what assumption(s) are commonly made when estimating a cost function?a) cost behavior is approximated through a linear function within the appropriate range.b) variations in the level that a solitary activity the sport in the related complete costs.c) both of the aboved) neither of the above

Match the different linear cost duty with the meaning given.1) A cost function in which total cost change in proportion to the transforms in the level of task in the relevant range.2) A cost function in which complete cost do not change with alters in the level of task in the relevant range.3) A cost duty that has actually both fixed and also variable elements. Complete cost change but not in the proportion come the changes in the level of activity in the pertinent range.A) Fixed cost FunctionB) Mixed expense FunctionC) Variable expense Function

What is the difference between a linear and a nonlinear price function? Give an instance of Each type of price function.A) A linear cost function is a cost duty where, in ~ the pertinent range, the graph of complete cost matches the level that a single activity related to that price is no a directly line. An instance of a linear cost function is a cost function for usage of a copier whereby the terms are a solved lease payment that $1,000 per month add to a $0.01 per range charge for each copy. A nonlinear cost duty is a cost duty where, in ~ the appropriate range, the graph of complete cost versus the level of single activity pertained to that price is a right line. Examples include quantity discounts for material purchases for each 1,000 systems of product purchased. The price per unit of product will loss for each 1,000 unties purchased at a time.B) A straight cost duty is a cost duty where, in ~ the relevant range, the graph of complete cost versus the level of a solitary activity pertained to that price is a straight line. An instance of a liner cost role is a cost function for usage of a phone call line wherein the terms are a addressed charge the $10,000 per year add to a $2 every minute fee for phone call use. A nonlinear cost role is a cost duty where, in ~ the relevant range, the graph of full cost versus the level the a single activity concerned that price is not a straight line. Example include economic climates of range in declaring where an company can double the number of advertisements for less than double the costs, step-cost functions, and learning-curve based costs.C) A straight cost role is a cost duty where, in ~ the relevant range, the graph of total cost versus the level of a solitary activity concerned that price is a directly line. Examples include economic situations of scale in heralding where an agency can double the variety of advertisements for much less than double the costs, step-cost functions, and learning-curve based costs. A nonlinear cost function is a cost duty where, within the appropriate range, the graph of complete cost matches the level of a single activity concerned that expense is no a right line. Examples include a cost duty for usage of a telephone line wherein the terms space a solved charge the $10,000 every year plus a $2 every minute charge for phone use.D) nobody of the above are correct.

You are watching: What assumption(s) are frequently made when estimating a cost function?

B) A linear cost duty is a cost duty where, in ~ the pertinent range, the graph of full cost matches the level of a solitary activity related to that price is a directly line. An instance of a liner cost function is a cost duty for usage of a call line where the terms space a fixed charge of $10,000 per year to add a $2 every minute charge for phone use. A nonlinear cost duty is a cost function where, in ~ the appropriate range, the graph of complete cost versus the level the a single activity pertained to that price is no a directly line. Instance include economic climates of range in heralding where an agency can dual the variety of advertisements for less than double the costs, step-cost functions, and also learning-curve based costs.

"High correlation between two variables way that one is the cause and also the other is the effect." do you agree? Explain.A) Yes. High correlation always method the variables have a cause and effect relationship.B) NO. High correlation method there is no cause and also effect relationship in between variables.C) No girlfriend must additionally consider economic plausibility before determining there is a cause and effect relationship.D) NO. There have to be a contractual setup to have a cause and also effect relationship.

C) No girlfriend must likewise consider economic plausibility prior to determining there is a cause and also effect relationship.

Conference methodQuantitative evaluation of existing or past relationshipAccount analysis methodIndustrial engineering method

Describe the conference technique for estimating a price function. What are two benefits of this method?A) The conference an approach use a formal mathematical an approach to fit expense functions to past observations. Advantages of the conference technique include1) The rate with which expense estimates and be developed.2) easy to use.B) The conference technique estimates price functions by classifying various price accounts as variable, solved or mixed with respect to the figured out level the activity. Advantages of the conference technique include1) Reasonably accurate 2) easy to use C) The conference technique estimates expense functions on the communication of evaluation and opinions around cost and also their chauffeurs gathered from miscellaneous departments that a firm (purchasing, procedure engineering, manufacturing, employee relations, etc.)1) The rate with which cost estimates can be developed.2) The pooling of knowledge from experts throughout functional areas.D) none of the above are correct.

C) The conference method estimates cost functions ~ above the communication of analysis and opinions around cost and their motorists gathered from assorted departments that a agency (purchasing, procedure engineering, manufacturing, employee relations, etc.)1) The rate with which cost estimates can be developed.2) The pooling of knowledge from experts across functional areas.

