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MAS5

The document discusses different cost estimation methods: 1. The learning curve in cost estimation is an example of non-linear cost behavior. 2. Cost estimation involves estimating the relationship between costs and cost drivers, documenting direct and indirect costs, and summarizing past costs into fixed and variable components. 3. Common cost estimation methods include account analysis, engineering method, and the high-low method.

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Kendrew Sujide
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77 views1 page

MAS5

The document discusses different cost estimation methods: 1. The learning curve in cost estimation is an example of non-linear cost behavior. 2. Cost estimation involves estimating the relationship between costs and cost drivers, documenting direct and indirect costs, and summarizing past costs into fixed and variable components. 3. Common cost estimation methods include account analysis, engineering method, and the high-low method.

Uploaded by

Kendrew Sujide
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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29. The learning curve in cost estimation is a good example of: A. non-linear cost behavior. C.

simple
regression. B. machine-intensive production. D. a random variable. Bobadilla 30. Cost estimation is the
process of A. estimating the relationship between costs and the cost drivers that cause those costs. B.
documenting costs in terms of direct and indirect costs. C. summarizing past costs into fixed and variable
components. D. all of the above. Bobadilla 31. Which of the following methods is used to estimate
costs? A. Account analysis C. Engineering method B. High-low method D. All of the above Bobadilla 32.
For analysis purposes, the high-low method usually produces a(n) A. reasonable estimate. C. overstated
estimate. B. precise estimate. D. understated estimate. Bobadilla 33. The high-low method is criticized
because it A. is not a graphical method. B. is a mathematical method. C. ignores much of the available
data by concentrating on only the extreme points. D. does not provide reasonable estimates. Bobadilla
34. The high-low method may give unsatisfactory results if A. the data points all fall on a line. C. the
points are not representative. B. volume of activity is heavy. D. volume of activity is light. Bobadilla 35.
The equation(s) required for applying the least squares method in the computation of fixed and variable
production costs could be expressed as A. xy = ax + b x 2 C.  y = na + b x B. y = a + bx2 D. xy = ax
+ b x 2 xy = na + b x y = na + bx Bobadilla 36. Weaknesses of the high-low method include all of
the following except A. Only two observations are used to develop the cost function. B. The high and low
activity levels may not be representative. C. the method does not detect if the cost behavior is
nonlinear.

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