Cost Accounting 1

The engineering method of estimating costs:

All of the above are correct statements.

Which of the following statements regarding the advantages and disadvantages of alternative cost estimation methods is not correct?

Companies using precious metals or replying on labor in developing countries have found that past cost data are very helpful in predicting future costs.

Which of the following statements regarding the implementation of regression analysis is not correct?

The learning phenomenon means that variable costs tend to increase per unit as the volume of activity increases.

The coefficient of determination or R-squared (R2) is interpreted as:

The proportion of the variation in the dependent variable explained by the independent variable.

In the cost equation TC = F + VX, which term refers to the volume of activity?

X

Houghton Corporation had the following results in its first four months of operations.

$1,200-1,400 machine labor hours

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?

$300($2*1,350 direct labor hours)=$3,000

What cost and activity would be used as the high data point in high-low cost estimation?

$56,000 and 43,000 hours

What percentage of the changes in maintenance costs is explained by the independent variable?

73.3%

Which of the following statements regarding the common problems with the use of regression estimates is not correct?

Some of the more common problems with using regression estimates include failing to include outliers.