Exam 3: Cost Behavior

Which of the following costs is a variable cost?

The three widely used quantitative methods of separating a mixed cost into its fixed and variable components are the high-low method, the scatter plot method, and the method of least squares.

In the formula Y = F + VX, VX refers to the

Figure 3-8 The following computer printout estimated overhead costs using multiple regression: During the year the company used 1,000 setup hours and 500 parts. -Refer to Figure 3-8. The degrees of freedom for the model is

The following excel printout provides information to estimate overhead costs using linear regression: a. Write the multiple regression model (round to nearest cent). b. What does the 't Stat' measure? c. What is the estimate of overhead if the department has 1,205 DLH, 55 setups and 125 moves?

The method is used whenever least squares is used to fit an equation involving two or more independent variables.

Each time cumulative volume doubles, fall by a constant and predictable percentage.

Weaknesses of the high-low method include all of the following EXCEPT

Figure 3-8 The following computer printout estimated overhead costs using multiple regression: During the year the company used 1,000 setup hours and 500 parts. -Refer to Figure 3-8. The model being measured is

Figure 3-8 The following computer printout estimated overhead costs using multiple regression: During the year the company used 1,000 setup hours and 500 parts. -Refer to Figure 3-8. Which slope and intercept parameters are significant at the 0.05 level?

A correlation coefficient near +1 means that two variables are moving in the direction.

Figure 3-4 The following information is available for electricity costs for the last six months of the year: -Refer to Figure 3-4. What are the fixed costs?

Figure 3-7 The following computer printout estimated overhead costs using regression: Please find the following statistical table During the last accounting period 10,000 DLH were worked . -Refer to Figure 3-7. The coefficient of determination in this model tells us that

The Hamilton Mills Company cost accountant wants to determine the cost behavior for overhead. Based on observation and discussion with the plant workers, the following accounts have been identified as the most relevant: Supervisor salaries and depreciation are believed to be generally fixed; Indirect labor, Utilities, and Purchasing are generally believed to be variable; Indirect labor primarily is responsible for moving materials; Utility cost is primarily caused by the electricity to run machinery; and Purchasing costs are driven by the number of purchase orders. These accounts and their balances are given below: Information on the activities is given below: Required: 1. Why did the cost accountant decide that salaries and depreciation were fixed? 2. Calculate the average account balance for each of the 5 accounts and calculate the average monthly amount for each of the three drivers. 3. Calculate the fixed overhead and variable rates for each of the costs. Write an equation for the total overhead cost. 4. In January, 490 moves; 4,375 machine hours, and 220 purchase orders were expected. What is the amount of overhead predicted?

If a motorcycle manufacturer changes from skilled labor to computer-controlled assembly procedures, the past data

When a cost behavior pattern does not follow a linear pattern, a non linear cost curve is used called the __________ curve.

Figure 3-3 The Sandoval Company has four process engineers that are each able to process 1,500 design changes. Last year 5,250 design changes were produced by the four engineers. Each engineer is paid $60,000 per year -Refer to Figure 3-3. What is the unused capacity in dollars?

If at a given volume total costs and fixed costs are known, the variable costs per unit may be computed as follows:

What is the difference between a correlation equal to -1 and a correlation equal to 0?

explain changes in costs as units produced change.