Exam 3: Cost Behavior

An alternative measure of goodness of fit is the coefficient of determination.

The following information is available for electricity costs for the last six months of the year: Month Production Volume Electricity Costs January 1,400 \ 2,200 February 2,800 5,400 March 3,200 5,700 April 1,750 3,900 May 1,200 2,400 June 2,100 4,050 What are the fixed costs?

The Y in the equation Y = F + VX represents the _________, the dependent variable

The following is an example of a mixed cost:

Costs can display variable, fixed, or mixed behavior, and it important that they are classified accurately.

The high-low method may give unsatisfactory results if

The expenses that result when organizations acquire many multiperiod service capacities by paying cash up front or by entering into an explicit contract that requires periodic cash payments are called:

The _________ analysis method is a method of determining cost behavior.

_________ explain changes in costs as units produced change.

The coefficient of determination is

Hereford Company is planning to introduce a new product with an 80 percent learning rate for production for batches of 1,000 units. The variable labor costs are $30 per unit for the first 1,000-unit batch. Each batch requires 100 hours. There are $10,000 in fixed costs not subject to learning. What is the cumulative total time (labor hours) to produce 2,000 units based on the cumulative average-time learning curve?

Green Company is planning to introduce a new product with a 75 percent incremental unit-time learning curve for production in batches of 1,500 units. The variable labor costs are $55 per unit for the first 1,500-unit batch. Each batch requires 200 hours. There are $15,000 in fixed costs not subject to learning. What is the cumulative total time (labor hours) to produce 3,000 units?

Hereford Company is planning to introduce a new product with an 80 percent learning rate for production for batches of 1,000 units. The variable labor costs are $30 per unit for the first 1,000-unit batch. Each batch requires 100 hours. There are $10,000 in fixed costs not subject to learning. What is the cumulative total time using the incremental unit-time learning curve to produce 2,000 units?

Managerial judgement includes the possibility of mixed costs.

_________ result when organizations acquire many multiperiod service capacities by paying cash up front.

Before opting to use managerial judgment, management should make sure that each cost is predominantly fixed or variable.

Activity-based use of resources can improve both managerial control and decision making because it encourages managers to pay more attention to controlling resource usage and spending.

The following information was taken from a computer printout generated with the least-squares method for use in estimating overhead costs: Slope 45 Intercept 5,700 Correlation coefficient .72 Activity variable Direct 1abor hours The cost formula is

Given the following graphs, which graph represents fixed costs? I II III

Resources are categorized as flexible, which are supplied as needed, and committed, which are supplied in advance of usage.