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: The coefficient of determination is negative. The level of production explains 49% of the variation in total costs There is a slightly inverse relationship between production and total costs. A correlation coefficient of 1.30 would produce a regression line with better fit to the data.

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: The coefficient of determination is negative. The level of production explains 49% of the variation in total costs There is a slightly inverse relationship between production and total costs. A correlation coefficient of 1.30 would produce a regression line with better fit to the data.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 10MC: Which of the following is one of the two approaches used to analyze data in the decision to keep or...

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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
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:
Which 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.
Which of the following statements related to cost estimation methods is true? O a. 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. O b. The high-low method is the most accurate and reliable method to determine the cost behavior compared to scatter-graph plot and least-squares regression methods. O c. None of the given answers. O d. Only high-low method has a slope and an intercept. e. The most complex method of cost estimation is the high-low method.
Which of the following statements related to cost estimation methods is true? O a. The most complex method of cost estimation is the high-low method. O b. The high-low method is the most accurate and reliable method to determine the cost behavior compared to scatter-graph plot and least-squares regression methods. O c. 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. O d. Only high-low method has a slope and an intercept. O . None of the given answers.
Carter 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?
Which 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.
Which of the following statements related to cost estimation methods is false? a. 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. O c. The most complex method of cost estimation is the high-low method. O d. None of the given answers. O e. The three methods determine a slope and an intercept.
Simple 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.
Which 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 positive