Exam 6: Activity Analysis,cost Behavior,and Cost Estimation

Mohammed Products has determined that the number of machine hours worked (MH)drives the amount of manufacturing overhead incurred (MOH).On the basis of this relationship,a staff analyst has constructed the following regression equation: MOH = 240,000 + 8MH Which of the choices correctly depicts the nature of Mohammed's variables?

A company observed a decrease in the cost per unit.All other things being equal,which of the following is probably true?

The high-low method and least-squares regression are used by accountants to:

The least-squares regression method of cost estimation relies on only two data points.

Sunshine Valley Meat Company produces one of the best sausage products in Pennsylvania.The company's controller compiled the following information by analyzing the accounting records: 1.Meat costs the company $3.25 per pound of sausage produced. 2.Compensation of production employees is $2.25 per pound of sausage produced. 3.Supervisory salaries total $23,000 per month. 4.The company incurs utility costs of $9,000 per month plus $0.35 per pound of sausage produced. 5.Insurance and property taxes average $6,400 per month. Required: A.1.Variable 2.Variable 3.Fixed 4.Semivariable 5.Fixed A.Classify each cost as variable,fixed,or semivariable. B. B.Write a formula to express the behavior of the firm's production costs.(Use the form Y = a + bX,where X denotes the quantity of sausage produceD. )

In regression analysis,the variable that is being predicted is known as the independent variable.

The following data relate to the Lisle Company for May and August of the current year: May and August were the lowest and highest activity levels,and Lisle uses the high-low method to analyze cost behavior.Which of the following statements is true?

Which of the following statements about the visual-fit method is (are)true? I.The method results in the creation of a scatter diagram. II.The method is not totally objective because of the manner in which the cost line is determined. III.The method is especially helpful in the determination of outliers.

Committed fixed costs would include:

Distinguish between least-squares regression and multiple regression as cost estimation methods.

The nonstatistical method of cost estimation that calls for the creation of a scatter diagram is the:

How much would Swanson's pay if it made 5,500 copies?

The following data relate to the Lisle Company for May and August of the current year: May and August were the lowest and highest activity levels,and Lisle uses the high-low method to analyze cost behavior.Which of the following statements is true?

What type of cost exhibits the behavior that follows?

A staff assistant at Whitmere Corporation recently determined that the first four units completed in a new manufacturing process took 800 hours to complete,or an average of 200 hours per unit.The assistant also found that when the cumulative output produced doubles,the average labor time declines by 20%.On the basis of this information,how many total hours would Washington use if it produces 16 units?

Which of the following is not an example of a committed fixed cost?

Which of the following choices denotes the typical cost behavior of advertising and sales commissions?

Chesley Corporation,which uses least-squares regression analysis,has derived the following regression equation for estimates of manufacturing overhead: Y = 495,000 + 5.65X.Which of the following statements is true if the primary cost driver is machine hours?

Wooster has the following budgeted costs at its anticipated production level (expressed in hours): variable overhead,$165,000;fixed overhead,$250,000.If Wooster now revises its anticipated production slightly upward,it would expect:

A high R² measure in regression analysis is preferred because: