Exam 3: Measurement of Cost Behavior

Engineering analysis and account analysis are similar because ________.

A cost function estimated with least squares regression has a coefficient of determination of 0.95.This statistic indicates that the cost function is ________.

When estimating a cost function,we assess reliability using ________.

Sunset 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,Sunset Motel has 8,000 guest days.In the next year,Sunset 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 total variable custodial cost for next year?

In a regression analysis,the constant from the linear cost function is a measure of reliability.

In a linear cost function,the slope measures the ________.

To estimate cost functions using account analysis,each account is classified as a ________ cost or ________ cost with respect to ________.

The following data points are available.This is an example of a ________ cost. Units Costs 600 \ 560 650 \ 565 800 \ 580 900 \ 590

Managers apply two criteria to obtain accurate and useful cost functions.These criteria are ________.

When examining the output from regression analysis,with one independent variable,the variable cost measure is labeled the ________ by most computer programs.

Donahue currently produces 120,000 units at a cost of $400,000.Of the $400,000 cost,$200,000 is a fixed cost.Next year Donahue expects to produce 145,000 units.Donahue's relevant range for production activities is 100,000 to 150,000 units.If 145,000 units are produced next year,what is the expected fixed cost for next year?

A hospital adds a new addition and needs to acquire some new equipment for the addition.The cost driver for the equipment is patient-days per month.The new addition increases the patient-days per month outside the relevant range.What type of equipment costs will change as a result of the addition?

If regression analysis is used when measuring cost behavior,plotting the cost against each of the potential cost drivers is not necessary.

Many organizations use a linear relationship with a single cost driver to describe a cost even though the cost may have multiple cost drivers.Why?

The Penquin Company has obtained the following data: Mlonth Indirect Production Costs Direct Labor Hours July \ 92,095 4,900 August \ 105,056 5,480 September \ 80,000 3,000 October \ 99,400 4,400 November \ 110,000 6,000 December \ 97,404 3,900 Required: A) Using the high-low method, determine the cost function for the above data. Round to two decimal places. B) If direct labor hours equal 10,000, what are the total expected indirect production costs?

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

To assess the ________ of estimates from regression analysis,we use the ________.

In an economic recession,a company could NOT eliminate ________.

It may be difficult to trace costs to products or services if the costs are ________.

Account analysis is used to identify appropriate cost drivers and their effects on the costs of making a product or providing a service.