L2

Question 1

disadvantages of high-low method

Answer 1

• highly sensitive to outliers at the highest/lowest observations of the cost driver
• (the regression analysis can also be influenced by outlier data points)

Question 2

standard error in regression analysis

Answer 2

measures the dispersion of the actual obs. around the regression line and thus gives a measure for accuracy of regression estimate

Question 3

t-value

Answer 3

measures validity of IV in predicting DV

Question 4

p-value

Answer 4

is a translation of t-value into probability that obs. relationship is due to chance

Question 5

economic plausibility

Answer 5

requires subjective assessment of cause-effect relationship

Question 6

What is the Cost-Volume-Profit Analysis?

Answer 6

• models the relationship btw. operating profit and the following factors that combine to determine the level of short-term profits:
• VC/ unit
• Total FC
• unit selling price
• output level
• -> answers What-if scenarios

Question 7

contribution income statement

Answer 7

• classifies costs based on cost behavior

Rev, VC, CM, FC, OI

Question 8

A normal costing system uses actual costs for direct materials and direct labor, and:

Answer 8

Estimated costs for factory overhead.

Question 9

If a costing system uses a single base to allocate overhead costs that are results of several production activities:

Answer 9

Products that use relatively more of this base tend to be overcosted