Excel Applications for Accounting Principles
4th Edition
ISBN: 9781111581565
Author: Gaylord N. Smith
Publisher: Cengage Learning
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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.
With the aid of computer software, managers can vary assumptions regardingselling prices, costs, and volume and can immediately see the effects of eachchange on the break-even point and profit. Such an analysis is called
A. “What if” or sensitivity analysis.B. Vary the data analysis.C. Computer aided analysis.D. Data gathering.
Which of the following statements about Least Squares Regression is not true ?
Least -squares regression is a mathematical technique to fit a cost -estimating equation to observed data .
In least -squares regression , a statistical measure (R -squared ) can be used to determine how well the equation fits the data .
Least -squares regression is considered superior to the high -low method because it uses more data points than just the high and low points
None of the listed choices are the correct answer because all of the listed choices are true .
Least -squares regression maximizes the vertical squared difference between the estimated and actual costs at each data point .
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Using the data in E4-2 and spreadsheet software, determine: The variable cost per unit, the total fixed cost, and R2. The plotted data points using the graphing function. Compare the results to your solutions in E4-2 and E4-3 and explain the reasons for the results.arrow_forwardWeaknesses of the high-low method include all of the following except: a. only two observations are used to develop the cost function. b. the high and low activity levels may not be representative. c. the method does not detect if the cost behavior is nonlinear. d. the mathematical calculations are relatively complex.arrow_forwardChoose the correct letter of answer In using least-squares to estimate the variable and the fixed components in a mixed cost, these two formulas are very useful: ∑XY = a∑X + b∑X2 and ∑Y = an + b∑X. Which unknown value can be computed after eliminating the first variable? a.) ab.) yc.) xd.) barrow_forward
- 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 answersarrow_forwardAn easy way to estimate the variable and fixed costs components of a mixed cost is by: 1. a scatter plot 2. the high-low method 3. a regression analysis 4. a guesstimatearrow_forwardThe value of any model is that it enables the user to make inferences about the real situation. True orFalse If variable costs increase, but price and fixed costs are held constant, the break even point will decrease. True or False If variable costs increase, but price and fixed costs are held constant, the break-even point will decrease. True orFalsearrow_forward
- _____Identifying the relationship between the activity and the costs is a key step in which of the following cost estimation methods? a) Scattergraph. b) High-low method. c) Linear regression. d) Account analysis.arrow_forwardCan you provide samples/examples of tasks for developing the costing and profitability model for a new product? Should include the following: o A table showing the list of the parameters used in your model o A breakdown of the expected production costs and profitability o Calculation of the NPV of expected sales/ profitability o A sensitivity analysis that accounts for changes in any three (3) parameters of your model. o At least two trade-off rules you developed for your product developmentarrow_forwardSimple 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_forward
- Which 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_forwardOne of the assumptions made in simple regression is that ______________. Group of answer choices the error terms are exponentially distributed the error terms have unequal variances the model is linear the error terms are dependent the model is nonlineararrow_forwardWhich of the following is not a benefit of using sensitivity analysis? A. More people can see the impact of their ideas on the project.B. The use of a spreadsheet program increases the accuracy of the projections.C. What will happen is not known in advance so a variety of options can be exploredprior to making a decision.D. A well-written spreadsheet will allow for a variety of questions to be answered in aminimal amount of time.arrow_forward
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