Exam 3: Cost Behavior

The following cost functions were developed for manufacturing overhead costs: If January production is expected to be 2,000 units requiring 3,000 direct labor hours, estimated manufacturing overhead costs would be

The cost function derived by the least-squares cost estimation method

The average unit cost at a monthly volume of 9,000 units is $3, and the average unit cost at a monthly volume of 22,500 units is $2.10. Required: Develop an equation for total monthly costs.

In the formula Y = F + VX, Y refers to the

The following is an example of a mixed cost:

Multiple regression can be useful to assess cost behavior when dependent variable is affected by only one independent variable.

Figure 3-5 Longberry Corporation manufactures and sells party items. The following representative direct labor hours and production costs are provided for a four-month period: Refer to Figure 3-5. The monthly production cost can be expressed as

__________ is useful when the dependent variable is affected by more than one independent variable.

If a company changes from skilled labor to robots, the previous data are of little value in predicting future costs.

A correlation coefficient near -1 means that two variables are moving in the __________ direction

Fixed costs are costs that, in total, are constant within the relevant range as the level of the associated driver varies.

The high-low method may give unsatisfactory results if

Figure 3-7 The following computer printout estimated overhead costs using regression: Please find the following statistical table During the last accounting period 10,000 DLH were worked. Refer to Figure 3-7. The hypothesis tests of the cost parameters indicate(s) that

Resources are categorized as flexible, which are supplied as needed, and committed, which are supplied in advance of usage.

Cost behavior analysis focuses on how costs

Figure 3-7 The following computer printout estimated overhead costs using regression: Please find the following statistical table During the last accounting period 10,000 DLH were worked. Refer to Figure 3-7. What is the confidence interval for the predicted overhead cost rounded to the nearest whole number for a 90 percent confidence level?

Which of the following decision-making tools would NOT be useful in determining the slope and intercept of a mixed cost?

The account analysis method can be used to estimate costs by classifying accounts in the general ledger as variable.

Variable costs are defined as costs that, in total, are constant regardless of change in an activity driver.

The drivers that explain changes in costs as units produced change are called: