Answer the following questions using the information below: Presented below are the production data for the first six months of the year for the mixed costs incurred by Benalla Company. \[\begin{array} { l r r } \text { Month } & \text { Cost } & \text { Units } \\ \text { January } & \$ 4890 & 4100 \\ \text { February } & 4024 & 3200 \\ \text { March } & 6480 & 5300 \\ \text { April } & 8840 & 7500 \\ \text { May } & 5800 & 4800 \\ \text { June } & 7336 & 6600 \end{array}\] Benalla Company uses the 'high-low method' to analyse mixed costs. -How would the cost function be stated?

A) y = $440 + $1.12X B) y = $7850 + $0.132X C) y = $3 562.30 + $0.144X D) y = $107.20 + $1.224X A) y = $440 + $1.12X B) y = $7850 + $0.132X C) y = $3 562.30 + $0.144X D) y = $107.20 + $1.224X

Yarrawonga Company has provided the following information: $\begin{array}{lrr}\text { Units of Output }&30000 \text { Units } &42000 \text { Units }\\ \text { Direct materials } & \$ 180000 & \$ 252000 \\ \text { Workers' wages } & 1080000 & 1512000 \\ \text { Supervisors' salaries } & 312000 & 312000 \\ \text { Equipment depreciation } & 151200 & 151200 \\ \text { Maintenance } & 81600 & 110400 \\ \text { Utilities } & \underline{384000} & \underline{528000} \\ \text { Total } & \$ 2 \underline{188800} & \$ 2865600 \end{array}$ Using the high-low method and the information provided above: a.identify the linear cost function equation;and b.estimate the total cost at 36 000 units of output. _____________________________________________________________________________________________ ____________________________________________________________________________________________

a.Variable cost = ($2 865 600 - $2 188 8

Wallaby Manufacturing Company uses two different independent variables (machine-hours and number of packages)in two different equations to evaluate costs of the packaging department.The most recent results of the two regressions are as follows: $\text { Machine-hours: }$ $\begin{array} { l r r r } \text { Variable } & \text { Coefficient } & \text { StandardError } & \text {-Value } \\ \text { Constant } & \$ 748.30 & \$ 341.20 & 2.19 \\ \text { Independent Variable } & \$ 52.90 & \$ 35.20 & 1.50 \end{array}$ $r ^ { 2 } = 0.33$ $\text { Number of packages: }$ $\begin{array}{l} \begin{array}{lrrr}\text { Variable } & \text { Coefficient } & \text { StandardError } & \text {-Value } \\ \text { Constant } & \$ 242.90 & \$ 75.04 & 3.24 \\ \text { Independent Variable } & \$ 5.60 & \$ 2.00 & 2.80 \end{array}\\ r^{2}=0.73 \end{array}$ Required: a.What are the estimating equations for each cost driver? b.Which cost driver is best and why? _____________________________________________________________________________________________ _____________________________________________________________________________________________

a.Machine-hours y = $748.30 + $52.90X Nu

The new cost analyst in your accounting department has just received a computer-generated report that contains the results of a simple regression program for cost estimation.The summary results of the report appear as follows: \[\begin{array}{l} \begin{array} { l c c c } \text { Variable } & \text { Coefficient } & \text { Standard Error } & \text { t-Value } \\ \text { Constant } & \$ 35.92 & \$ 16.02 & 2.24 \\ \text { Independent variable } & \$ 563.80 & \$ 205.40 & 2.74 \end{array}\\ \mathrm { r } ^ { 2 } = 0.75 \end{array}\] Required: a.What is the cost estimation equation according to the report? b.What is the goodness of fit? What does it tell about the estimating equation? _____________________________________________________________________________________________ _____________________________________________________________________________________________

a.y = $35.92 + $563.80X b.Goodness of fi

Answer the following questions using the information below: The Yeppoon Company uses the high-low method to estimate its cost function.The information for 2018 is provided below: \[\begin{array} { l c c } & \text { Machine-hours } & \text { Costs } \\ \text { Highest observation of cost driver } & 2000 & \$ 225000 \\ \text { Lowest observation of cost driver } & 1000 & \$ 125000 \end{array}\] -What is the slope coefficient per machine-hour?

A) $10.00 B) $12.50 C) $125.00 D) $100.00 A) $10.00 B) $12.50 C) $125.00 D) $100.00

Exam 3: Determining How Costs Behave

Answer the following questions using the information below: Presented below are the production data for the first six months of the year for the mixed costs incurred by Benalla Company. Month Cost Units January \ 4890 4100 February 4024 3200 March 6480 5300 April 8840 7500 May 5800 4800 June 7336 6600 Benalla Company uses the 'high-low method' to analyse mixed costs. -How would the cost function be stated?

(Multiple Choice)

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Question 41

Examples of non-linear cost functions include all of the following EXCEPT:

(Multiple Choice)

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Question 42

When estimating a cost function,cost behaviour can be approximated by a linear cost function within the relevant range.

