Exam 10: Determining How Costs Behave

The coefficient of determination (r²)measures the percentage of variation in X (the independent variable)explained by Y (the dependent variable).

Quantum Company uses the high-low method to estimate the cost function.The information for 2017 is provided below: What is the estimated total cost when 450 machine-hours are used?

List and briefly describe the six steps in estimating a cost function under quantitative analysis.

At the Wild Cat Group Company,the cost of the library and information center has always been charged to the various departments based upon number of employees.Recently,opinions gathered from the department managers indicate that the number of engineers within a department might be a better predictor of library and information center costs. If the number of engineers is considered the cost driver,what amount of library and information center costs will be allocated to Department A? (Round any intermediary calculations two decimal places and your final answer to the nearest dollar. )

The larger the vertical difference between actual costs and predicted costs the better the goodness of fit.

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

Which of the following is a step to overcome problems related to data collection for estimating cost function?

Mountain Manufacturing Inc.ran its machines in March,a slow month,for 410 hours for a total cost of $63,000.In July,a peak month,the freezer ran for 756 hours for a total cost of $92,800. Required: a.What is the cost estimating equation for the department if hours of freezer use are used as the cost driver? b.What is the estimated total cost at an operating level of 600 hours?

Each time Mayberry Nursery hires a new employee,it must wait for some period of time before the employee can meet production standards.Management is unsure of the learning curve in its operations but it knows the first job by a new employee averages 40 hours and the second job averages 32 hours.Assume all jobs to be equal in size. Required: a.What is the learning-curve percentage,assuming the cumulative average-time method? b.What is the time for a new employee to build 16 units with this learning curve using the cumulative average-time method? You may use an index of −0.1520.

Which of the following best describes a step variable-cost function?

One assumption frequently made in cost behavior estimation is that changes in total costs can be explained by changes in the level of a single activity.

M & G TV and Appliance Store is a small company that has hired you to perform some management advisory services.The following information pertains to 2017 operations. What was the variable cost per unit sold for 2017?

A step cost function is an example of a linear cost function.

Managers should use past data to create a cost function and then use the exact information provided by that cost function to create the budgetary forecast for the next year.

At the Wild Cat Group Company,the cost of the library and information center has always been charged to the various departments based upon number of employees.Recently,opinions gathered from the department managers indicate that the number of engineers within a department might be a better predictor of library and information center costs. Which cost estimation method is being used by Wild Cat Group Company?

Which of the following represents cross-sectional data?

Presented below are the production data for the first six months of the year for the mixed costs incurred by Venus Company. Venus Company uses the high-low method to analyze mixed costs. How would the cost function be stated?

Taunton Company uses the high-low method to estimate its cost function.The information for 2017 is provided below: What is the estimated total cost when 1,900 machine-hours are used?

In a graphical display of a cost function,the steepness of a line represents the total amount of fixed costs.

The cost to be predicted and managed is referred to as the ________.