Describe the account an approach for estimating a cost function.A) The account analysis technique estimates expense functions ~ above the communication of analysis and opinions about cost and also their motorists gathered from miscellaneous departments of a agency (purchasing, procedure engineering, employee relations, etc.)B) The account analysis method estimates price functions by evaluating the relationship in between inputs and outputs in physics terms.C) The account analysis an approach estimates cost functions by classifying expense accounts in the subsidiary ledger together variable fixed, or blended with respect to the figured out level of activity. Typically, managers use qualitative, analysis when making these cost group decisions.D) The account analysis technique uses a formal mathematical method to fit expense functions to past data observations. Excel is a beneficial tool because that performing the account analysis method.

C) The account analysis an approach estimates price functions by classifying price accounts in the subsidiary ledger together variable fixed, or blended with respect come the determined level of activity. Typically, managers use qualitative, analysis when making this cost group decisions.

List the six measures in estimating a cost function on the communication of an evaluation of a past expense relationship in the correct order. Which step is generally the most an overwhelming for the cost analyst?

1) pick the dependent variable2) identify the independent change or cost driver3) collect data top top the dependence variable and driver4) Plot the data.5) calculation the expense function6) advice the expense driver of the estimated cost function.Step 3 is typically the most complicated for the cost analyst.

When utilizing the high-low method, need to you basic the high and low monitorings on the dependent change or on the price driver?A) dependent variableB) cost driver

Three criteria that are important when picking among alternative cost functions are:A) goodness of fit, steep of regression line, the rate with which expense estimates can be determinedB) economic plausibility, goodness of fit, the speed with which price estimates can be figured out C) economic plausibility, quality of fit, steep of regression lineD) none of the above

Complete the an interpretation of finding out curve. Choose two models that can be offered when combine learning right into the estimation of cost

A learning curve is a role that measures exactly how labor-hours per unit decline as systems of manufacturing increase since workers space learning and also becoming far better at their jobs.Two models that have the right to be offered when combine learning right into the estimation of price functions are:Cumulative average-time learning modelIncremental unit-time discovering model

Which of adhering to are commonly encountered problems when collecting expense data on variable contained in a price function?A) 1. A homogeneous relationship between the individual expense items in the dependent variable cost pool and the expense driver(s) does2. The relationship in between the cost and also the cost driver is not stationary.B) 1. Data space either not available for all monitorings or space not uniformly reliable.2. Too much values of monitorings occur.C) 1. The time period used to measure up the dependent variable is not correctly matched through the time duration used to measure up the cost driver(s).2) Fixed price are ceded are allocated as if they room variable.D) every one of the over are correct.

What room the four crucial assumptions check in specification analysis in the case of straightforward regression?A) 1. Linearity of relationship between the dependency variable and also the independent variable in ~ the pertinent range.2. Continuous variance that residuals for all values of the live independence variable.3. Indepence the residuals.4. Normal circulation of residuals.B) 1. Self-reliance of residuals.2. Normal circulation of residuals.3. Fixed cost are allocated as if they space variable.4. The relationship between the expense driver and also the expense is not stationary.C) 1. Linearity that relationship between the dependence variable and also the independent variable in ~ the appropriate range.2. Continuous variance of residuals for all values of the independent variable.3. Fixed prices are allocated together if they are variable.4. The relationship between the price driver and also the expense is no stationary.D) nobody of the above are correct.

A) 1. Linearity of relationship between the dependence variable and the independent variable within the appropriate range.2. Consistent variance of residuals for all worths of the independent variable.3. Indepence of residuals.4. Normal distribution of residuals.

"All the independent variables in a cost function estimated with regression analysis are cost drivers." do you agree?A) YesB) No

"Multicollinearity exists as soon as the dependent variable and also the independent variable are highly correlated." do you agree? Explain.A) No. Multicollinearity exists once two or an ext independent variables space highly correlated with each other.B) No. Multicollinearity increases the standard errors of the coefficients of the dependency variables, leave the elevation variables highly correlated.C) Yes. Multicollinearity exists when the dependency variable and also the independent variable space highly associated with each other, bring about a coefficient of correlation in between variables better than 0.70.D) Yes. Multicollinearity exists as soon as the dependent variable and also the independent variable space highly correlated with each other, leading to a coefficient the correlation between variables much less then 0.70.

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A) No. Multicollinearity exists when two or more independent variables room highly correlated with every other.

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Managerial Accounting16th EditionChengyee Chang, rod Smith, Vernon J. Richardson

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