Question 1

Using the least-squares regression method, the estimate of the variable component of utility cost per machine-hour is closest to:

Accepted Answer

A) $8.15 
B) $5.78 
C) $5.57 
D) $5.85 
A) $8.15 
B) $5.78 
C) $5.57 
D) $5.85 D

Question 2

Moeller Inc.'s inspection costs are listed below:   Management believes that inspection cost is a mixed cost that depends on the number of units produced. Using the least-squares regression method, the estimates of the variable and fixed components of inspection cost would be closest to:

Accepted Answer

A) $51.76 per unit plus $2,621 per month 
B) $51.99 per unit plus $2,584 per month 
C) $67.86 per unit plus $11,053 per month 
D) $52.23 per unit plus $2,550 per month 
A) $51.76 per unit plus $2,621 per month 
B) $51.99 per unit plus $2,584 per month 
C) $67.86 per unit plus $11,053 per month 
D) $52.23 per unit plus $2,550 per month B

Question 3

The Stephens Leadership Center provides training seminars in personal development and time management. The company is relatively new and management is seeking information regarding the Center's cost structure. The following information has been gathered since the inception of the business in January of the current year:   Required:
a. Using the high-low method, estimate the variable cost per seminar and the total fixed cost per month.
b. Using the least-squares method, estimate the variable cost per seminar and the total fixed cost per month.

Accepted Answer

a. High-Low Method:   Variable cost = Change in Cost/Change in activity = $6,762/8 seminars = $845.25 per seminar
Fixed cost element = Total cost - Variable cost element
= $23,762 - ($845.25 per seminar × 18 seminars) = $8,547.50
Cost formula for seminar costs: $8,547.50 per month plus $845.25 per seminar held
b. Least-Squares Method:
n = 6
sumX = 84
sumY = 121,662
sumXY = 1,737,816
sumX^2 = 1,218
b = [n(sumXY) - (sumX)(sumY)]/[n(sumX^2) - (sumX)^2]
= [6(1,737,816) - (84)(121,662)]/[6(1,218) - (84)^2]
= $822.57 (rounded to the nearest whole cent)
a = [(sumY) - b(sumX)]/n
= [(121,662) - 822.57(84)]/6
= $8,761 (rounded to the nearest whole dollar)
The cost formula is $8,761 per month plus $822.57 per seminar. A similar answer can be obtained using Microsoft Excel.

Question 4

Galarneau Inc. maintains a call center to take orders, answer questions, and handle complaints. The costs of the call center for a number of recent months are listed below:   Management believes that the cost of the call center is a mixed cost that depends on the number of calls taken.
Required:
Estimate the variable cost per call and fixed cost per month using the least-squares regression method.

Accepted Answer

Using Microsoft Excel function

Question 5

Using the least-squares regression method, the estimate of the fixed component of inspection cost per month is closest to:

Accepted Answer

A) $1,979 
B) $6,033 
C) $5,624 
D) $2,021 
A) $1,979 
B) $6,033 
C) $5,624 
D) $2,021

Question 6

Using the least-squares regression method, the estimated monthly fixed component of the electrical cost is closest to:

Accepted Answer

A) $5 
B) $20 
C) $6 
D) $10 
A) $5 
B) $20 
C) $6 
D) $10

Question 7

Using the least-squares regression method, the estimate of the fixed component of maintenance cost per month is closest to:

Accepted Answer

A) $2,859 
B) $8,241 
C) $8,550 
D) $2,782 
A) $2,859 
B) $8,241 
C) $8,550 
D) $2,782

Question 8

Which of the following methods of analyzing mixed costs can be used to estimate an equation for the mixed cost?

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 9

Least-squares regression selects the values for the intercept and slope of a straight line that minimize the sum of the squared errors.

Accepted Answer

A) True 
 B)False

Question 10

In least-squares regression, independent variables are not included in the computations of the slope and intercept.

Accepted Answer

A) True 
 B)False

Question 11

Your boss would like you to estimate the fixed and variable components of a particular cost. Actual data for this cost over four recent periods appear below.   Using the least-squares regression method, what is the cost formula for this cost?

