Exam 3: Measurement of Cost Behavior

Account analysis is one method of approximating cost functions.

In the mixed?cost function, Y = $66,000 + $8.70X, the Y signifies _____.

Managers should apply two principles to obtain accurate and useful cost functions.These principles are _____.

Managers should apply these criteria to obtain accurate and useful cost functions

Selecting a volume?related cost driver and classifying each account as a variable cost or a fixed cost is called_____.

Least-squares regression measures a cost function more objectively with statistics rather than human eyesight) using the same data.

This method measures cost behavior according to what costs should be, not by what costs have been

Accountants sometimes use a linear cost model for nonlinear costs because_____.

_____ is a method in which the cost analyst draws a straight line through a plot of all the available data.

Costs that change abruptly at intervals of activity because the resources and their costs come in indivisible chunks are called _____.

The visual-fit method of measuring cost behavior only uses two points of data.

The Bonaduce 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 \ 21,885 Standard error of Y estimate \ 4,560 R - squared 0.8232 No. of observations 22 Degrees of freedom 20 X coefficients) 7.75 Standard error of coefficients) 4.4576 The variable cost per unit of product is _____.

In the mixed cost equation, Y = F + VX, the X is the cost driver.

An algebraic equation used by managers to describe the relationship between a cost and its cost drivers)

A disadvantage of engineering cost analysis is _____.

Presented below is the production data for the first six months of the year showing the mixed costs incurred by Columbia Company. Month Cost Units July \ 7,500 4,000 August 10,250 6,500 September 10,500 8,000 October 12,700 10,500 November 13,500 12,000 December 10,850 9,000 Columbia Company uses the high?low method to analyze mixed costs.The total fixed cost rounded to the nearest dollar) is _____.

Measurement of cost behavior means understanding and quantifying how activities of an organization affect its levels of costs.

One of the reasons why cost functions are important is to help managers make proper long-run decisions.

In the mixed cost equation, Y = F + VX, the Y is the predicted total cost.

The following data has been assembled for Lion Company.Use the high-low method. Cost Hours \ 24,400 2,000 39,000 3,500 39,280 3,450 43,400 3,200 44,160 3,900 The variable cost per hour is _____.