The facilities housekeeping department at St.Luke's Hospital has determined that the appropriate cost driver for housekeeping costs is patient-days.There are 10,000 patient-days per month.The department has collected the following accounts for the past month: $\begin{array}{ll}\text { Monthly Housekeeping Expenses }&\text { Amount }\\ \text { Supervisors' Salaries Expense } & \$ 10,000 \\ \text { Depreciation Expense-Scrubbing Machines } & \$ 5,000 \\ \text { Cleaning Supplies Expense } & \$ 7,000 \\ \text { Hourly Workers' Wages Expense } & \$ 100,000 \\ \text { Insurance Expense - Scrubbing Machines } & \$ 2,000 \end{array}$ Required: Estimate the cost function using the account analysis method.

Fixed Costs: @#IMG-DLM& Variable Costs: @#IMG-DLM& Variabl

The Joseph Company used regression analysis to predict the annual cost of utilities.The results were as follows: $\begin{array}{ll}&\text { Utilities Cost }\\ &\text { Explained by Direct Labor Hours }\\ \text { Constant } & 2,500 \\ \text { Standard error of } Y \text { estimate } & 0.7 \\ \text { R-Squared } & 0.85 \\ \text { No. of observations } & 30 \\ \text { Degrees of freedom } & 28 \\ \text { X Coefficient } & 0.84 \\ \text { Standard error of coefficient } & 0.92 \end{array}$ The coefficient of determination is ________.

A) 0.70 B) 0.84 C) 0.85 D) 0.92 A) 0.70 B) 0.84 C) 0.85 D) 0.92

Jorgensen Company used least squares regression analysis to obtain the following output: Mainterance Department Cost Explained by Number of Labor Hours $\begin{array}{ll} \text { Constant } & 8,200 \\ \text { Standard error of } Y \text { estimate } & 630 \\ \mathrm{R}^{2} & 0.94 \\ \text { No. of observations } & 20 \\ \text { Degrees of freedom } & 18 \\ \text { X coefficient } & 2.21\\ \text { Standard error of coefficient }&0.0966 \end{array}$ Required: A) What is the total fixed cost of the maintenance department? B) What is the variable cost per labor hour for the maintenance department? C) What is the linear cost function? D) What is the coefficient of determination? Comment on the goodness of fit.

A)$8,200 B)$2.21 C)Y = $8,200 + $2.21X W

The Lindsey Company used regression analysis to predict the annual cost of utilities.The results were as follows: $\begin{array}{ll}&\text { Utilities Cost }\\ &\text { Explained by Direct Labor Hours }\\ \text { Constant } & 5,000 \\ \text { Standard error of } Y \text { estimate } & 595 \\ \text { R-Squared } & 0.87 \\ \text { No. of observations } & 30 \\ \text { Degrees of freedom } & 28 \\ \text { X Coefficient } & 4.02 \\ \text { Standarderror of coefficient } & 0.81 \end{array}$ The linear cost function is ________ where Y = Total utilities cost and X = Number of direct labor hours.

A) Y = $5,000 + $0.87X B) Y = $5,000 + $0.81X C) Y = $595 + $0.81X D) Y = $5,000 + $4.02X A) Y = $5,000 + $0.87X B) Y = $5,000 + $0.81X C) Y = $595 + $0.81X D) Y = $5,000 + $4.02X

Atlanta Senior Center is planning its annual fundraiser.The event committee has developed the following budget for the event. $\begin{array}{ll} \text { Ballroom rental } & \$ 3,000 \\ \text { Entertainment } & \$ 2,500 \\ \text { Printing } & \$ 600 \text { plus } \$ 9 \text { per person } \\ \text { Food } & \$ 30 \text { per person } \\ \text { Decorations } & \$ 700 \text { plus } \$ 5 \text { per person } \end{array}$ Required: A) Determine the cost function. B) If Atlanta Senior Center charges $100 per person, and 1,000 people attend, how much profit will be derived by this event?

A)Fixed cost = $3,000 + $2,500 + $600 +

Exam 3: Measurement of Cost Behavior

The facilities housekeeping department at St.Luke's Hospital has determined that the appropriate cost driver for housekeeping costs is patient-days.There are 10,000 patient-days per month.The department has collected the following accounts for the past month: Monthly Housekeeping Expenses Amount Supervisors' Salaries Expense \ 10,000 Depreciation Expense-Scrubbing Machines \ 5,000 Cleaning Supplies Expense \ 7,000 Hourly Workers' Wages Expense \ 100,000 Insurance Expense - Scrubbing Machines \ 2,000 Required: Estimate the cost function using the account analysis method.

(Essay)

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Question 21

Companies can reduce or eliminate committed fixed costs when demand falls during an economic downturn.

(True/False)

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Question 22

The use of high-technology methods rather than labor in manufacturing products usually means a much greater fixed-cost component to total costs.

(True/False)

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Question 23

The Joseph Company used regression analysis to predict the annual cost of utilities.The results were as follows: Utilities Cost Explained by Direct Labor Hours Constant 2,500 Standard error of Y estimate 0.7 R-Squared 0.85 No. of observations 30 Degrees of freedom 28 X Coefficient 0.84 Standard error of coefficient 0.92 The coefficient of determination is ________.

(Multiple Choice)

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Question 24

Account analysis ________.

(Multiple Choice)

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Question 25

Jorgensen Company used least squares regression analysis to obtain the following output: Mainterance Department Cost Explained by Number of Labor Hours Constant 8,200 Standard error of Y estimate 630 0.94 No. of observations 20 Degrees of freedom 18 X coefficient 2.21 Standard error of coefficient 0.0966 Required: A) What is the total fixed cost of the maintenance department? B) What is the variable cost per labor hour for the maintenance department? C) What is the linear cost function? D) What is the coefficient of determination? Comment on the goodness of fit.