(True/False)

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Question 43

Which cost estimation method may use time-and-motion studies to analyse the relationship between inputs and outputs in physical terms?

(Multiple Choice)

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Question 44

How many separate cost pools should be formed given the following information:

(Multiple Choice)

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Question 45

The 'independent variable':

(Multiple Choice)

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Question 46

An example of time-series data is to compile maintenance costs of 12 different manufacturing plants incurred during 2018.

(True/False)

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Question 47

'Regression analysis' relies on only two observations to estimate a linear cost function.

(True/False)

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Question 48

Which statement related to assumptions about estimating linear cost functions is FALSE?

(Multiple Choice)

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Question 49

An inaccurate cost function with a slope coefficient that is estimated too low may MOST likely result in:

(Multiple Choice)

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Question 50

Yarrawonga Company has provided the following information: Units of Output 30000 Units 42000 Units Direct materials \ 180000 \ 252000 Workers' wages 1080000 1512000 Supervisors' salaries 312000 312000 Equipment depreciation 151200 151200 Maintenance 81600 110400 Utilities Total \ 2 \ 2865600 Using the high-low method and the information provided above: a.identify the linear cost function equation;and b.estimate the total cost at 36 000 units of output. _

(Essay)

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Question 51

Write a linear cost function equation for each of the following conditions.Use y for estimated costs and X for activity of the cost driver. a.Direct manufacturing labour is $10 per hour. b.Direct materials cost $9.20 per cubic metre. c.Utilities have a minimum charge of $1000,plus a charge of $0.05 per kilowatt-hour. d.Machine operating costs include $200 000 of machine depreciation per year,plus $75 of utility costs for each day the machinery is in operation. _ _

(Essay)

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Question 52

The 'conference method' estimates cost functions:

(Multiple Choice)

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Question 53

When fixed costs are allocated to individual products as part of the standard costing system,they should be treated as variable costs for purposes of future cost estimation.

(True/False)

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Question 54

Wallaby Manufacturing Company uses two different independent variables (machine-hours and number of packages)in two different equations to evaluate costs of the packaging department.The most recent results of the two regressions are as follows: $\text { Machine-hours: }$ Variable Coefficient StandardError -Value Constant \ 748.30 \ 341.20 2.19 Independent Variable \ 52.90 \ 35.20 1.50 $r ^ { 2 } = 0.33$ $\text { Number of packages: }$ Variable Coefficient StandardError -Value Constant \ 242.90 \ 75.04 3.24 Independent Variable \ 5.60 \ 2.00 2.80 =0.73 Required: a.What are the estimating equations for each cost driver? b.Which cost driver is best and why? _ _

(Essay)

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Question 55

Machine-hours is a more economically plausible cost driver of machine maintenance than number of direct manufacturing labour-hours.

(True/False)

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Question 56

The new cost analyst in your accounting department has just received a computer-generated report that contains the results of a simple regression program for cost estimation.The summary results of the report appear as follows: Variable Coefficient Standard Error t-Value Constant \ 35.92 \ 16.02 2.24 Independent variable \ 563.80 \ 205.40 2.74 =0.75 Required: a.What is the cost estimation equation according to the report? b.What is the goodness of fit? What does it tell about the estimating equation? _ _

(Essay)

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Question 57

If machine maintenance is scheduled at a time when production is at a low level,then:

(Multiple Choice)

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Question 58

Answer the following questions using the information below: The Yeppoon Company uses the high-low method to estimate its cost function.The information for 2018 is provided below: Machine-hours Costs Highest observation of cost driver 2000 \ 225000 Lowest observation of cost driver 1000 \ 125000 -What is the slope coefficient per machine-hour?

(Multiple Choice)

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Question 59

Over the short run,a non-linear cost function would MOST likely result from all of the following EXCEPT:

(Multiple Choice)

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Question 60

Examples of non-linear cost functions include all of the following EXCEPT:

When estimating a cost function,cost behaviour can be approximated by a linear cost function within the relevant range.

Which cost estimation method may use time-and-motion studies to analyse the relationship between inputs and outputs in physical terms?

How many separate cost pools should be formed given the following information:

The 'independent variable':

An example of time-series data is to compile maintenance costs of 12 different manufacturing plants incurred during 2018.

'Regression analysis' relies on only two observations to estimate a linear cost function.

Which statement related to assumptions about estimating linear cost functions is FALSE?

An inaccurate cost function with a slope coefficient that is estimated too low may MOST likely result in:

The 'conference method' estimates cost functions:

When fixed costs are allocated to individual products as part of the standard costing system,they should be treated as variable costs for purposes of future cost estimation.

Machine-hours is a more economically plausible cost driver of machine maintenance than number of direct manufacturing labour-hours.

If machine maintenance is scheduled at a time when production is at a low level,then:

Over the short run,a non-linear cost function would MOST likely result from all of the following EXCEPT:

Management Accounting in Context

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