Accepted Answer

A) Y = $156.64 + $9.20X 
B) Y = $0.00 + $16.01X 
C) Y = $164.54 + $8.86X 
D) Y = $169.97 + $6.10X 
A) Y = $156.64 + $9.20X 
B) Y = $0.00 + $16.01X 
C) Y = $164.54 + $8.86X 
D) Y = $169.97 + $6.10X

Question 12

The management of Ferriman Corporation would like to better understand the behavior of the company's warranty costs. Those costs are listed below for a number of recent months:   Management believes that warranty cost is a mixed cost that depends on the number of product returns.
Required:
Estimate the variable cost per product return and the fixed cost per month using the least-squares regression method.

Accepted Answer

The solution using Microsoft Excel funct

Question 13

Using the least-squares regression method, the estimate of the variable component of maintenance cost per machine-hour is closest to:

Accepted Answer

A) $9.36 
B) $9.49 
C) $14.06 
D) $9.23 
A) $9.36 
B) $9.49 
C) $14.06 
D) $9.23

Question 14

The management of Ferry Corporation would like for you to analyze their repair costs, which are listed below:   Management believes that repair cost is a mixed cost that depends on the number of machine-hours. Using the least-squares regression method, the estimates of the variable and fixed components of repair cost would be closest to:

Accepted Answer

A) $1.64 per machine-hour plus $29,566 per month 
B) $0.92 per machine-hour plus $31,132 per month 
C) $1.37 per machine-hour plus $30,157 per month 
D) $15.39 per machine-hour plus $33,096 per month 
A) $1.64 per machine-hour plus $29,566 per month 
B) $0.92 per machine-hour plus $31,132 per month 
C) $1.37 per machine-hour plus $30,157 per month 
D) $15.39 per machine-hour plus $33,096 per month

Question 15

Using the least-squares regression method, the estimate of the variable component of inspection cost per unit produced is closest to:

Accepted Answer

A) $9.87 
B) $14.84 
C) $9.26 
D) $9.97 
A) $9.87 
B) $14.84 
C) $9.26 
D) $9.97

Question 16

The least-squares regression method:

Accepted Answer

A) fits a line to data by minimizing the sum of the squared errors from the line. 
B) is generally less accurate than the high-low method. 
C) can be used only if the fixed cost element is larger than the variable cost element. 
D) can be used only if the fixed cost element is smaller than the variable cost element. 
A) fits a line to data by minimizing the sum of the squared errors from the line. 
B) is generally less accurate than the high-low method. 
C) can be used only if the fixed cost element is larger than the variable cost element. 
D) can be used only if the fixed cost element is smaller than the variable cost element.

Question 17

Using the least-squares regression method, the estimated variable electrical cost per machine hour is closest to:

Accepted Answer

A) $0.91 
B) $0.10 
C) $0.20 
D) $0.25 
A) $0.91 
B) $0.10 
C) $0.20 
D) $0.25

Question 18

Executive Training, Inc., provides a personal development seminar that is popular with many companies. The number of seminars offered over the last five months, along with the total costs of offering these seminars, follows:   Required:
a. Using the high-low method, estimate the variable cost per seminar and the total fixed cost per month.
b. Using the least-squares regression method, compute the variable cost per seminar and the total fixed cost per month. (Round off to the nearest whole dollar.)

Accepted Answer

a. Using the high-low method, estimate t

Question 19

Below are cost and activity data for a particular cost over the last four periods. Your boss has asked you to analyze this cost so that management will have a better understanding of how this cost changes in response to changes in activity.   Required:
Using the least-squares regression method, estimate the cost formula for this cost.

Accepted Answer

The solution using Microsoft Excel funct

Question 20

Dillenbeck Printing Corp., a book printer, has provided the following data:   Management believes that the press setup cost is a mixed cost that depends on the number of titles printed. (A specific book that is to be printed is called a "title". Typically, thousands of copies will be printed of each title. Specific steps must be taken to setup the presses for printing each title-for example, changing the printing plates. The costs of these steps are the press setup costs.)
Required:
Estimate the variable cost per title printed and the fixed cost per month using the least-squares regression method.

