Exam 5: Cost Estimation

Thul Company is interested in establishing the relationship between electricity costs and machine hours.Data have been collected and a regression analysis prepared using Excel.The monthly data and the regression output follow: If the controller uses the high-low method to estimate costs,the fixed cost portion of the cost equation for electricity cost is:

In the cost equation TC = F + VX,X is best described as the:

Thul Company is interested in establishing the relationship between electricity costs and machine hours.Data have been collected and a regression analysis prepared using Excel.The monthly data and the regression output follow: If the controller uses the high-low method to estimate costs,the variable cost per machine hour is:

The Business School at Eastern 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: The controller's office has analyzed the data and has given you the results from the regression analysis: The percent of the total variance that can be explained by the regression is:

Given actual amounts of a semivariable cost for various levels of output,the method that will always give the most reliable measure of the fixed and variable components is the:

The quality of the cost equation depends on collecting appropriate data.The results obtained are only as good as the data used.If data improves,so will the results.

The linear cost estimate tends to understate the slope of the cost line in ranges close to capacity.As capacity is approached there are changes in the costs such as additional overtime due to scheduling problems.

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

The Business School at Eastern 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: The controller's office has analyzed the data and has given you the results from the regression analysis: Based on the results of the high-low analysis,the estimate of administrative costs in a month with 1,000 credit hours would be: (rounded to the nearest whole dollar)

One disadvantage of the high-low method is the highest and lowest points may not be representative of normal operating activities.High and low points may reflect unusual circumstances.

Cost behavior is the most important characteristic for managerial decision making.This is a fundamental concept.

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

Hawkins Products,Inc. ,has found that new products follow a learning curve.The first two units have been completed with the following results: How much time will be needed to complete the 4^th unit?

The Shapely Company uses the high-low method to determine its cost equation.The following information was gathered for the past year: What are the direct labor costs per machine hour?

Thul Company is interested in establishing the relationship between electricity costs and machine hours.Data have been collected and a regression analysis prepared using Excel.The monthly data and the regression output follow: Based on the results of the regression analysis,the estimate of electricity costs in a month with 2,200 machine hours would be: (rounded to the nearest whole dollar)

The Business School at Eastern 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: The controller's office has analyzed the data and has given you the results from the regression analysis: The correlation coefficient for the regression equation for administrative costs is:

Hagler's Toupees has the following machine hours and production costs for the last six months of last year: If Hagler expects to incur 14,000 machine hours in January,what will be the estimated total production cost using the high-low method?

The account analysis method is more subjective than other cost estimation methods because it relies heavily on the personal judgment and experience of accountants.Different accountants will have different experience and will classify items accordingly.

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

The Shapely Company uses the high-low method to determine its cost equation.The following information was gathered for the past year: If Shapely expects to use 10,000 machine hours next month,what are the estimated direct labor costs?