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Managerial Accounting for Managers 4th Edition Test Bank

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    App0 2 A - 1 Copyright © 2017 McGraw - Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw - Hill Education. Appendix 2A Least Squares Regression Computations True / False Questions 1. (Appendix 2A) The R 2 (i.e., R - squared) is a measure of the goodness - of - fit in least - squares regression. True False 2. (Appendix 2A) When analyzing a mixed cost, you should always plot the data in a scattergraph, but it is particularly important to check the data visually on a scattergraph when the R 2 from a least squares regression is low. A quick look at the scattergraph can reveal that there is little relation between the cost and the activity or that the relation is something other than a simple straight line. True False Multiple Choice Questions

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    App0 2 A - 2 Copyright © 2017 McGraw - Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw - Hill Education. 3. (Appendix 2A) _________________ is a method of separating a mixed cost into its fixed and variable elements by fitting a line to the data that minimizes the sum of the squared errors. A. Account analysis B. Scattergraph C. High - low D. Least - square regression 4. (Appendix 2A) Your boss would like you to estimate the fixed and variable components of a particular cost. Actual data for this cost over four recent periods appear below. Activity Cost Period 1 24 $174 Period 2 25 $179 Period 3 20 $165 Period 4 22 $169 Using the least - squares regression method, what is the cost formula for this cost? A. Y = $0.00 + $7.55X B. Y = $110.44 + $2.70X C. Y = $103.38 + $3.00X D. Y = $113.35 + $0.89X

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    App0 2 A - 3 Copyright © 2017 McGraw - Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw - Hill Education. 5. (Appendix 2A) The management of Bandle Corporation would like for you to analyze their repair costs, which are listed below: Machine - Hours Repair Costs March 6,966 $102,067 April 6,952 $101,966 May 6,924 $101,759 June 6,967 $102,072 July 6,963 $102,027 August 6,996 $102,243 September 6,964 $102,031 October 6,926 $101,776 Management believes that repair cost is a mixed cost that depends on the number of machine - hours. Using the least - squares regression method, the estimates of the variable and fixed components of repair cost would be closest to: A. $6.72 per machine - hour plus $55,230 per month B. $6.80 per machine - hour plus $54,679 per month C. $7.28 per machine - hour plus $51,389 per month D. $14.66 per machine - hour plus $101,993 per month

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    App0 2 A - 4 Copyright © 2017 McGraw - Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw - Hill Education. 6. (Appendix 2A) Laborn Inc.'s inspection costs are listed below: Units Produced Inspection Costs March 265 $11,254 April 248 $10,684 May 272 $11,516 June 235 $10,210 July 207 $9,258 August 217 $9,578 September 261 $11,108 October 274 $11,578 Management believes that inspection cost is a mixed cost that depends on the number of units produced. Using the least - squares regression method, the estimates of the variable and fixed components of inspection cost would be closest to: A. $43.04 per unit plus $10,648 per month B. $34.63 per unit plus $2,089 per month C. $34.78 per unit plus $2,044 per month D. $36.00 per unit plus $1,714 per month

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    App0 2 A - 5 Copyright © 2017 McGraw - Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw - Hill Education. 7. (Appendix 2A) Donner Company would like to estimate the variable and fixed components of its maintenance costs and has compiled the following data for the last five months of operations. Labor Hours Maintenance Cost January 160 $617 February 130 $553 March 180 $596 April 190 $623 May 110 $532 Using the high - low method of analysis, the estimated variable cost per labor hour for maintenance is closest to: A. $0.83 B. $1.84 C. $1.30 D. $1.14

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    App0 2 A - 6 Copyright © 2017 McGraw - Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw - Hill Education. 8. (Appendix 2A) Donner Company would like to estimate the variable and fixed components of its maintenance costs and has compiled the following data for the last five months of operations. Labor Hours Maintenance Cost January 160 $617 February 130 $553 March 180 $596 April 190 $623 May 110 $532 Using the high - low method of analysis, the estimated total fixed cost per month for maintenance is closest to: A. $440 B. $407 C. $470 D. $0

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    App0 2 A - 7 Copyright © 2017 McGraw - Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw - Hill Education. 9. (Appendix 2A) Donner Company would like to estimate the variable and fixed components of its maintenance costs and has compiled the following data for the last five months of operations. Labor Hours Maintenance Cost January 160 $617 February 130 $553 March 180 $596 April 190 $623 May 110 $532 (Appendix 2A) Using the least - squares regression method, the estimated variable cost per labor hour for maintenance is closest to: A. $1.88 B. $1.52 C. $1.09 D. $1.96

