EBK HORNGREN'S COST ACCOUNTING
16th Edition
ISBN: 9780134475950
Author: Datar
Publisher: PEARSON CO
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Chapter 10, Problem 10.19MCQ
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:
- a. The coefficient of determination is negative.
- b. The level of production explains 49% of the variation in total costs
- c. There is a slightly inverse relationship between production and total costs.
- d. A correlation coefficient of 1.30 would produce a regression line with better fit to the data.
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10-19 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:
a. The coefficient of determination is negative.
b. The level of production explains 49% of the variation in total costs
c. There is a slightly inverse relationship between production and total costs.
d. A correlation coefficient of 1.30 would produce a regression line with better fit to the data
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?
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
Chapter 10 Solutions
EBK HORNGREN'S COST ACCOUNTING
Ch. 10 - What two assumptions are frequently made when...Ch. 10 - Describe three alternative linear cost functions.Ch. 10 - What is the difference between a linear and a...Ch. 10 - High correlation between two variables means that...Ch. 10 - Name four approaches to estimating a cost...Ch. 10 - Describe the conference method for estimating a...Ch. 10 - Describe the account analysis method for...Ch. 10 - List the six steps in estimating a cost function...Ch. 10 - When using the high-low method, should you base...Ch. 10 - Describe three criteria for evaluating cost...
Ch. 10 - Define learning curve. Outline two models that can...Ch. 10 - Discuss four frequently encountered problems when...Ch. 10 - Prob. 10.13QCh. 10 - All the independent variables in a cost function...Ch. 10 - Multicollinearity exists when the dependent...Ch. 10 - HL Co. uses the high-low method to derive a total...Ch. 10 - A firm uses simple linear regression to forecast...Ch. 10 - In regression analysis, the coefficient of...Ch. 10 - A regression equation is set up, where the...Ch. 10 - What would be the approximate value of the...Ch. 10 - Estimating a cost function. The controller of the...Ch. 10 - Identifying variable-, fixed-, and mixed-cost...Ch. 10 - Various cost-behavior patterns. (CPA, adapted)....Ch. 10 - Matching graphs with descriptions of cost and...Ch. 10 - Account analysis, high-low. Stein Corporation...Ch. 10 - Account analysis method. Gower, Inc., a...Ch. 10 - Prob. 10.27ECh. 10 - Estimating a cost function, high-low method. Lacy...Ch. 10 - Linear cost approximation. Dr. Young, of Young and...Ch. 10 - Cost-volume-profit and regression analysis....Ch. 10 - Regression analysis, service company. (CMA,...Ch. 10 - High-low, regression. May Blackwell is the new...Ch. 10 - Learning curve, cumulative average-time learning...Ch. 10 - Learning curve, incremental unit-time learning...Ch. 10 - High-low method. Wayne Mueller financial analyst...Ch. 10 - High-low method and regression analysis. Market...Ch. 10 - High-low method; regression analysis. (CIMA,...Ch. 10 - Regression, activity-based costing, choosing cost...Ch. 10 - Interpreting regression results. Spirit...Ch. 10 - Cost estimation, cumulative average-time learning...Ch. 10 - Cost estimation, incremental unit-time learning...Ch. 10 - Regression; choosing among models. Apollo Hospital...Ch. 10 - Multiple regression (continuation of 10-42). After...Ch. 10 - Cost estimation. Hankuk Electronics started...Ch. 10 - Prob. 10.45PCh. 10 - Interpreting regression results, matching time...Ch. 10 - Purchasing department cost drivers, activity-based...Ch. 10 - Purchasing department cost drivers, multiple...
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- 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.arrow_forwardWhich 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.arrow_forwardWhich 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 answersarrow_forward
- 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 P1,500arrow_forwardThe 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 + $5.15Xarrow_forwardWhich 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 .arrow_forward
- 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 positivearrow_forwardSoleil 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.arrow_forwardWhich of the following statements related to cost estimation methods is false? 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. O b. The low-high 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. The three methods determine a slope and an intercept. O d. None of the given answers. The most complex method of cost estimation is the high-low method.arrow_forward
- Rodolfo works at Johnson Incorporated and is tasked with measuring costs. When Rodolfo identifies that actual sales are less than expected sales, what type of variance did Rodolfo identify? A Fixed cost volume variance B Sales price variance C Favorable variance D Unfavorable variancearrow_forwardIn 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.arrow_forwardIf the regression method indicated the intercept = $30 and the slope = $20 for a cost function, then:arrow_forward
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