Exam 3: Measurement of Cost Behavior

A mortgage payment would most likely be identified as a _____.

A thorough knowledge of cost behavior helps managers to _____.

This non-statistical approach is more reliable than the high-low method because it uses all the available data instead of just two points

Presented below is the production data for the first six months of the year showing the mixed costs incurred by Brooklyn Company. Month Cost Units July \ 7,500 4,000 August 11,250 9,500 September 11,500 9,000 October 11,700 10,500 November 13,500 12,000 December 12,850 10,000 Brooklyn Company uses the high?low method to analyze mixed costs.The total cost at an operating level of 10,000 units is _____.

Engineering analysis and account analysis are similar because _____.

A cost function is an algebraic equation used to describe the relationship between a cost and its cost drivers).

The Reynolds Company used regression analysis to predict the annual cost of utilities. The results were as follows: Utilities Cost Explained by Direct Labor Hours Constant \ 7,650 Standard error of Y estimate \ 245.20 R - squared 0.8650 No. of observations 30 Degrees of freedom 28 X coefficients) 8.437 Standard error of coefficients) 0.917 The linear cost function is_____.

The _____ method of measuring cost functions is the most subjective.

The following three data points appear to be _____. Units Costs 100 \ 500 130 550 160 600

Volume-driven costs can be easily traced to products or services.

The Eastwood Company used regression analysis to predict the annual cost of utilities. The results were as follows: Utilities Cost Explained by Direct Labor Hours Constant \ 9,650 Standard error of Y estimate \ 875.20 R - squared 0.8650 No. of observations 33 Degrees of freedom 31 X coefficients) 4.937 Standard error of coefficients) 0.997 The variable cost per direct labor hour is _____.

Simba Company makes metal signs for businesses and residences.These signs are made of sheet metal, which the owner paints by hand.The owner has a good sense of his labor and materials cost behavior, but he is concerned that he does not have good measure of other support costs.Currently, he predicts support costs to be 40% of the cost of materials.Close investigation of the business reveals that $50 per direct labor hour is a more plausible and reliable support cost relationship. Consider estimated support costs of the following two signs that Simba Company makes. Small Sign Large Sign Materials cost \ 200 \ 500 Direct labor hours 5 9 Support costs ? ? The amount of support costs assigned to a large sign using direct labor hours as the cost driver is ____.

A lower coefficient of determination is better than a higher one.

Measuring a cost function objectively by using statistics to fit a cost function to all the data

A cost function for a mixed cost includes_____.

In the high-low method, the change in total cost is due to _____.

_____ of approximating cost functions does not involve the analysis of past costs.

In the mixed?cost function, Y = $88,000 + $7.20X, the $7.20 stands for_____.

Account analysis _____.

The Fonda Company used regression analysis to predict the annual cost of utilities. The results were as follows: Utilities Cost Explained by Direct Labor Hours Constant \ 6,650 Standard error of Y estimate \ 745.20 R - squared 0.9350 No. of observations 32 Degrees of freedom 30 X coefficients) 9.438 Standard error of coefficients) 0.287 The coefficient of determination is ____.