FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 3: Measurement of Cost Behavior

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Short Answer

Review LaterAdd Note

Review Later

The measure of reliability, or goodness of fit

Correct Answer

verified

Coefficien...

View Answer

Show Answer

Question 42

True/False

Review LaterAdd Note

Review Later

The high-low method of measuring cost behavior uses estimated costs.

A) True
B) False

Correct Answer

verified

Show Answer

Question 43

True/False

Review LaterAdd Note

If regression analysis is used when measuring cost behavior, plotting the cost against each of the potential cost drivers is not necessary.

Skoda Company makes metal signs for businesses and residences.These signs are made of sheet metal, which the owner paints by hand.The owner has a good sense of his labor and materials cost behavior, but he is concerned that he does not have good measure of other support costs.Currently, he predicts support costs to be 30% of the cost of materials.Close investigation of the business reveals that $10 per direct labor hour is a more plausible and reliable support cost relationship. Consider estimated support costs of the following two signs that Skoda Company makes. $\begin{array}{llr}&\text { Small Sign }& \text { Large Sign }\\\text { Materials cost } & \$ 300 & \$ 700 \\\text { Direct labor hours } & 5 & 11 \\\text { Number of components } & 8 & 13\end{array}$ The amount of support costs assigned to a small sign using number of components as the cost driver is _____.

These costs are the fixed costs of being able to achieve a desired level of production or to provide a desired level of service while maintaining product or service attributes, such as quality

A company could temporarily reduce or eliminate _____.

Least-squares regression is the easiest method to approximate a cost function.

The visual-fit method is more objective than the engineering analysis method.

An example of a volume-driven cost in making a textbook is the salaries of the editorial staff.

An engineering cost analysis is often not timely.

Discretionary fixed costs have obvious relationships with levels of capacity or output activity.

In a linear regression, the x coefficient is the _____.

The following data has been assembled for Hippy Company.Use the high-low method. $\begin{array}{l}\text { Cost }& \text { Hours } \\\$ 24,400 & 2,000 \\37,000 & 2,300 \\34,280 & 2,850 \\36,400 & 3,600 \\44,160 & 3,900\end{array}$ The cost function is stated as _____.

The first step in estimating or predicting costs as a function of appropriate cost drivers

When performing an engineering analysis, one must be careful because the observed time period may be abnormal.

In the mixed?cost function, Y = $77,000 + $9.70X, the X signifies _____.

In the mixed cost equation, Y = F + VX, the F is the slope.

An example of a committed fixed cost is insurance.

The use of high-technology methods rather than labor usually means a much greater fixed-cost component to the total cost.

A compensation plan where the sales force is paid salary plus commission is a _____.