Question 1

The __________ method is used whenever least squares is used to fit an equation involving two or more independent variables.

Accepted Answer

The answer of The __________ method is used whenever least...

Question 2

The following computer printout estimated overhead costs using linear regression:
   Required:

Accepted Answer

The answer of The following computer printout estimated overhead costs...

Question 3

The high-low method preselects the two points that are used to compute the parameters F and X in the expression Y = F + VX

Accepted Answer

A) True 
 B)False

Question 4

The confidence interval for the predicted value of Y

Accepted Answer

A)  is a measure of the likelihood that the prediction interval will not contain the actual cost. 
B)  is constructed by multiplying the t-statistic times the standard error. 
C)  can only be computed with 95 percent confidence. 
D)  all of the above. 
A)  is a measure of the likelihood that the prediction interval will not contain the actual cost. 
B)  is constructed by multiplying the t-statistic times the standard error. 
C)  can only be computed with 95 percent confidence. 
D)  all of the above.

Question 5

A cost that does not change as output changes is a variable cost, and one that changes is a fixed cost.

Accepted Answer

A) True 
 B)False

Question 6

The __________ parameter is the point at which the mixed cost line intercepts the cost (vertical) axis.

Accepted Answer

The answer of The __________ parameter is the point at...

Question 7

Spokane Corporation found its maintenance cost and sales dollars to be somewhat correlated. Last year's high and low observations were as follows:   What is the fixed portion of the maintenance cost?

Accepted Answer

A)  $28,000 
B)  $52,000 
C)  $60,000 
D)  $14,000 
A)  $28,000 
B)  $52,000 
C)  $60,000 
D)  $14,000

Question 8

Advantages of the method of least squares over the high-low method include all of the following EXCEPT

Accepted Answer

A)  a statistical method is used to mathematically derive the cost function. 
B)  only two points are used to develop the cost function. 
C)  the squared differences between actual observations and the line (cost function) are minimized. 
D)  all the observations have an effect on the cost function. 
A)  a statistical method is used to mathematically derive the cost function. 
B)  only two points are used to develop the cost function. 
C)  the squared differences between actual observations and the line (cost function) are minimized. 
D)  all the observations have an effect on the cost function.

Question 9

What does a correlation coefficient near 0 mean?

Accepted Answer

A)  Two variables are moving in the opposite direction. 
B)  Two variables are moving in the same direction. 
C)  Two variables are unrelated. 
D)  One variable is a good predictor of the other. 
A)  Two variables are moving in the opposite direction. 
B)  Two variables are moving in the same direction. 
C)  Two variables are unrelated. 
D)  One variable is a good predictor of the other.

Question 10

What is the difference between a correlation equal to -1 and a correlation equal to 0?

Accepted Answer

A)  A correlation equal to -1 means two alternatives are moving in the same direction, whereas a correlation of 0 means they are moving in opposite directions. 
B)  A correlation equal to -1 means two alternatives are moving in the same direction, whereas a correlation of 0 means they are unrelated. 
C)  A correlation equal to -1 means two alternatives are moving in opposite directions, whereas a correlation of 0 means they are moving in the same direction. 
D)  A correlation equal to -1 means two alternatives are moving in opposite directions, whereas a correlation of 0 means they are unrelated. 
A)  A correlation equal to -1 means two alternatives are moving in the same direction, whereas a correlation of 0 means they are moving in opposite directions. 
B)  A correlation equal to -1 means two alternatives are moving in the same direction, whereas a correlation of 0 means they are unrelated. 
C)  A correlation equal to -1 means two alternatives are moving in opposite directions, whereas a correlation of 0 means they are moving in the same direction. 
D)  A correlation equal to -1 means two alternatives are moving in opposite directions, whereas a correlation of 0 means they are unrelated.

