COST ACCOUNTING
16th Edition
ISBN: 9781323169261
Author: Horngren
Publisher: PEARSON C
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 10, Problem 10.19MCQ
A regression equation is set up, where the dependent variable is total costs and the independent variable is production. A correlation coefficient of 0.70 implies that:
- a. The coefficient of determination is negative.
- b. The level of production explains 49% of the variation in total costs
- c. There is a slightly inverse relationship between production and total costs.
- d. A correlation coefficient of 1.30 would produce a regression line with better fit to the data.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Least-squares regression is a statistical method for identifying cost behavior.
True or False
True
R-squared is a measure of
a. The spurious relationship between cost and activity
b. The fxed cost component
C The variable cost per unit activity
d. How well the regression line accounts for the changes in the dependent variable
Which of the following statements related to cost estimation methods is true ?
a . Only high -low method has a slope and an intercept .
b. The scatter - graph method is used to derive an estimated line of cost behavior by graphically connecting the two cost amounts identified with the highest and lowest volume levels .
c. The most complex method of cost estimation is the high - low method .
d. The least -squares regression method is the most accurate and reliable method to determine the cost behavior compared to scatter -graph plot and high -low methods .
e. None of the given answers
Chapter 10 Solutions
COST ACCOUNTING
Ch. 10 - What two assumptions are frequently made when...Ch. 10 - Describe three alternative linear cost functions.Ch. 10 - What is the difference between a linear and a...Ch. 10 - High correlation between two variables means that...Ch. 10 - Name four approaches to estimating a cost...Ch. 10 - Describe the conference method for estimating a...Ch. 10 - Describe the account analysis method for...Ch. 10 - List the six steps in estimating a cost function...Ch. 10 - When using the high-low method, should you base...Ch. 10 - Describe three criteria for evaluating cost...
Ch. 10 - Define learning curve. Outline two models that can...Ch. 10 - Discuss four frequently encountered problems when...Ch. 10 - Prob. 10.13QCh. 10 - All the independent variables in a cost function...Ch. 10 - Multicollinearity exists when the dependent...Ch. 10 - HL Co. uses the high-low method to derive a total...Ch. 10 - A firm uses simple linear regression to forecast...Ch. 10 - In regression analysis, the coefficient of...Ch. 10 - A regression equation is set up, where the...Ch. 10 - What would be the approximate value of the...Ch. 10 - Estimating a cost function. The controller of the...Ch. 10 - Identifying variable-, fixed-, and mixed-cost...Ch. 10 - Various cost-behavior patterns. (CPA, adapted)....Ch. 10 - Matching graphs with descriptions of cost and...Ch. 10 - Account analysis, high-low. Stein Corporation...Ch. 10 - Account analysis method. Gower, Inc., a...Ch. 10 - Prob. 10.27ECh. 10 - Estimating a cost function, high-low method. Lacy...Ch. 10 - Linear cost approximation. Dr. Young, of Young and...Ch. 10 - Cost-volume-profit and regression analysis....Ch. 10 - Regression analysis, service company. (CMA,...Ch. 10 - High-low, regression. May Blackwell is the new...Ch. 10 - Learning curve, cumulative average-time learning...Ch. 10 - Learning curve, incremental unit-time learning...Ch. 10 - High-low method. Wayne Mueller financial analyst...Ch. 10 - High-low method and regression analysis. Market...Ch. 10 - High-low method; regression analysis. (CIMA,...Ch. 10 - Regression, activity-based costing, choosing cost...Ch. 10 - Interpreting regression results. Spirit...Ch. 10 - Cost estimation, cumulative average-time learning...Ch. 10 - Cost estimation, incremental unit-time learning...Ch. 10 - Regression; choosing among models. Apollo Hospital...Ch. 10 - Multiple regression (continuation of 10-42). After...Ch. 10 - Cost estimation. Hankuk Electronics started...Ch. 10 - Prob. 10.45PCh. 10 - Interpreting regression results, matching time...Ch. 10 - Purchasing department cost drivers, activity-based...Ch. 10 - Purchasing department cost drivers, multiple...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- 7. Which of the following charts best represent total variable costs? For each chart, the line represents the cost behavior pattern, the vertical axis represents costs, and the horizontal axis represents total volume, (A) Your answer is (B) (C) (D) Explain your answer: 8. Which of the following is NOT a cost estimation method? A) High-low cost estimation B) Scatter diagrams C) Least-square regressions D) CVP analysis Your answer is Explain your answer: 9. Assume a local Cost Cutters provides cuts, perms, and hairstyling services. Annual fixed costs are $120,000, and variable costs are 40 percent of sales revenue. Determine its break-even point in sales dollars. A) $250,000 B) $200,000 c) $240,000 D) $360,000 Your answer is Explain your answer:arrow_forwardSimple regression analysis provides