Learning Objective 8-5
1) In which step of estimating a cost function using quantitative analysis would a manager determine the dependent variable to use in a cost relationship?
A) Step 1: Choose the Dependent Variable.
B) Step 2: Identify the Independent Variable, or Cost Driver.
C) Step 3: Collect Data on the Dependent Variable and the Cost Driver.
D) Step 4: Plot the Data.
E) Step 5: Estimate the Cost Driver of the Estimated Cost Function.
2) In which step of estimating a cost function using quantitative analysis would a manager realize all items of costs in the dependent variable have different cost drivers?
A) Step 1: Choose the Dependent Variable.
B) Step 2: Identify the Independent Variable, or Cost Driver.
C) Step 3: Collect Data of the Dependent Variable and the Cost Driver.
D) Step 4: Plot the Data.
E) Step 5: Estimate the Cost Drive of the Estimated Cost Function.
3) Which step of estimating a cost function using quantitative analysis is the most difficult step for a manager to implement in cost analysis?
A) Step 1: Choose the Dependent Variable.
B) Step 2: Identify the Independent Variable, or Cost Driver.
C) Step 3: Collect Data of the Dependent Variable and the Cost Driver.
D) Step 4: Plot the Data.
E) Step 5: Estimate the Cost Driver of the Estimated Cost Function.
4) In which step of estimating a cost function using quantitative analysis do managers realize the relationship between the driver and costs is approximately linear, or there was an error in recording the data?
A) Step 1: Choose the Dependent Variable.
B) Step 2: Identify the Independent Variable, or Cost Driver.
C) Step 3: Collect Data of the Dependent Variable and the Cost Driver.
D) Step 4: Plot the Data.
E) Step 5: Estimate the Cost Driver of the Estimated Cost Function.
5) In which step of estimating a cost function using quantitative analysis would a manager estimate a cost function with the high-low method, or regression analysis?
A) Step 1: Choose the Dependent Variable
B) Step 2: Identify the Independent Variable, or Cost Driver.
C) Step 3: Collect Data of the Dependent Variable of the Cost Driver.
D) Step 4: Plot the Data.
E) Step 5: Estimate the Cost Driver of the Estimated Cost Function.
6) The ________ uses only the highest and lowest observed values of the cost driver within the relevant range and their respective costs to estimate the slope coefficient and the constant of the cost function.
A) cost function
B) relevant range
C) high-low method
D) dependent variable
E) independent variable
7) The managerial accountant at Hampson Company reported the following information:
|
Cost Driver: Machine-Hours (X)
|
Indirect Manufacturing Labor
(Y)
|
Highest observation cost driver
|
120
|
$1,750
|
Lowest observation cost driver
|
55
|
845
|
Difference
|
?
|
?
|
Required:
Use the high-low method to compute the difference of the Cost Driver: Machine Hours, the Difference of the Indirect Manufacturing Labor, and the slope coefficient
b
for each machine hour.
A) 55; $855; $13.68
B) 65; $905; $13.92
C) 75; $910; $14.85
D) 85; $925; $15.65
E) 95; $950; $16.22
8) The Photography Shoppe uses the high-low method and reported the following information to estimate the cost function. The managerial accountant provided the following information in 2012:
Machine Hours
Labor Costs
Highest observation of cost driver380$18,000
Lowest observation of cost driver220$11,600
Required:
Compute the slope coefficient per machine-hour.
A) $10
B) $20
C) $30
D) $40
E) $50
9) The managerial accountant at Hampson Company reported the following information:
|
Cost Driver: Machine-Hours (X)
|
Indirect Manufacturing Labor
(Y)
|
Highest observation cost driver
|
120
|
$1,750
|
Lowest observation cost driver
|
55
|
845
|
Difference
|
?
|
?
|
Use the high-low method to and use the highest observation of the cost driver to compute the constant
a,
using a slope coefficient of $13.92 per machine hour.
a
=
y
-
BX
At the highest observation of the cost driver, the constant,
a, is:
A) $75.60
B) $76.80
C) $75.62
D) $79.60
E) $81.24
10) The managerial accountant at the Candle Shoppe uses the high-low method to estimate its cost function. The managerial accountant reported the following information in 2012:
Total Labor Hours
Total Wages
Highest observation 2,500$460,000
Lowest observation1,400240,000
1,100$220,000
Required:
Compute the slope coefficient per machine-hour.
A) $100
B) $200
C) $300
D) $400
E) $500