Exam 3: Cost Behaviour, Cost Drivers and Cost Estimation

Distinguish between least squares regression (simple) and multiple regression as cost estimation methods.

Lawson Lumber uses the high-low method to estimate electricity cost, which varies in relation to machine hours. Based on the following data, how would the cost function be stated if 'X' is the number of machine hours?

Which of the following statements are assumptions underlying cost estimation?

Truweight Ltd has introduced a new line of weight machines for the catering industry which has required additional steps in the production line. During the first two months of production the labour time for the weight machines was as follows: The learning curve percentage is

The following is an extract of a cost report for Big Whale Car Wash for the six months from June to November. Management considers the activities in these six months as within the relevant range for the purpose of cost estimation. The car washing labour cost is a:

A cost that changes in total in direct proportion to a change in the cost driver is a:

Define the term 'relevant range' and explain its importance to understanding cost behaviour.

Which of the following statements is true concerning cost estimation methods?

An activity or factor that causes costs to be incurred is known as a

The main reason for analysing cost behaviour is to

The method of cost estimation that minimises the sum of the squared deviations between the cost line and the data points is:

The following is an extract of a cost report for Big Whale Car Wash for the six months from June to November. Management considers the activities in these six months as within the relevant range for the purpose of cost estimation. The car washing labour cost is a:

Relevant range is only important when determining fixed costs.

Which of the following increases as volume of activity decreases?

The level of activity within which fixed costs remain unchanged is called the:

In regression analysis, the variable that is being predicted is:

Units produced 12 000 15 000 Direct materials $36 000 $45 000 Based on the above data, the direct material costs for producing 7000 units are $21 000.

A cost that has both a fixed and variable component is called a:

In which approach to cost estimation, is least squares used?

Units produced 12 000 15 000 Direct materials $36 000 $45 000 Based on the above data, at the production level of 10 000 units, the fixed costs per unit are $5 per unit and if the firm produced 8000 units the fixed cost per unit would remain constant at $5.