Question 11

The following information was available about supplies cost for the second quarter of the year:   Using the high-low method, the estimate of supplies cost at 1,000 units of production is

Accepted Answer

A)  $2,700. 
B)  $4,460. 
C)  $4,900. 
D)  $7,100. 
A)  $2,700. 
B)  $4,460. 
C)  $4,900. 
D)  $7,100.

Question 12

Figure 3-9 Hereford Company is planning to introduce a new product with an 80 percent learning rate for production for batches of 1,000 units. The variable labor costs are $30 per unit for the first 1,000-unit batch. Each batch requires 100 hours. There are $10,000 in fixed costs not subject to learning.
Refer to Figure 3-9. What is the cumulative total time using the incremental unit-time learning curve to produce 2,000 units?

Accepted Answer

A)  180 
B)  100 
C)  90 
D)  80 
A)  180 
B)  100 
C)  90 
D)  80

Question 13

The __________ method may be used to determine the activities and amounts for cost behavior.

Accepted Answer

industrial

Question 14

The following information was taken from a computer printout generated with the least-squares method for use in estimating overhead costs:   The cost formula is

Accepted Answer

A)  Overhead = $5,700 - $45X 
B)  Overhead = $5,700 + $45X 
C)  Overhead = $5,700 + ($45 ´ 0.72) 
D)  Overhead = $5,700 ´ 0.72 
A)  Overhead = $5,700 - $45X 
B)  Overhead = $5,700 + $45X 
C)  Overhead = $5,700 + ($45 ´ 0.72) 
D)  Overhead = $5,700 ´ 0.72

Question 15

Highestec, Inc., is beginning the production of a new product. Management believes that 500 labor hours will be required to complete the new unit. A 90 percent cumulative average-time learning curve model for direct labor hours is assumed to be valid. Data on costs are as follows:
   Required:

Accepted Answer

The answer of Highestec, Inc., is beginning the production of...

Question 16

Stanfil Corporation developed a cost function for manufacturing overhead costs of Y = $8,000 + $1.60X. Estimated manufacturing overhead costs at 10,000 units of production are

Accepted Answer

A)  $16,000. 
B)  $17,600. 
C)  $24,000. 
D)  $26,000. 
A)  $16,000. 
B)  $17,600. 
C)  $24,000. 
D)  $26,000.

Question 17

Finding a strong statistical association between an activity cost and an activity driver can provide evidence to managers about the correctness of a driver selection.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following statements is TRUE about fixed and variable costs?

Accepted Answer

A)  Variable costs are constant in total and fixed costs are constant per unit. 
B)  Both costs are constant when considered on a total basis. 
C)  Both costs are constant when considered on a per-unit basis. 
D)  Fixed costs are constant in total and variable costs are constant per unit. 
A)  Variable costs are constant in total and fixed costs are constant per unit. 
B)  Both costs are constant when considered on a total basis. 
C)  Both costs are constant when considered on a per-unit basis. 
D)  Fixed costs are constant in total and variable costs are constant per unit.

Question 19

Weaknesses of the high-low method include all of the following EXCEPT

Accepted Answer

A)  only two observations are used to develop the cost function. 
B)  the high and low activity levels may not be representative. 
C)  the method does not detect if the cost behavior is nonlinear. 
D)  the method is relatively complex and difficult to apply. 
A)  only two observations are used to develop the cost function. 
B)  the high and low activity levels may not be representative. 
C)  the method does not detect if the cost behavior is nonlinear. 
D)  the method is relatively complex and difficult to apply.

Question 20

Amigos Industries analyzed the relationship between total factory overhead and changes in direct labor hours. It found the following: Y = $6,000 + $6X
The Y in the equation is an estimate of

Accepted Answer

A)  total variable costs. 
B)  total direct labor hours. 
C)  total factory overhead. 
D)  total fixed costs. 
A)  total variable costs. 
B)  total direct labor hours. 
C)  total factory overhead. 
D)  total fixed costs.

The __________ method is used whenever least squares is used to fit an equation involving two or more independent variables.

