Exam 5: Cost Estimation

The cost accountants at the Barkley Company regressed total overhead costs and direct labor hours for the past 30-months and reported the following results: Slope \ 41.27 Intercept \ 596.36 Correlation Coeffic ient .934 What is the estimated overhead cost if 225 direct labor hours are expected to be used in the upcoming period? (rounded to the nearest whole dollar)

Which of the following statements regarding regression analysis is (are)true? (A)One way to control the effects of a nonlinear relationship between total costs and activity is reduce the relevant range.(B)The linear cost estimate tends to understate the slope of the cost line in ranges close to capacity.

The Ornate Company produces a single product and has total costs ranging from $321,875 (at 20,000 units)to $966,875 (at 80,000 units).Sales volume in 2016 was 32,000,and operating income was $45,125.Ornate's product is highly specialized;therefore,no units are kept in inventory. Required: (a. )Determine the cost equation for Ornate's costs. (b. )Prepare a contribution margin income statement for 2016 including separate columns for total dollars,per unit dollars,and percentages. (c. )Determine the break-even point (in units and in dollars).

The College of Business at Northeast College is accumulating data as a first step in the preparation of next year's budget development.One cost that is being looked at closely is administrative costs as a function of student credit hours.Data on administrative costs and credit hours for the past thirteen months are shown below: Month Actinistrative Costs Credit Hours July \ 129,301 250 August 82,613 115 September 225,580 1,392 October 216,394 1,000 November 258,263 1,309 December 184,449 1,112 January 219,137 1,339 February 245,000 1,373 March 209,462 1,064 April 191,925 1,123 May 249,978 1,360 June 170,418 420 July 128,167 315 Total \ 2,510,687 12,172 Average \ 193,130 936 The controller's office has analyzed the data and has given you the results from the regression analysis: If the controller uses regression analysis to estimate costs,the estimate of the fixed portion of administrative salaries is:

In general,accounting records accumulate cost information according to its behavior (i.e. ,variable and fixed).

Which of the following statements regarding the learning phenomenon is true?

Because outliers are extreme data points,they can be included in the regression analysis and not significantly affect the results.

The linear cost estimate tends to understate the slope of the cost line in ranges close to capacity.

In the standard regression equation of y = a + bx,the letter b is best described as the:

Which of the following costs would most likely be classified as variable,assuming the account analysis method is used to determine cost behaviors?

In the learning curve equation Y = aX^b,the Y term represents:

The College of Business at Northeast College is accumulating data as a first step in the preparation of next year's budget development.One cost that is being looked at closely is administrative costs as a function of student credit hours.Data on administrative costs and credit hours for the past thirteen months are shown below: Month Actinistrative Costs Credit Hours July \ 129,301 250 August 82,613 115 September 225,580 1,392 October 216,394 1,000 November 258,263 1,309 December 184,449 1,112 January 219,137 1,339 February 245,000 1,373 March 209,462 1,064 April 191,925 1,123 May 249,978 1,360 June 170,418 420 July 128,167 315 Total \ 2,510,687 12,172 Average \ 193,130 936 The controller's office has analyzed the data and has given you the results from the regression analysis: Based on the results of the regression analysis,the estimate of the variable portion of administrative costs in a month with 200 credit hours would be:

Which of the following cost estimation methods finds the fixed portion of a mixed cost before calculating the variable portion?

Which of the following is not a data problem an analyst must watch for when estimating cost behavior?

Describe the effect on cost estimation of four of the following five problems: 1)missing data,2)outliers,3)allocated and discretionary costs,4)inflation,or 5)mismatched time periods.

The College of Business at Northeast College is accumulating data as a first step in the preparation of next year's budget development.One cost that is being looked at closely is administrative costs as a function of student credit hours.Data on administrative costs and credit hours for the past thirteen months are shown below: Month Actinistrative Costs Credit Hours July \ 129,301 250 August 82,613 115 September 225,580 1,392 October 216,394 1,000 November 258,263 1,309 December 184,449 1,112 January 219,137 1,339 February 245,000 1,373 March 209,462 1,064 April 191,925 1,123 May 249,978 1,360 June 170,418 420 July 128,167 315 Total \ 2,510,687 12,172 Average \ 193,130 936 The controller's office has analyzed the data and has given you the results from the regression analysis: The correlation coefficient (rounded to the 3^rd decimal)for the regression equation for administrative costs is:

The coefficient of correlation is:

Engineering cost estimates are usually based on operating conditions that are considered:

The term "relevant range" as used in cost accounting means the range over which:

Which of the following statements is (are)true regarding cost behaviors? (A)In general,accounting records accumulate cost information according to its behavior. (B)Cost behaviors are the most important consideration in managerial decision making.