Accepted Answer

The solution using Microsoft Excel funct

Using the least-squares regression method, the estimate of the variable component of utility cost per machine-hour is closest to:

Moeller Inc.'s inspection costs are listed below: Management believes that inspection cost is a mixed cost that depends on the number of units produced. Using the least-squares regression method, the estimates of the variable and fixed components of inspection cost would be closest to:

Using the least-squares regression method, the estimate of the fixed component of inspection cost per month is closest to:

Using the least-squares regression method, the estimated monthly fixed component of the electrical cost is closest to:

Using the least-squares regression method, the estimate of the fixed component of maintenance cost per month is closest to:

Which of the following methods of analyzing mixed costs can be used to estimate an equation for the mixed cost?

Least-squares regression selects the values for the intercept and slope of a straight line that minimize the sum of the squared errors.

In least-squares regression, independent variables are not included in the computations of the slope and intercept.

Your boss would like you to estimate the fixed and variable components of a particular cost. Actual data for this cost over four recent periods appear below. Using the least-squares regression method, what is the cost formula for this cost?

Using the least-squares regression method, the estimate of the variable component of maintenance cost per machine-hour is closest to:

Using the least-squares regression method, the estimate of the variable component of inspection cost per unit produced is closest to:

The least-squares regression method:

Using the least-squares regression method, the estimated variable electrical cost per machine hour is closest to:

Managerial Accounting and Cost Concepts

Cost-Volume-Profit Relationships

Job-Order Costing

Variable Costing and Segment Reporting: Tools for Management

Activity-Based-Costing: a Tool to Aid Decision Making

Differential Analysis: The Key to Decision Making

Capital Budgeting Decisions

Capital Budgeting Decisions

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Variances

Performance Measurement in Decentralized Organizations

Job-Order Costing

Activity-Based-Costing: a Tool to Aid Decision Making

A Capital Budgeting Decisions

Standard Costs and Variances

Performance Measurement in Decentralized Organizations

Performance Measurement in Decentralized Organizations

Profitability Analysis

Pricing Products and Services

Filters

Exam 14: Managerial Accounting and Cost Concepts

Using the least-squares regression method, the estimate of the variable component of utility cost per machine-hour is closest to:

Moeller Inc.'s inspection costs are listed below: Management believes that inspection cost is a mixed cost that depends on the number of units produced. Using the least-squares regression method, the estimates of the variable and fixed components of inspection cost would be closest to:

Using the least-squares regression method, the estimate of the fixed component of inspection cost per month is closest to:

Using the least-squares regression method, the estimated monthly fixed component of the electrical cost is closest to:

Using the least-squares regression method, the estimate of the fixed component of maintenance cost per month is closest to:

Which of the following methods of analyzing mixed costs can be used to estimate an equation for the mixed cost?

Least-squares regression selects the values for the intercept and slope of a straight line that minimize the sum of the squared errors.

In least-squares regression, independent variables are not included in the computations of the slope and intercept.

Your boss would like you to estimate the fixed and variable components of a particular cost. Actual data for this cost over four recent periods appear below. Using the least-squares regression method, what is the cost formula for this cost?

Using the least-squares regression method, the estimate of the variable component of maintenance cost per machine-hour is closest to:

Using the least-squares regression method, the estimate of the variable component of inspection cost per unit produced is closest to:

The least-squares regression method:

Using the least-squares regression method, the estimated variable electrical cost per machine hour is closest to:

Managerial Accounting and Cost Concepts

Cost-Volume-Profit Relationships

Job-Order Costing

Variable Costing and Segment Reporting: Tools for Management

Activity-Based-Costing: a Tool to Aid Decision Making

Differential Analysis: The Key to Decision Making

Capital Budgeting Decisions

Capital Budgeting Decisions

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Variances

Performance Measurement in Decentralized Organizations

Job-Order Costing

Activity-Based-Costing: a Tool to Aid Decision Making

A Capital Budgeting Decisions

Standard Costs and Variances

Performance Measurement in Decentralized Organizations

Performance Measurement in Decentralized Organizations

Profitability Analysis

Pricing Products and Services

Filters