(Essay)

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Question 26

In a linear mixed cost function,the slope of the function is the fixed cost per unit of the cost driver.

(True/False)

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Question 27

During an engineering analysis,knowledge about new costs may be obtained from experiments with prototypes.

(True/False)

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Question 28

Sunrise Motel's cost function is given as: Y = $75,000 + $9.50X Where: Y = annual custodial cost X = number of guest-days of occupancy In the current year,Sunrise Motel has 8,000 guest days.In the next year,Sunrise Motel expects an occupancy level of 10,000 guest days.(All costs next year will remain in the same relevant range as the current year.)What is the expected fixed custodial cost for next year?

(Multiple Choice)

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Question 29

The Lindsey Company used regression analysis to predict the annual cost of utilities.The results were as follows: Utilities Cost Explained by Direct Labor Hours Constant 5,000 Standard error of Y estimate 595 R-Squared 0.87 No. of observations 30 Degrees of freedom 28 X Coefficient 4.02 Standarderror of coefficient 0.81 The linear cost function is ________ where Y = Total utilities cost and X = Number of direct labor hours.

(Multiple Choice)

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Question 30

Consider the following linear mixed-cost function: Y = $110,000 + $5.50X Where: Y = total annual custodial cost $X = \text { number of patient-days }$ What does the $5.50 represent?

(Multiple Choice)

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Question 31

Costs that may be essential to the long-run achievement of the organization's goals,but that managers can almost reduce to zero in the short-run,are called ________.

(Multiple Choice)

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Question 32

In an economic downturn,a company could temporarily reduce or eliminate a(n)________.

(Multiple Choice)

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Question 33

The account analysis method of measuring cost behavior does not rely on subjective assessments.

(True/False)

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Question 34

Atlanta Senior Center is planning its annual fundraiser.The event committee has developed the following budget for the event. Ballroom rental \ 3,000 Entertainment \ 2,500 Printing \ 600 plus \ 9 per person Food \ 30 per person Decorations \ 700 plus \ 5 per person Required: A) Determine the cost function. B) If Atlanta Senior Center charges $100 per person, and 1,000 people attend, how much profit will be derived by this event?

(Essay)

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Question 35

The high-low method uses estimated cost data to approximate the cost function.

(True/False)

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Question 36

Due to the economic downturn,a company has reduced charitable donations to community groups.This is an example of a ________.

(Multiple Choice)

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Question 37

Three cost drivers are used to estimate the cost of processing insurance claims.The cost drivers are: (1)claim amount,(2)age of vehicle in accident and (3)age of driver in accident.The percentages attributable to the cost drivers are 50% for claim amount,and 15% for each of the other two cost drivers.What is the cost to process Claim #101? The claim amount is $1,000.The age of the vehicle is 5 years.The age of the driver is 20 years.

(Multiple Choice)

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Question 38

Managers can influence the amount of fixed and variable costs in a firm through decisions about ________.

(Multiple Choice)

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Question 39

In an economic downturn,a company could temporarily reduce or eliminate a(n)________.

(Multiple Choice)

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Question 40

Companies can reduce or eliminate committed fixed costs when demand falls during an economic downturn.

The use of high-technology methods rather than labor in manufacturing products usually means a much greater fixed-cost component to total costs.

Account analysis ________.

In a linear mixed cost function,the slope of the function is the fixed cost per unit of the cost driver.

During an engineering analysis,knowledge about new costs may be obtained from experiments with prototypes.

Consider the following linear mixed-cost function: Y = $110,000 + $5.50X Where: Y = total annual custodial cost $X = \text { number of patient-days }$ What does the $5.50 represent?

Costs that may be essential to the long-run achievement of the organization's goals,but that managers can almost reduce to zero in the short-run,are called ________.

In an economic downturn,a company could temporarily reduce or eliminate a(n)________.

The account analysis method of measuring cost behavior does not rely on subjective assessments.

The high-low method uses estimated cost data to approximate the cost function.

Due to the economic downturn,a company has reduced charitable donations to community groups.This is an example of a ________.

Managers can influence the amount of fixed and variable costs in a firm through decisions about ________.

In an economic downturn,a company could temporarily reduce or eliminate a(n)________.

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus on Pricing Decisions

Relevant Information for Decision Making With a Focus on Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Exam 3: Measurement of Cost Behavior

Companies can reduce or eliminate committed fixed costs when demand falls during an economic downturn.

The use of high-technology methods rather than labor in manufacturing products usually means a much greater fixed-cost component to total costs.

Account analysis ________.

In a linear mixed cost function,the slope of the function is the fixed cost per unit of the cost driver.

During an engineering analysis,knowledge about new costs may be obtained from experiments with prototypes.

Consider the following linear mixed-cost function: Y = $110,000 + $5.50X Where: Y = total annual custodial cost X= number of patient-days X = \text { number of patient-days }X= number of patient-days What does the $5.50 represent?

Costs that may be essential to the long-run achievement of the organization's goals,but that managers can almost reduce to zero in the short-run,are called ________.

In an economic downturn,a company could temporarily reduce or eliminate a(n)________.

The account analysis method of measuring cost behavior does not rely on subjective assessments.

The high-low method uses estimated cost data to approximate the cost function.

Due to the economic downturn,a company has reduced charitable donations to community groups.This is an example of a ________.

Managers can influence the amount of fixed and variable costs in a firm through decisions about ________.

In an economic downturn,a company could temporarily reduce or eliminate a(n)________.

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus on Pricing Decisions

Relevant Information for Decision Making With a Focus on Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Consider the following linear mixed-cost function: Y = $110,000 + $5.50X Where: Y = total annual custodial cost $X = \text { number of patient-days }$ What does the $5.50 represent?