A regression equation is set up, where the dependent variable is total costs and the independent variable is production. A correlation coefficient of 0.70 implies that: The coefficient of determination is negative. The level of production explains 49% of the variation in total costs There is a slightly inverse relationship between production and total costs. A correlation coefficient of 1.30 would produce a regression line with better fit to the data.

A regression equation is set up, where the dependent variable is total costs and the independent variable is production. A correlation coefficient of 0.70 implies that: The coefficient of determination is negative. The level of production explains 49% of the variation in total costs There is a slightly inverse relationship between production and total costs. A correlation coefficient of 1.30 would produce a regression line with better fit to the data.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 19E: Data for Torleson Company are as follows: Required: 1. Calculate the sales price variance. 2....

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Carter Dry Cleaning has developed two regression analyses for cost estimation. The accounting manager has presented statistical measures for both of these regressions. Regression A has an R-squaredvalue of .53 and a t-value of 1.08. Regression B has an R-squared of .89 and a t-value of 2.17. Whatdo these statistical measures indicate about the regressions? Which regression should Carter DryCleaning use for cost estimation?
If the high-low points method is used, the results when compared with those under the method of least squares, are (Variable Cost Per Unit, Total Fixed Costs). the given is a. Equal, Equal b. Higher by P1.26, Lower by P2,850 c. Lower by P1.26, Higher by P2,850 d. Higher by P5 , Lower by P1,500
Which of the following is NOT a use of CVP (Cost-Volume-Profit) analysis? a.what is the impact on the break-even point of an increase or decrease in fixed costs b.how many units must be sold to break even c.the identification of price and efficiency variances d.the ability to conduct sensitivity analysis of cost or price changes
Which of the following is NOT true of regression techniques for estimating costs? a) They permit the inclusion of more than one predictor. b) They typically use the highest and lowest activity points to estimate the relation between cost and activity. c) They help develop estimates that have a broader base than those based on a few select points. d) They are designed to generate a line that best fits a set of data points.
The Perize Corporation used regression analysis to predict the annual cost of indirect materials. The results were as follows: Indirect Materials Cost Explained by Units Produced Constant $15,685 Standard error of Y estimate $3,500 r2 0.7832 Number of observations 20 X coefficient(s) 10.25 Standard error of coefficient(s) 2.1876 What is the cost function? Select one: a. Y = $19,185 + $4.48X b. Y = $15,685 + $10.25X c. Y = $12,285 + $10.25X d. Y = $3,500 + $5.15X
Which of the following statements about CVP analysis is false ? a. Total revenues and total costs are linear in relation to output units . b. Managers use (CVP ) analysis to study the behavior of and relationship among the elements such as total revenues , total costs , and income c. All of the given answers are true . d. Unit selling price , unit variable costs , and total fixed costs are known and remain constant . e. Operating income calculations in CVP analysis are based on contribution margin not gross margin .
Which of the following statements related to cost estimation methods is true ? a . Only high -low method has a slope and an intercept . b. The scatter - graph method is used to derive an estimated line of cost behavior by graphically connecting the two cost amounts identified with the highest and lowest volume levels . c. The most complex method of cost estimation is the high - low method . d. The least -squares regression method is the most accurate and reliable method to determine the cost behavior compared to scatter -graph plot and high -low methods . e. None of the given answers
Which of the following statements is true when making decisions using cost-volume-profit (CVP) analysis? Select one: a. As long as the contribution margin is a positive number, net income will be positive b. As long as variable costs are more than fixed costs, net income will be negative c. As long as the contribution margin is greater than fixed costs, net income will be positive d. As long as the sales price per unit is greater than fixed costs per unit, net income will be positive
Simple regression analysis provides the means to evaluate a line of regression, which is fitted to a plot of data and represents the a. way costs change with respect to dependent variable.b. way costs change with respect to both independent and dependent variables.c. variability expense with pesos of productiond. way costs change with respect to independent variable.
Which of the following statements regarding graphs of fixed and variable costs is true? (01)(a) Variable costs can be represented by a straight line where costs are the same for each data point.(b) Fixed costs can be represented by a straight line starting at the origin and continuing through each data point.(c) Fixed costs are zero when production is equal to zero.(d) Variable costs are zero when production is equal to zero.(e) Fixed and Variable costs are curvilinear form above zero on the “Y” axis.
Soleil Enterprise uses regression analysis on 24 months of data. The dependent variable is overhead costs and the independent variable is machine hours. The coefficient of determination is 0.83. Which of the following is true? I. Machine hours and overhead costs are negatively correlated. II. The coefficient of correlation is approximated 91%. III. Machine hours account for about 61% of the variation in overhead costs. IV. Factors other than machine hours account for about 17% of the variation in overhead costs. V. The regression shows a weak correlation between machine hours and overhead costs.
In describing the cost formula equation, Y = a + bX, which of the following is correct?a. “Y” is the independent variableb. “a” is the variable cost per unitc. “a” and “b” are valid for all levels of activityd. in the high-low method, “b” equals the change in cost divided by the change in activity.