Exam 10: Determining How Costs Behave

Taunton Company uses the high-low method to estimate its cost function.The information for 2017 is provided below: What is the constant for the estimated cost equation?

When using the high-low method,the two observations used are the high and low observations of the ________.

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?

The account analysis method estimates cost functions by classifying various cost accounts as variable,fixed,or mixed with respect to the identified level of activity.

The high-low method ________.

If cost accountants decide to use production of prior periods as a cost driver for repair cost of the current period they understand that

Which of the following is not a nonlinear cost function?

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. Which cost estimation method is being used by South Coast Appliance Store?

Data collection problems can arise when extreme values of observations occur.

The cost function y = 2,700 + 8X ________.

When estimating the cost function for each cost pool,the manager must pay careful attention to the cost hierarchy because the cost pool may have more than one cost driver from different levels of the cost hierarchy.

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

What are the three criteria a company should use to evaluate and choose a cost driver? Briefly explain each of the three criteria.

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 were the total fixed costs for 2017?

The account analysis method estimates cost functions ________.

An example of a physical cause-and-effect relationship is when additional units of production increase total direct material costs.

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?

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 are the estimated total costs if South Coast's store expects to sell 8,900 units next year?

A step variable-cost function ________.

Which cost estimation method uses time-and-motion studies to reveal that to make a high quality men's suit jacket ,it takes of 3 hours of direct labor effort per jacket and 5 minutes of a salaried manager to perform quality control?