing floor manager's salary is considered fixed factory overhead and is a part of the gross margin calculation but not part of the contribution margin calculation.
What is a company's margin of safety if it has sales of \$200,000, a contribution margin of \$120,000, fixed costs of \$90,000, and income taxes of \$12,000?
\$150,000
\$182,000
\$168,000
\$50,000
Explanation
$90,000/($120,000/$200,000) = $150,000. $200,000 - $150,000 = \$50,000.
Sales forecasts are formed considering all of the following factors except:
Past historical sales data
Estimates of future sales
Competitor plans
Sunk costs
Explanation
Sunk costs should not be considered as there is no recuperating them and they do not play a role in forecasts at all.