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Exam 3: Cost Behavior

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Question 71

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Figure 3-3 The Sandoval Company has four process engineers that are each able to process 1,500 design changes. Last year 5,250 design changes were produced by the four engineers. Each engineer is paid $60,000 per year -Which of the following is NOT a method of determining cost behavior?

A) industrial engineering method
B) account analysis method
C) statistical and quantitative methods
D) confidence interval model

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Question 72

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and studies may be used in conjunction with the industrial engineering method.

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Question 73

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Tornado Enterprises has the following information available regarding costs at various levels of monthly production: a. Identify each cost as being variable, fixed, or mixed by writing the name of each cost under one of the following headings: Variable Costs Fixed Costs Mixed Costs b. Develop an equation for total monthly production costs. c. Predict total costs for a monthly production volume of 8,000 units.

The Knapp Company needs to predict the labor cost in producing small ceramic dolls. The following production information is available: Wage rates have steadily increased since 2011; however, management expects no further increases in 2017. Required: a. Select the appropriate independent variable for predicting labor cost. Explain the reason for your selection. b. Develop an equation to predict for 2017 the labor cost of producing ceramic dolls. Use the high- low method.

Multiple regression has or independent variables.

Finding a strong statistical association between an activity cost and an activity driver can provide evidence to managers about the correctness of a driver selection.

Figure 3-7 The following computer printout estimated overhead costs using regression: Please find the following statistical table During the last accounting period 10,000 DLH were worked . -Refer to Figure 3-7. What is the confidence interval for the predicted overhead cost rounded to the nearest whole number for a 90 percent confidence level?

Which of the following is an example of a step-fixed cost?

The following information was available about supplies cost for the second quarter of the year: Using the high-low method, the estimate of supplies cost at 1,000 units of production is

Cost behavior analysis focuses on how costs

The coefficient of determination is

The following is an example of a mixed cost:

Given the following information: Required: a. Calculate an estimate of HR department costs using the hi-low method using # of new hires as the variable parameter b. Calculate an estimate of HR department costs using the hi-low method using # termination as the variable parameter c. Which parameter do you feel is a better driver of HR cost?

The level of activity performance where the amount of activity capacity needed corresponds to the level of efficiency required is called the activity capacity.

Figure 3-1 Sonor Systems undertakes its own machine maintenance. The depreciation on the equipment is $20,000 per year and operating cost is $2 per machine hour. Last year 275,000 machine hours were used to produce 100,000 units. -Refer to Figure 3-1. Compute the total variable machine maintenance cost last year.

The experience curve relates cost to increased efficiency, such that the more a task is performed, the lower the cost of doing will be.

The following cost functions were developed for manufacturing overhead costs: If January production is expected to be 2,000 units requiring 3,000 direct labor hours, estimated manufacturing overhead costs would be

If production volume increases from 16,000 to 20,000 units,

Which of the following decision-making tools would NOT be useful in determining the slope and intercept of a mixed cost?

Which of the following statements is TRUE about relevant range?