Regression analysis is sometimes called the best-fit cost estimation because:
the regression analysis finds the cost estimation line with least squares errors.
A key ethical issue in cost allocation involves costing in an international context, because the choice of a cost allocation method can affect:
Taxes in domestic and foreign countries
Management accounting activities include planning and controlling. Cost estimation is most closely aligned to controlling. T OR F.
False. Cost estimation is about costs; ie. planning
Before using regression it is essential to graph the data. T OR F.
True.
In the estimation equation, Y= a + (b * ) + e, (a) represents a fixed quantity which is the amount of Y when X equals _________.
zero
Pairing of estimated costs and its related cost driver?
- Product design cost; number of design elements
- heating expense for a building; temp. to be maintained in the building
- fuel expense for a delivery truck; miles driven.
The statistical measures that can be used to evaluate the reliability of a regression analysis include:
- R-squared, or coefficient of determination
- p-value
- t-value
Non-linear relationships are most common for ____________ cost drivers.
structural
The strategic role of cost estimation includes:
- application of the cost estimation model in planning and decision making
- identification of key cost drivers
- prediction of future costs
In the estimation equation, Y= a + (b * X), (a) represents:
a fixed quantity (it represents the value Y when X= 0)
A time-series regression model is used to:
predict future costs
High-low predictions are only valid for activity that falls within the _______________ ______________.
relevant range
The use of learning curves is important in cost estimation because:
- of business start-up costs
- of productivity improvements in many industries
- new products have a period of low productivity
Examples of inconsistent data that should be avoided in cost estimation include:
- using cash basis accounting for some of the data and the accrual basis for other data
- differences in accounting method used to calculate the data
A _____________ ___________ represents the presence or absence of a condition.
dummy variable
Managers commonly use cost estimation to assess the cost impact of different product designs of product enhancements in:
target costing and pricing
Limitations of learning curve analysis include:
- the learning rate is assumed to be constant
- unreliability because changes in productivity may be due to factors unrelated to learning
When repetition of the same activity makes labor more productive, nonlinear cost behavior is influenced by ____________.
learning.
Data relationships may be non-linear due to:
- trends or seasonality in the data
- a shift in the data at a point in time
- outliers in the data
In the learning model Y= a * X^b , Y is:
cumulative average time per unit
The high-low method:
- is based on a unique cost line for the high and low points
- estimates fixed and variable cost for a set of data
Assessing the accuracy of the cost estimate can be done using:
- regression analysis
- MAPE
The first step in cost estimation is:
define the cost object
The second step in cost estimation is:
Determine the Costs Drivers
The third step in cost estimation is:
Collect Consistent and Accurate Data
The fourth step in cost estimation is:
Graph the Data
The fifth step in cost estimation is:
Select and Employ the Estimation Method
The sixth step in cost estimation is:
Asses the Accuracy of the Cost Estimate
The degree to which changes in the dependent variable can be explained by changes in the independent variable(s) is:
R-squared
When a given variable tends to change predictability in the same (or opposite) direction of a given change in another variable __________ exists.
Correlation
Means that two or more independent variables are highly correlated with each other:
Multicollinearity
A measure of the reliability of each independent variable; that is, the degree to which an independent variable has a valid, stable, long-term relationship with the dependent variable.
t-value
The study of the data graph is important to:
- spot non-linearity in the data or the presence of outlier(s)
- both high-low and regression analysis
Unusual data points that strongly influence regression analysis are __________.
outliers
Statistical measures that can be used to evaluate the precision of a regression analysis include:
the standard error of the estimate
The limitation of learning curve analysis is it:
applies only for repetitive tasks.
The mean absolute percentage error (MAPE) is used to:
assess the accuracy of the cost estimate
A relatively precise regression will have a standard error of the estimate that is:
small relative to the mean of the dependent variable.
Learning controls are helpful in :
- capital budgeting
- management control
- life-cycle control
Cost estimation methods available to the management accountant include:
- high-low method
- regression analysis