Cost Behavior W/ Regression Analysis Flashcards
(32 cards)
Which of the following costs is most likely a variable cost?
a. P 20 total costs at 10 units; P 20 total costs at 20 units
b. P 8 per unit at 10 units; P 8 per unit at 20 units
c. P 50 per unit at 1 unit; P 25 per unit at 2 units
d. P 4 per unit at 10 units; P 3 per unit at 20 units
b. P 8 per unit at 10 units; P 8 per unit at 20 units
(Unit variable cost stays constant)
In cost analysis using the line equation Y = a + bX, “b” (unit variable cost) is regarded as the
a. Dependent variable
b. Independent variable
c. Slope of the line
d. Y-axis intercept
c. Slope of the line
A company has developed a production cost function for its lone product: Y = 70 + 4X, where X is based
on the number of labor hours. Based on a relevant range of 10 to 20 labor hours, what is the estimated
production cost at zero (0) labor hour?
a. P 70
b. P 110
c. P 150
d. The exact amount cannot be determined without additional information
d. The exact amount cannot be determined without additional information
When compared to the high-low method, the graphic approach to cost estimation is usually
a. Less accurate
b. More representative
c. Less representative
d. Equally representative
b. More representative
What is the appropriate range for the coefficient of determination (r2)?
a. 0 to +1
c. - 1 to 0
b. 0 to -1
d. -1 to +1
a. 0 to +1
Which of the following corresponds to (1) line of VISUAL FIT method and (2) line of BEST FIT method?
a. (1) High-low method (2) Scattergraph method
b. (1) High-low method (2) Least-squares regression method
c. (1) Scattergraph method (2) Least-squares regression method
d. (1) Least-squares regression method (2) Scattergraph method
c. (1) Scattergraph method (2) Least-squares regression method
What cost segregation method gives the most mathematically precise cost estimate?
a. Scatter diagram method
c. High-low method
b. Least-squares regression method
d. Withdrawal method
b. Least-squares regression method
Using statistical normal relationships, the least-squares method uses what equations?
Ey = na + bEx
Exy = aEx + bEx^2
Simple regression analysis involves the use of
a. One dependent variable and one independent variable
b. One dependent variable and many independent variables
c. Many dependent variables and one independent variable
d. Many dependent variables and many independent variables
a. One dependent variable and one independent variable
Under Cost-Volume-Profit (CVP) analysis, a mixed cost should be:
a. Disregarded
c. Treated as a variable cost
b. Treated as a fixed cost
d. Separated into fixed & variable components
d. Separated into fixed & variable components
Which of the following is the best example of a variable cost?
a. Property taxes
c. Cost of raw material
b. Interest charges
d. Corporate president’s salary
c. Cost of raw material
Which of the following categories of cost is most likely not considered a component of fixed factory overhead?
a. Rent
c. Depreciation
b. Power
d. Property taxes
b. Power
Which of the following statements is true?
a. The higher is the production within the relevant range, the higher is the variable cost per unit
b. The higher is the production within the relevant range, the higher is the fixed cost per unit
c. The lower is the production within the relevant range, the lower is the total fixed cost
d. The lower is the production within the relevant range, the lower is the total variable cost
d. The lower is the production within the relevant range, the lower is the total variable cost
Within the relevant range, the amount of variable cost per unit
a. Differs at each production level
c. Decreases as production increases
b. Increases as production increases
d. Remains constant at each production level
d. Remains constant at each production level
Which of the following best describes a fixed cost?
a. It is constant per unit of changes in production.
b. It may change in total when such change is related to changes in production.
c. It may change in total when such change is unrelated to changes in production.
d. It may change in total when such change depends upon production or within the relevant range.
c. It may change in total when such change is unrelated to changes in production.
Committed fixed costs
a. Can never be changed
c. Are difficult to change in the short run
b. Can usually be changed in the short run
d. Are the result of factors outside the organization
c. Are difficult to change in the short run
What would be an example of a discretionary fixed cost?
a. Depreciation on equipment
c. Salaries of top management
b. Rent on a factory building
d. Research and development
d. Research and development
A cost that is fixed over a short range of activity, then rises abruptly and remains fixed over another short range is called
a. Step cost
c. Mixed cost
b. Fixed cost
d. Variable cost
a. Step cost
Which of the following best describes a step cost?
a. It is partly variable and partly fixed
c. It increases proportionately with volume
b. It remains constant in all cases
d. It increases abruptly outside the relevant range
d. It increases abruptly outside the relevant range
Mixed costs or semi-variable costs
a. Do not exist
b. Are part fixed and part variable
c. Are variable costs which increase gradually
d. Are ignored in cost analysis because they are difficult to interpret
b. Are part fixed and part variable
The fixed cost of a semi-variable cost is comparable to the mathematical concept of
a. Y-intercept
c. Dependent variable
b. Slope of the line
d. Independent variable
a. Y-intercept
In describing the cost formula equation Y = a + bX, which of the following statements is correct?
a. ‘Y’ is the independent variable
b. ‘a’ is the variable rate
c. ‘a’ and ‘b’ are valid for all levels of activity
d. In the high-low method, ‘b’ equals the change in cost (Y) divided by the change in activity (X)
d. In the high-low method, ‘b’ equals the change in cost (Y) divided by the change in activity (X)
The high-low method may give unsatisfactory results if:
a. Volume is low
c. Data points all fall on a line
b. Volume is heavy
d. Data points are unrepresentative
d. Data points are unrepresentative
The method of cost analysis in which the accountant draws a straight line through plotted points, keeping as close as
possible to most of the points, is called:
a. High-low method
c. Simple regression approach
b. Graphic approach
d. Multiple regression approach
b. Graphic approach
