Exam 3: Measurement of Cost Behavior

An activity that can be graphed with a straight line because each cost is assumed to be either fixed or variable

The following data has been assembled for Bowie Company.Use the high-low method. Cost Hours \ 24,400 2,000 32,000 2,900 36,280 2,950 39,400 3,500 44,160 3,900 The total cost at an operating level of 2,850 hours is _____.

Identifying the appropriate cost drivers) is the most critical aspect of any method for measuring cost behavior.

The use of high-technology methods rather than labor usually creates lesser risks for companies with wide variations in demand.

Examples of this type of cost are advertising, research and development, and employee training programs

Pertaining to a useful cost function, plausibility refers to a cause-and-effect relationship.

In the equation, Y = $30,000 + $9X, the $30,000 represents fixed costs per unit.

Mixed costs contain elements of only fixed-cost behavior.

A property tax is an example of an) _____.

Managers cannot alter discretionary fixed costs easily.

The visual-fit method is highly subjective and is more reliable when the cost function of the data is linear.

Costs that change abruptly at intervals of activity because the resources and their costs are only available in indivisible chunks

In regression analysis, the fixed-cost measure is labeled the constant or intercept.

The Keith Corporation used regression analysis to predict the annual cost of indirect materials.The results were as follows: Indirect Materials Cost Explained by Units Froduced Constant \ 19,885 Standard error of Y estimate \ 9,560 R - squared 0.7832 No. of observations 22 Degrees of freedom 20 X coefficients) 3.75 Standard error of coefficients) 2.5576 The linear cost function is _____.

During an engineering cost analysis, knowledge about new costs may be obtained from experiments with prototypes and the experience of competitors.

In a small construction firm, another crew supervisor is added for every 10 workers employed.This is an example of a _____.

A telephone bill, which includes a monthly base rate plus an extra fee for each minute of long-distance service, is an example of a variable cost.

In relation to a cost function, the term reliability means _____.

By their decisions, managers influence cost behavior throughout the entire value chain.

The Marsha Corporation used regression analysis to predict the annual cost of indirect materials.The results were as follows: Indirect Materials Cost Explained by Units Froduced Constant \ 14,885 Standard error of Y estimate \ 9,960 R - squared 0.7832 No. of observations 22 Degrees of freedom 20 X coefficients) 11.75 Standard error of coefficients) 2.1876 The total fixed cost is _____.