Exam 10: Determining How Costs Behave

Time-series data analysis includes ________.

The ideal database for estimating cost functions contains ________.

South Coast Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2017 operations. What was the variable cost per unit sold for 2017?

Inflation can distort data that are compared over time so purely inflationary effects should be removed.

The coefficient of determination is important in explaining variances in estimating equations. For a certain estimating equation, the unexplained variation was given as 22,000. The total variation was given as 55,000. What is the coefficient of determination for the equation?

Salter Manufacturing Company produces inventory in a highly automated assembly plant in Fall River, Massachusetts. The automated system is in its first year of operation and management is still unsure of the best way to estimate the overhead costs of operations for budgetary purposes. For the first six months of operations, the following data were collected: Required: a.Use the high-low method to determine the estimating cost function with machine-hours as the cost driver. b.Use the high-low method to determine the estimating cost function with kilowatt-hours as the cost driver. c.For July, the company ran the machines for 4,000 hours and used 4,550,000 kilowatt-hours of power. The overhead costs totaled $365,000. Which cost driver was the best predictor for July?

Place the following steps in order for estimating a cost function using quantitative analysis. A = Plot the data B = Collect data on the dependent variable and the cost driver. C = Choose the dependent variable D = Identify the independent variable, or cost driver E = Estimate the cost function

If the total cost function is y = 6,500 + 9X, calculate the variable cost for 4,400 units.

Which cost estimation method would involve analyzing direct labor subsidiary accounts and classifying costs as as variable, fixed, or mixed to derive cost estimation formulas?

Presented below are the production data for the first six months of the year for the mixed costs incurred by Venus Company. Venus Company uses the high-low method to analyze mixed costs. How would the cost function be stated?

The high-low method ________.

Each time Mayberry Nursery hires a new employee, it must wait for some period of time before the employee can meet production standards. Management is unsure of the learning curve in its operations but it knows the first job by a new employee averages 40 hours and the second job averages 32 hours. Assume all jobs to be equal in size. Required: a.What is the learning-curve percentage, assuming the cumulative average-time method? b.What is the time for a new employee to build 16 units with this learning curve using the cumulative average-time method? You may use an index of ?0.1520.

The account analysis method estimates cost functions ________.

At the Spring Valley Company, the cost of the personnel department has always been charged to production departments based upon number of employees. Recently, opinions gathered from the department managers indicate that the number of new hires might be a better predictor of personnel costs. Total personnel department costs are $299,000. If the number of employees is considered the cost driver, what amount of personnel costs will be allocated to Department A? (Round any intermediary calculations to two decimal places and your final answer to the nearest dollar.)

The H.W. Grant Corporation used regression analysis to predict the annual cost of indirect materials. The results were as follows: What is the cost estimation equation?

The Connors Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Connors Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation. What is the cost function?

The high-low method relies on only two observations, the highest and lowest, to estimate a linear cost function.

Cross-sectional data pertain to the same entity (organization, plant, activity, and so on) over successive past periods.

M & G TV and Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2017 operations. What were total fixed costs for 2017?

The conference method estimates cost functions ________.