The following computer printout estimated overhead costs using linear regression: Required:

The high-low method preselects the two points that are used to compute the parameters F and X in the expression Y = F + VX

The confidence interval for the predicted value of Y

A cost that does not change as output changes is a variable cost, and one that changes is a fixed cost.

The __________ parameter is the point at which the mixed cost line intercepts the cost (vertical) axis.

Spokane Corporation found its maintenance cost and sales dollars to be somewhat correlated. Last year's high and low observations were as follows: What is the fixed portion of the maintenance cost?

Advantages of the method of least squares over the high-low method include all of the following EXCEPT

What does a correlation coefficient near 0 mean?

What is the difference between a correlation equal to -1 and a correlation equal to 0?

The following information was available about supplies cost for the second quarter of the year: Using the high-low method, the estimate of supplies cost at 1,000 units of production is

The __________ method may be used to determine the activities and amounts for cost behavior.

The following information was taken from a computer printout generated with the least-squares method for use in estimating overhead costs: The cost formula is

Highestec, Inc., is beginning the production of a new product. Management believes that 500 labor hours will be required to complete the new unit. A 90 percent cumulative average-time learning curve model for direct labor hours is assumed to be valid. Data on costs are as follows: Required:

Stanfil Corporation developed a cost function for manufacturing overhead costs of Y = $8,000 + $1.60X. Estimated manufacturing overhead costs at 10,000 units of production are

Finding a strong statistical association between an activity cost and an activity driver can provide evidence to managers about the correctness of a driver selection.

Which of the following statements is TRUE about fixed and variable costs?

Weaknesses of the high-low method include all of the following EXCEPT

Amigos Industries analyzed the relationship between total factory overhead and changes in direct labor hours. It found the following: Y = $6,000 + $6X The Y in the equation is an estimate of

Introduction to Cost Management

Basic Cost Management Concepts

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control Key

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters

Exam 3: Cost Behavior

The __________ method is used whenever least squares is used to fit an equation involving two or more independent variables.

The following computer printout estimated overhead costs using linear regression: Required:

The high-low method preselects the two points that are used to compute the parameters F and X in the expression Y = F + VX

The confidence interval for the predicted value of Y

A cost that does not change as output changes is a variable cost, and one that changes is a fixed cost.

The __________ parameter is the point at which the mixed cost line intercepts the cost (vertical) axis.

Spokane Corporation found its maintenance cost and sales dollars to be somewhat correlated. Last year's high and low observations were as follows: What is the fixed portion of the maintenance cost?

Advantages of the method of least squares over the high-low method include all of the following EXCEPT

What does a correlation coefficient near 0 mean?

What is the difference between a correlation equal to -1 and a correlation equal to 0?

The following information was available about supplies cost for the second quarter of the year: Using the high-low method, the estimate of supplies cost at 1,000 units of production is

The __________ method may be used to determine the activities and amounts for cost behavior.

The following information was taken from a computer printout generated with the least-squares method for use in estimating overhead costs: The cost formula is

Highestec, Inc., is beginning the production of a new product. Management believes that 500 labor hours will be required to complete the new unit. A 90 percent cumulative average-time learning curve model for direct labor hours is assumed to be valid. Data on costs are as follows: Required:

Stanfil Corporation developed a cost function for manufacturing overhead costs of Y = $8,000 + $1.60X. Estimated manufacturing overhead costs at 10,000 units of production are

Finding a strong statistical association between an activity cost and an activity driver can provide evidence to managers about the correctness of a driver selection.

Which of the following statements is TRUE about fixed and variable costs?

Weaknesses of the high-low method include all of the following EXCEPT

Amigos Industries analyzed the relationship between total factory overhead and changes in direct labor hours. It found the following: Y = $6,000 + $6X The Y in the equation is an estimate of

Introduction to Cost Management

Basic Cost Management Concepts

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control Key

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters