Exam 8: Determining How Costs Behave

The Viola Shoppe has 25 employees that work full time.Twenty of the employees are salaried employees paid $5,000 per month.How does the manager at the Viola Shoppe classify the total costs?

In the cost function y = $10,000,the fixed cost of $10,000 is called a/an ________.

In which step of estimating a cost function using quantitative analysis do managers realize the relationship between the driver and costs is approximately linear,or there was an error in recording the data?

Costs in a step cost function increase by discrete amounts as the level of activity increases from one range to the next.

The Clean Manufacturing Company reported the following information in November: Indirect manufacturing labor hours = $3,750 + ($15 per machine hour × 925 machine hours). Required: Use the account analysis method and choose the linear cost equation to represent this data.

In a/an ________,the graph of total costs is not a straight line within the relevant range.

Managers must be careful not to interpret a high correlation,or connection,in the relationship between two variables to mean that either variable causes the other.

In which step of the decision process does a manager gather potential information about the cost driver?

The manager at the Center of Research encourages interdepartmental coordination among the staff,and the pooling of expert knowledge from different business functions.The manager is concerned because the costing method implemented at the company is based on opinions rather than systematic estimation.This creates issues because the accuracy of the cost estimates is based on the skill of the employees that provide inputs.What cost estimation is implemented at the Center of Research?

Managerial accountants believe that one component of an ideal database contains:

When all items of costs in the dependent variable do not have the same cost driver,the management accountant should consider creating homogeneous cost pools.

What is the impact of price breaks on direct material costs?

What forms of quantitative analysis do managers implement to estimate the cost function?

Only a cause-and-effect relationship,not merely correlation,establishes an economically plausible relationship between the level of an activity and its costs.

Managers use cost estimation to measure a relationship based on data from past costs.

Why is the cost hierarchy important to managerial accountants?

What is r²,the coefficient of determination?

What is the ideal time-series database?

When a relationship between the cost driver and the cost is not stationary,the managerial accountant should pool data to provide a larger data set to obtain the cost estimation.

What is the difference between time-series data and cross-sectional data?