the means to evaluate a line of regression, which is fitted to a plot of data and represents the a. way costs change with respect to dependent variable.b. way costs change with respect to both independent and dependent variables.c. variability expense with pesos of productiond. way costs change with respect to independent variable.arrow_forwardCarter Dry Cleaning has developed two regression analyses for cost estimation. The accounting manager has presented statistical measures for both of these regressions. Regression A has an R-squaredvalue of .53 and a t-value of 1.08. Regression B has an R-squared of .89 and a t-value of 2.17. Whatdo these statistical measures indicate about the regressions? Which regression should Carter DryCleaning use for cost estimation?arrow_forward
- Which of the following methods of cost estimation relies on only two data points?A. the high-low methodB. account analysisC. least-squares regressionD. SWOT analysis.arrow_forwardWhich of the following statements related to CVP chart is not true? O a. To determine the variable cost per unit from a graph, the change in cost is divided by the change in units. O b. The scatter graph method is a way to estimate the cost behavior by graphically connecting the two cost amounts identified with the highest and lowest volume levels. O c. The slope of the total cost line determines the variable cost per unit. O d. To calculate the total fixed cost from a graph is by multiplying a level of volume by the variable cost per unit found out earlier and subtracting that from the total cost for that level of volume. e. The intercept between the total cost line on a graph and the y-axis determines the fixed cost. f. None of the given answers.arrow_forwardWhich of the following is NOT true of regression techniques for estimating costs? a) They permit the inclusion of more than one predictor. b) They typically use the highest and lowest activity points to estimate the relation between cost and activity. c) They help develop estimates that have a broader base than those based on a few select points. d) They are designed to generate a line that best fits a set of data points.arrow_forward
- “All the independent variables in a cost function estimated with regression analysis are cost drivers.” Do you agree? Explain.arrow_forwardWhich of the following statements related to cost estimation methods is false? The least-squares regression method is the most accurate and reliable method to determine the cost behavior compared to scatter-graph plot and high-low methods. O b. The low-high method is used to derive an estimated line of cost behavior by graphically connecting the two cost amounts identified with the highest and lowest volume levels. The three methods determine a slope and an intercept. O d. None of the given answers. The most complex method of cost estimation is the high-low method.arrow_forwardNewport, Inc. used Excel to run a least-squares regression analysis, which resulted in the following output: Regression Statistics Multiple R R Square Observations 0.7225 0.8500 30 Coefficients Standard Error T Stat P-Value 0.021 Intercept Production (X) 31,000 5.87 3,493 2.86 0.4640 14.30 0.000 a. What is Newport's total fixed cost? Total Fixed Cost b. What is Newport's variable cost per unit? (Round your intermediate calculations to 2 decimal places.) Variable Cost per unit c. What total cost would Newport predict for a month in which they sold 5,000 units? Total Costs d. What proportion of variation in Newport's cost is explained by variation in production? (Round your intermediate calculations to 2 decimal places.) Proportion of Variationarrow_forward
- Which of the following statements is true regarding regression analysis? Question 8 options: Regression analysis considers all of the data points for determining the line that best fits the data so it is usually less accurate than the high-low method. Regression analysis helps generate a statistic, called the R-square, which tells how well the line fits the data points. Regression analysis can only be used by manufacturing companies to predict costs. All of the above are true.arrow_forwardWhich of the following statements is true when making decisions using cost-volume-profit (CVP) analysis? Select one: a. As long as the contribution margin is a positive number, net income will be positive b. As long as variable costs are more than fixed costs, net income will be negative c. As long as the contribution margin is greater than fixed costs, net income will be positive d. As long as the sales price per unit is greater than fixed costs per unit, net income will be positivearrow_forwardWhich of the following items would be useful to management in deciding whether to investigate the cause of a reported standard cost variance? O Cost-volume-profit analysis. O Simultaneous equations. O Linear regression analysis. O Iso-profit lines. Indifference probability.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
How to Estimate Project Costs: A Method for Cost Estimation; Author: Online PM Courses - Mike Clayton;https://www.youtube.com/watch?v=YQ2Wi3Jh3X0;License: Standard Youtube License