Cost Accounting 1 – Flashcards
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In the cost equation TC = F + VX, which term refers to the volume of activity?
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X
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The engineering method of estimating costs:
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All of the above are correct statements.
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Voyager Corporation has developed the following cost formula for its maintenance costs: Y = $300 + $2X, where X = the number of direct labor hours incurred. Assuming that the company expects 1,350 direct labor hours to be incurred during July, what maintenance costs would it expect?
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$300($2*1,350 direct labor hours)=$3,000
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Houghton Corporation had the following results in its first four months of operations.
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$1,200-1,400 machine labor hours
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What cost and activity would be used as the high data point in high-low cost estimation?
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$56,000 and 43,000 hours
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The coefficient of determination or R-squared (R2) is interpreted as:
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The proportion of the variation in the dependent variable explained by the independent variable.
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What percentage of the changes in maintenance costs is explained by the independent variable?
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73.3%
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Which of the following statements regarding the common problems with the use of regression estimates is not correct?
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Some of the more common problems with using regression estimates include failing to include outliers.
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Which of the following statements regarding the implementation of regression analysis is not correct?
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The learning phenomenon means that variable costs tend to increase per unit as the volume of activity increases.
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Which of the following statements regarding the advantages and disadvantages of alternative cost estimation methods is not correct?
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Companies using precious metals or replying on labor in developing countries have found that past cost data are very helpful in predicting future costs.
