Cost Accounting Chapter 10 Exam Questions with Complete Solutions

Cost Accounting Chapter 10 Exam Questions with Complete Solutions account analysis method (p. 377) - Correct Answers: estimates cost functions by classifying various cost accounts as variable, fixed, or mixed in regard to the identified level of activity. coefficient of determination (r2) (p. 399) - Correct Answers: measures the percentage of variation in Y explained by X (the independer^nt variable). conference method (p. 377) - Correct Answers: estimates cost functions on the basis of analysis and opinions about costs and their drivers gathered from various departments of a company (purchasing, process engineering, manufacturing, employee relations, and so on). constant (p. 372) - Correct Answers: The fixed cost of $1,000 is called a... it is the component of the total cost that does not vary with changes in the level of the activity. cost estimation (p. 374) - Correct Answers: used to measure a relationship based on data from past costs and the related level of an activity. cost function (p. 371) - Correct Answers: is a mathematical description of how a cost changes with changes in the level of an activity relating to that cost. cost predictions (p. 374) - Correct Answers: Managers are interested in estimating past cost functions primarily because they can help them make more accurate ________________, or forecasts, of future costs. cumulative average-time learning model (p. 390) - Correct Answers: cumulative average time per unit declines by a constant percentage each time the cumulative quantity of units produced doubles. dependent variable (p. 379) - Correct Answers: (the cost to be predicted and managed) managers choose will depend on the specific cost function being estimated. experience curve (p. 389) - Correct Answers: measures the decline in the cost per unit of these various business functions as the amount of these activities increases. high-low method (p. 381) - Correct Answers: It 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. incremental unit-time learning model (p. 391) - Correct Answers: the time needed to produce the last unit declines by a constant percentage each time the cumulative quantity of units produced doubles. independent variable (p. 379) - Correct Answers: (level of activity or cost driver) is the factor used to predict the dependent variable (costs). industrial engineering method (p. 376) - Correct Answers: also called the work-measurement method, estimates cost functions by analyzing the relationship between inputs and outputs in physical terms. intercept (p. 372) - Correct Answers: the constant is also called the learning curve (p. 389) - Correct Answers: is a function that measures how labor-hours per unit decline as units of production increase because workers are learning and becoming better at their jobs. linear cost function (p. 371) - Correct Answers: total cost versus the level of a single activity related to that cost is a straight line within le relevant range. mixed cost (p. 372) - Correct Answers: also called a semivariable cost—is a cost that has both fixed and variable elements. multicollinearity (p.406) - Correct Answers: exists when two or more independent variables are highly correlated with each other. multiple regression (p. 383) - Correct Answers: analysis estimates the relationship between the dependent variable and two or more independent variables. nonlinear cost function (p. 388) - Correct Answers: Is a cost function for which the graph of total costs (based on the level of a single activity) is not a straight line within the relevant range. regression analysis (p. 383) - Correct Answers: is a statistical method that measures the average amount of change in the dependent variable associated with a unit change in one or more independent variables. residual term (p. 383) - Correct Answers: measures the distance between actual cost and estimated cost for each observation of the cost driver. semivariable cost (p. 372) - Correct Answers: is a cost that has both fixed and variable elements. A mixed cost—also called simple regression (p. 383) - Correct Answers: analysis estimates the relationship between the dependent variable and one independent variable. slope coefficient (p. 372) - Correct Answers: the amount by which total cost changes when a one-unit change occurs in the level of activity (one hour of CPU usage in the StoreBox example). specification analysis (p. 401) - Correct Answers: is the testing of the assumptions of regression analysis. standard error of the estimated coefficient (p. 400) - Correct Answers: indicates how much the estimated value, b, is likely to be affected by random factors. standard error of the regression (p. 399) - Correct Answers: is the standard deviation of the residuals. step cost function (p. 388) - Correct Answers: IS a cost function in which the cost remains the same over various ranges of the level of activity, but the cost increases by discrete amounts—that is, increases in steps—as the level of activity increases from the next. work-measurement method (p. 376) - Correct Answers: the industrial engineering method, also called____________ estimates cost functions by analyzing the relationship between inputs and outputs in physical terms.