Exam 2: Cost Concepts, Behaviour, and Estimation

All of the following are true about average cost per unit except:

Three different divisions of a footwear manufacturing company are estimating costs for their human resources departments. Each division has a cost structure that is different from the other divisions' and those structures are represented by the following cost behaviour patterns (A, B, and C). Number of Emplovees Cost A Cost B Cost 0 \ 0 \ 120 \ 118 25 50 118 180 50 100 123 245 75 125 124 296 100 200 119 360 Which cost is best described as variable?

Consider the following cost data for the cost object; number of machine setups. Each set of costs (A, B, and C) is from a different type of manufacturing operation and represents the cost behaviour for the cost of that company's machine setups. Number of Machine Setups Cost A Cost Cost 0 \ 5 \ 80 \ 5 10 20 79 37 20 40 82 66 30 60 78 91 40 80 81 123 50 100 79 154 Cost B is best described as:

Which of the following cost estimation techniques makes assumptions about the data being analyzed? I. Analysis at the account level II. Two-point method III. Regression analysis

Reviewing the pattern of a cost over time is a critical step in determining an engineered cost estimate.

All of the following are true about analysis at the account level except:

Which of the following statements is true?

The difference between simple regression and multiple regression is that:

Which of the following is an alternative name for the cost being predicted in a regression analysis?

The trend line from a scatter plot can be used to identify data points for:

Simple regression analysis output produces a variety of statistics. Which of the following statistics best summarizes how well the cost driver explains the behaviour of the cost?

Past cost information, although accurate in predicting future costs, may be: I. Unavailable II. Irrelevant III. Outdated

The best source for determining historical costs is usually:

Bava Company wants to develop a cost function for its maintenance costs to estimate such costs for the coming year. The following data are available: Direct Maintenance Month Labour Hours Costs Incurred June 4,000 \ 900 July 6,500 1,325 August 7,000 1,500 September 5,500 1,150 Using the high-low method, what is the variable maintenance cost per direct labour hour?

Assuming that a cost is mixed and linear, and that past cost behaviour is expected to continue into the future, which of the following is mostly likely the best technique for estimating future costs?

An organization's accountant is estimating next period's total overhead costs. She performed two regression analyses, one based on direct labour hours and the other based upon machine hours. The results were: Total overhead = $150,000 + $4 x direct labour hours Adjusted R-square = 0.65 Total overhead = $130,000 + $5 x machine hours Adjusted R-square = 0.77 For the next period, the accountant anticipates using 28,000 direct labour hours and 26,000 machine hours. Based upon this information, what is the best estimate for overhead for the next period?

Managers should be trained in engineering to calculate an engineered cost estimate.

All of the following are examples of variable costs except:

Simple regression minimizes the distance from each data point to:

Bava Company wants to develop a cost function for its maintenance costs to estimate such costs for the coming year. The following data are available: Direct Maintenance Month Labour Hours Costs Incurred June 4,000 \ 900 July 6,500 1,325 August 7,000 1,500 September 5,500 1,150 Using the high-low method, what is the fixed maintenance cost?