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    App0 2 A - 8 Copyright © 2017 McGraw - Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw - Hill Education. 10. (Appendix 2A) Donner Company would like to estimate the variable and fixed components of its maintenance costs and has compiled the following data for the last five months of operations. Labor Hours Maintenance Cost January 160 $617 February 130 $553 March 180 $596 April 190 $623 May 110 $532 (Appendix 2A) Using the least - squares regression method, the estimated total fixed cost per month for maintenance is closest to: A. $470 B. $416 C. $400 D. $378

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    App0 2 A - 9 Copyright © 2017 McGraw - Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw - Hill Education. 11. (Appendix 2A) Donner Company would like to estimate the variable and fixed components of its maintenance costs and has compiled the following data for the last five months of operations. Labor Hours Maintenance Cost January 160 $617 February 130 $553 March 180 $596 April 190 $623 May 110 $532 (Appendix 2A) Using the least - squares regression equation, the total maintenance cost for March is: A. above the regression line. B. on the regression line. C. below the regression line. D. outside the relevant range.

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    App0 2 A - 10 Copyright © 2017 McGraw - Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw - Hill Education. 12. (Appendix 2A) Recent maintenance costs of Gallander Corporation are listed below: Machine - Hours Maintenance Costs April 727 $7,269 May 725 $7,290 June 720 $7,273 July 641 $7,130 August 671 $7,208 September 728 $7,291 October 710 $7,260 November 707 $7,231 Management believes that maintenance cost is a mixed cost that depends on machine - hours. Using the least - squares regression method, the estimate of the variable component of maintenance cost per machine - hour is closest to: A. $1.85 B. $10.30 C. $1.67 D. $1.90

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    App0 2 A - 11 Copyright © 2017 McGraw - Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw - Hill Education. 13. (Appendix 2A) Recent maintenance costs of Gallander Corporation are listed below: Machine - Hours Maintenance Costs April 727 $7,269 May 725 $7,290 June 720 $7,273 July 641 $7,130 August 671 $7,208 September 728 $7,291 October 710 $7,260 November 707 $7,231 Management believes that maintenance cost is a mixed cost that depends on machine - hours. Using the least - squares regression method, the estimate of the fixed component of maintenance cost per month is closest to: A. $6,066 B. $7,244 C. $5,944 D. $7,130

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    App0 2 A - 12 Copyright © 2017 McGraw - Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw - Hill Education. 14. (Appendix 2A) Cespedes Inc.'s inspection costs are listed below: Units Produced Inspection Costs March 659 $10,550 April 628 $10,380 May 643 $10,462 June 678 $10,655 July 622 $10,342 August 656 $10,531 September 694 $10,731 October 662 $10,566 Management believes that inspection cost is a mixed cost that depends on units produced. Using the least - squares regression method, the estimate of the variable component of inspection cost per unit produced is closest to: A. $5.40 B. $5.33 C. $5.43 D. $16.07

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    App0 2 A - 13 Copyright © 2017 McGraw - Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw - Hill Education. 15. (Appendix 2A) Cespedes Inc.'s inspection costs are listed below: Units Produced Inspection Costs March 659 $10,550 April 628 $10,380 May 643 $10,462 June 678 $10,655 July 622 $10,342 August 656 $10,531 September 694 $10,731 October 662 $10,566 Management believes that inspection cost is a mixed cost that depends on units produced. Using the least - squares regression method, the estimate of the fixed component of inspection cost per month is closest to: A. $6,983 B. $10,342 C. $10,527 D. $6,972 Essay Questions

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    App0 2 A - 14 Copyright © 2017 McGraw - Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw - Hill Education. 16. (Appendix 2A) CPE for CPAs, Inc., provides continuing professional education for certified public accountants. The company is relatively new and management is seeking information regarding the company's cost structure. The following information has been gathered for the first six months of the current year: Seminars Offered Costs Incurred January 8 $15,200 February 10 $17,000 March 13 $19,400 April 16 $21,800 May 14 $20,000 June 11 $18,200 Required: a. Using the high - low method, estimate the variable cost per seminar and the total fixed cost per month. b. Using the least - squares regression method, estimate the variable cost per seminar and the total fixed cost per month.

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    App0 2 A - 15 Copyright © 2017 McGraw - Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw - Hill Education. 17. (Appendix 2A) The management of Buff Sports Stadium believes that the number of sporting events each month is an measure of activity for total clean - up cost. Shown below are event figures and total clean up costs for the past four months: Number of Sporting Events Total Clean - up Cost July 28 $30,900 August 34 $34,200 September 16 $20,700 October 22 $28,200 Required: a. Estimate Buff's cost formula for monthly clean - up cost using the high - low method. b. Estimate Buff's cost formula for monthly clean - up cost using the least - squares regression method.

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