Exam 8: Cost Estimation

A manager uses regression to express sales as a function of advertising expenditures (X1), and per capita income (X2) in your sales area. The following multiple linear regression equation is developed: Y = 10 + 0.51X1 + 0.45X2 The coefficient of determination is 0.96 This coefficient of determination explains that:

The p-value measures:

If the coefficient of correlation between two variables is nearly zero, how might a graph of these variables appear?

A company using regression analysis to correlate income to a variety of sales indicators found that the relationship between the number of sales managers in a territory and net income for the territory had a correlation coefficient of -1. Which is the best description of this situation?

Austen Co.produced a pilot run of eighty units of a recently developed part used in the finished products.Austen Co.expects to produce and sell 2,560 units annually.The pilot run required 40 direct labor hours for the eighty units, averaging 0.5 direct labor hours per unit.Austen experiences an eighty percent learning curve. Required: Calculate the average direct labor hours per unit for the first 2,560 units (including the pilot run) produced.

A measure of the statistical reliability of each independent variable is:

Armer Company is accumulating data to use in preparing its annual profit plan for the coming year. The cost behavior pattern of the maintenance costs must be determined. The accounting staff has suggested the use of linear regression to derive an equation for maintenance hours and costs. Data regarding the maintenance hours and costs for the last year and the results of the regression analysis follow:The percent of the total variance that can be explained by the regression equation is

Sterling Glass Company uses the high-low method to analyze mixed costs. The following information relates to the production data for the first six months of the year.What is the estimated total cost at an operating level of 900 hours?

The R-squared in a satisfactory regression should be:

Maintenance expenses of a company are to be analyzed for purposes of constructing a flexible budget. Examination of past records disclosed the following costs and volume measures: Highest Lowest Cost per month \ 42,000 \ 34,000 Machine hours 46,000 30,000 Using the high-low method, the estimated variable cost per machine hour is:

Multiple regression analysis:

Georgia Meadows Company uses the high-low method to analyze production costs. The following information relates to the production data for the first six months of the year. Month Cost () Hours () January \ 8,542 6,530 February \ 7,750 5,950 March \ 9,700 7,500 April \ 7,435 5,700 May \ 7,200 5,500 June \ 9,263 6,750 How should the cost function be properly stated using the high-low method?

Sterling Glass Company uses the high-low method to analyze mixed costs. The following information relates to the production data for the first six months of the year.How should the cost function be properly stated?

Which of the following provides the most accurate cost estimation?

Which of the following is not used for evaluating a regression analysis?

Thompson Refrigerators Inc. needs to prepare pro forma financial statements for the next fiscal year. To do so, the company must forecast its total overhead cost. The actual machine hours and total overhead cost are presented below for the past six months.Using the high-low method, total monthly fixed overhead cost is calculated to be:

Based on analyzing the relationship of total factory overhead (Y) to direct labor hours (X). The following relationship was found: Y = $1,000 + $2X The variable Y in the equation is an estimate of:

Bradford Company derived the following cost relationship from a regression analysis of its monthly manufacturing overhead cost: C = $80,000 + $12M where: C = monthly manufacturing overhead cost, and M = machine hours The standard error of estimate of the regression is $6,000. The standard time required to manufacture one six-unit case of Bradford's single product is two machine hours. Bradford applies manufacturing overhead to production on the basis of machine hours, and its normal annual production is 50,000 cases. Bradford's estimated variable manufacturing overhead cost for a month in which scheduled production is 5,000 cases would be:

The following costs were for Bikeway Inc., a bicycle manufacturer that uses the high-low method:At an output level of 1,000 bicycles, per unit total cost is calculated to be:

Thompson Refrigerators Inc. needs to prepare pro forma financial statements for the next fiscal year. To do so, the company must forecast its total overhead cost. The actual machine hours and total overhead cost are presented below for the past six months.Using the high-low method, unit variable overhead cost is calculated to be: