Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 10, Problem 10.48P
Purchasing department cost drivers, multiple regression analysis (continuation of 10-47). Carl Hart decides that the simple regression analysis used in Problem 10-47 could be extended to a multiple regression analysis. He finds the following results for two multiple regression analyses:
Regression 4: PDC = a + (b1 × No. of POs) + (b2 × No. of Ss)
Regression 5: PDC = a + (b1 × No. of POs) + (b2 × No. of Ss) + (b3 × MP$)
The coefficients of correlation between combinations of pairs of the variables are as follows:
- 1. Evaluate regression 4 using the criteria of economic plausibility, goodness of fit, significance of independent variables, and specification analysis. Compare regression 4 with regressions 2 and 3 in Problem 10-47. Which one of these models would you recommend that Hart use? Why?
Required
- 2. Compare regression 5 with regression 4. Which one of these models would you recommend that Hart use? Why?
- 3. Hart estimates the following data for the Baltimore store for next year: dollar value of merchandise purchased, 578,500,000; number of purchase orders, 4,100; number of suppliers, 110. How much should Hart budget for purchasing department costs for the Baltimore store for next year?
- 4. What difficulties do not arise in simple regression analysis that may arise in multiple regression analysis? Is there evidence of such difficulties in either of the multiple regressions presented in this problem? Explain.
- 5. Give two examples of decisions in which the regression results reported here (and in Problem 10-47) could be informative.
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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 methods of cost estimation relies on only two data points?A. the high-low methodB. account analysisC. least-squares regressionD. SWOT analysis.
Directions: Choose the right answer in the multiple-choice
1. What is the cost incurred in the past?
A. Future cost
B. Unknown cost
C. Already incurred cost
D. Accounting Cost
E. None of the above
2. The formula: Y=a+bx+cz is an example ofA. Simple regressionB. Multiple regressionC. Linear programmingD. None of the above
3. If “r” between two variables is zero, how might the scatter diagram of these variables appear?A. A least-square line that slopes to the rightB. A least-square line that slopes to the leftC. Under this case, the scatter diagram could not be plotted in the graphD. None of the above
4. In cost accounting, relevant range is the range over which A. Production is stableB. Costs are stable and constantC. Total fixed cost fluctuatesD. Cost relationship Is not validE. None of the above
5. Which of the following is a controller’s responsibility?
A. Provision for capitalB. Custodian of fundsC. Credit and collectionD. Arranging shirt…
Chapter 10 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 10 - What two assumptions are frequently made when...Ch. 10 - Describe three alternative linear cost functions.Ch. 10 - What is the difference between a linear and a...Ch. 10 - High correlation between two variables means that...Ch. 10 - Name four approaches to estimating a cost...Ch. 10 - Describe the conference method for estimating a...Ch. 10 - Describe the account analysis method for...Ch. 10 - List the six steps in estimating a cost function...Ch. 10 - When using the high-low method, should you base...Ch. 10 - Describe three criteria for evaluating cost...
Ch. 10 - Define learning curve. Outline two models that can...Ch. 10 - Discuss four frequently encountered problems when...Ch. 10 - Prob. 10.13QCh. 10 - All the independent variables in a cost function...Ch. 10 - Multicollinearity exists when the dependent...Ch. 10 - HL Co. uses the high-low method to derive a total...Ch. 10 - A firm uses simple linear regression to forecast...Ch. 10 - In regression analysis, the coefficient of...Ch. 10 - A regression equation is set up, where the...Ch. 10 - What would be the approximate value of the...Ch. 10 - Estimating a cost function. The controller of the...Ch. 10 - Identifying variable-, fixed-, and mixed-cost...Ch. 10 - Various cost-behavior patterns. (CPA, adapted)....Ch. 10 - Matching graphs with descriptions of cost and...Ch. 10 - Account analysis, high-low. Stein Corporation...Ch. 10 - Account analysis method. Gower, Inc., a...Ch. 10 - Prob. 10.27ECh. 10 - Estimating a cost function, high-low method. Lacy...Ch. 10 - Linear cost approximation. Dr. Young, of Young and...Ch. 10 - Cost-volume-profit and regression analysis....Ch. 10 - Regression analysis, service company. (CMA,...Ch. 10 - High-low, regression. May Blackwell is the new...Ch. 10 - Learning curve, cumulative average-time learning...Ch. 10 - Learning curve, incremental unit-time learning...Ch. 10 - High-low method. Wayne Mueller financial analyst...Ch. 10 - High-low method and regression analysis. Market...Ch. 10 - High-low method; regression analysis. (CIMA,...Ch. 10 - Regression, activity-based costing, choosing cost...Ch. 10 - Interpreting regression results. Spirit...Ch. 10 - Cost estimation, cumulative average-time learning...Ch. 10 - Cost estimation, incremental unit-time learning...Ch. 10 - Regression; choosing among models. Apollo Hospital...Ch. 10 - Multiple regression (continuation of 10-42). After...Ch. 10 - Cost estimation. Hankuk Electronics started...Ch. 10 - Prob. 10.45PCh. 10 - Interpreting regression results, matching time...Ch. 10 - Purchasing department cost drivers, activity-based...Ch. 10 - Purchasing department cost drivers, multiple...
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