Exam 23: Cost Estimation and Cost Behaviour

A coefficient of determination of 0.91 means

Hook Company wants to develop a cost estimating equation for its monthly cost of electricity. It has the following data: Using the high-low method, which of the following is the best equation?

Which of the following decision-making tools would NOT be useful in determining the slope and intercept of a mixed cost?

____ is a measure of the percent of variation in the dependent variable (such as total cost) that is explained by variations in the independent variable (such as total shipments) when the least-squares estimation equation is used.

Weaknesses of the high-low method include all of the following EXCEPT

The following cost functions were developed for manufacturing overhead costs: If July production is expected to be 200 units that require 300 direct labour hours, estimated manufacturing overhead costs would be

The following information was available about supplies cost for the second quarter of the year: Using the high-low method, the estimate of supplies cost at 1,000 units of production is

What does a correlation coefficient near +1 mean?

Which of the following statements is TRUE about the learning curve?

The following computer printout estimated overhead costs using linear regression: Table of Selected Values: t Distribution What is the interval around Y if 95 percent confidence is desired?

In a simple least-squares regression where X refers to the number of sales calls made by a sales department and Y refers to the monthly total cost of the sales department, the constant in the regression output would represent:

The coefficient of determination is

Innova, SA., is beginning the production of a new product. Management believes that 500 labour hours will be required to complete the new unit. An 80 percent incremental unit-time learning curve model for direct labour hours is assumed to be valid. Assume that the exponent b = -0.3219. Data on costs are as follows: Required: a. Set up a table with columns for cumulative number of units showing the cumulative total time in hours using the incremental unit-time learning curve. Complete the table for 1, 2, 3, and 4 units given the individual unit time for the nth unit as 500, 400, 351, and 320 for 1 to 4 units respectively. b. Set up a similar table assuming a 90 percent with the incremental unit-time learning curve with the individual unit time for the nth unit as 500, 450, 430, 405 for 1 to 4 units respectively. c. What is the difference in variable cost of producing four units?

In the method of least squares, the deviation is the difference between the

Baker Enterprises developed a cost function for manufacturing overhead costs of Y = £8,000 + £1.60X. Estimated manufacturing overhead costs at 10,000 units of production are

Briefly discuss some of the areas of concern that make cost estimation and prediction difficult.

Which of the following is a weakness of the high-low method?

Advantages of the method of least squares over the high-low method include all of the following EXCEPT

In a simple least-squares regression where X refers to the number of sales calls made by a sales department and Y refers to the monthly total cost of the sales department, the value of X in the regression output would represent:

Figure 23-3 Abboud Company is planning to introduce a new product with an 80 percent cumulative learning curve for production for batches of 1,000 units. The variable labour 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. -Refer to Figure 23-3. What is the cumulative total time (labour hours) to produce 2,000 units?