Chapter-3-Cost-drivers-cost-behaviour-and-cost-estimation：第3-cost司機(jī)-成本行為-成本估算

Testbankt/aManagementAccounting:AnAustralianPerspective3/ebyLangfield-Smith,ThorneandHilton PAGE39Chapter3—Costdrivers,costbehaviourandcostestimationQuestion1.Therelationshipbetweencostandactivityiscalled:A.Costestimation.B.Costprediction.C*.Costbehaviour.D.Costanalysis.E.Costapproximation.Question2._________isaforecastofcostataparticularlevelofactivity.A.Costestimation.B*.Costprediction.C.Costbehaviour.D.Costfunctions.E.Costanalysis.Question3.Thedeterminationofcostbehaviouriscalled:A*.Costestimation.B.Costprediction.C.Costbehaviour.D.Costfunctions.E.Costactivity.Question4.Acostwhichhasbothafixedandvariablecomponentiscalled:A.Step-fixedcost.B.Step-variablecost.C*.Semi-variablecost.D.Curvilinearcost.E.Discretionarycost.Question5.Acostwhichremainsunchangedintotalastheactivitylevel(orcostdriver)changesisa:A*.Fixedcost.B.Variablecost.C.Semi-variablecost.D.Step-fixedcost.E.Step-variablecost.Question6.Acostwhichchangesintotalindirectproportiontoachangeinthecostdriverisa:A*.Variablecost.B.Fixedcost.C.Semi-variablecost.D.Step-variablecost.E.Step-fixedcost.Question7.Amanufacturerplanstoincreaseproductionwithintherelevantrangeofactivity.Whatbehaviourcanthecompanyexpectforeachofthefollowing?Fixedcostperunit VariablecostperunitA. Nochange NochangeB. Nochange IncreaseC. Increase NochangeD. Decrease IncreaseE*. Decrease NochangeQuestion8.Variablecostperunit:A.Increasesindirectproportiontochangesinthecostdriver.B.Decreasesindirectproportiontochangesinthecostdriver.C*.Remainsunchangedasthelevelofcostdriverchanges.D.Increases,butnotindirectproportiontochangesinthecostdriver.E.Noneoftheabove.Question9.Fixedcostsperunit:A.Changeindirectproportiontochangesinactivitylevel.B*.Changeasactivityvaries.C.Remainunchangedasactivitylevelchanges.D.AandBE.Noneoftheabove.Question10.Coststhatremainfixedoverwiderangesofactivity,butjumptoadifferentamountoutsidethatrangearecalled:A*.Step-fixedcosts.B.Step-variablecosts.C.Semi-variablecosts.D.Curvilinearcosts.E.Committedfixedcosts.Question11.Thefixedcostsperunitare$10whenacompanymakes10,000units.Whataretheperunitfixedcostswhen12,500unitsareproduced?A.$12.00.B.$10.00.C*.$8.00.D.$6.00.E.$4.00.Question12.Thevariablecostsperunitare$4whenacompanymakes10,000units.Whataretheperunitvariablecostswhen8,000unitsareproduced?A.$6.00.B*.$4.00.C.$4.50.D.$5.50.E.$5.00.Question13.Totalcostsare$140,000when10,000unitsaremade.Ofthisamountvariablecostsare$4perunit.Whatarethetotalcostswhen8,000unitsareproduced?A.$140,000.B.$136,000.C*.$132,000.D.$124,000.E.$112,000.Question14.Totalcostsare$80,000when8,000unitsaremade.Ofthisamount,variablecostsare$48,000.Whatarethetotalcostswhen10,000unitsareproduced?A.$80,000.B*.$92,000.C.$98,000.D.$100,000.E.$108,000.Question15.Theslopeofthetotalcostlinerepresentsthe___________costperunit.A.Fixed.B*.Variable.C.Semi-variable.D.Step-fixed.E.Step-variable.Question16.Acostwhichexhibitsbothdecreasingandincreasingmarginalcostsoveraparticularrangeofactivityisanexampleofa:A*.Semi-variablecost.B.Curvilinearcost.C.Step-fixedcost.D.Step-variablecost.E.Discretionaryvariablecost.Question17.A_________costbehaviourpatternisoftenusedtoapproximateacurvilinearcost.A.Fixed.B.Variable.C*.Semi-variable.D.Step-variable.E.Step-fixed.Question18.Thelevelofactivitywithinwhichfixedcostsremainunchangediscalledthe:A.Extremerange.B*.Relevantrange.C.Activityrange.D.AandC.E.BandC.Question19.Therelevantrangeisthatrangeofactivitywhere:A.Managementmaynotfinditimportanttoconcernitself.B.Managementdoesnotexpectthefirmtooperate.C*.Fixedcostsremainunchanged.D.Theexpectedcostsexceedthebenefitsfromtheactivity.E.AandB.Question20.Withintherelevantrangeofactivity,costs:A*.Canbeestimatedwithreasonableaccuracy.B.Canbeexpectedtochangeradically.C.Exhibitdecreasingmarginalcostpatterns.D.Exhibitincreasingmarginalcostpatterns.E.Noneoftheabove.Question21.Asafirmbeginstooperateoutsidetherelevantrange,theaccuracyofcostestimatesforfixedandvariablecostsFixed VariableA. Increase increaseB. Increase decreaseC. Decrease increaseD*. Decrease decreaseE. Donotchange.Question22.Whichofthefollowingstatementsistrue?A.Costbehaviourpatternsarethesameinallbusinesses.B*.Costdriverschosenbyabusinessandtheassociatedcostfunctionsmaybeinaccurate.C.Costfunctions,onceestimated,canbereliedupontobeaccurate.D.Itisnotpossibletodevelopmoreaccuratecostbehaviourfunctionsthanthosethatalreadyexist.E.Noneoftheabovearetrue.Question23.Acost-estimationmethodwhichinvolvesacarefulexaminationoftheledgeraccountsiscalledthe_________method.A.Leastsquaresregression.B.High–low.C.Visualfit.D*.Accountclassification.E.Multipleregression.Question24.Amethodofcostestimationinwhichacostlineisdrawnthroughascatterdiagramtohelptheanalystvisualisetherelationshipbetweencostandactivityisknownasthe____________method.A.Leastsquaresregression.B.High–low.C*.Visualfit.D.Accountclassification.E.Multipleregression.Question25.Withintherelevantrange,acurvilinearcostfunctioncanbegraphedasa:A*.Straightline.B.Setofstraightlines.C.Solidline.D.Curvedline.E.Noneoftheabove.Question26.Thevisualfitmethodofcostestimationisusedtomodelcostbehaviourwhen:A.Acosthasbeenclassifiedasafixedcost.B.Theanalysthasnoclearideaaboutthebehaviourofthecostitem.C.Theanalystbelievesthecostbehaviourtobecurvilinearwithintherelevantrange.D.AandC.E*.BandC.Question27.Themethodofcostestimationwhichfitsacostlinebetweentwodatapointsis:A.Leastsquaresregression.B*.High–low.C.Visualfit.D.Accountclassification.E.Multipleregression.Question28.Themethodofcostestimationthatminimisesthesumofthesquareddeviationsbetweenthecostlineandthedatapointsis:A*.Leastsquaresregression.B.High–low.C.Visualfit.D.Accountclassification.E.Noneoftheabove.Question29.Inregressionanalysis,thevariablethatisbeingpredictedisA.Theindependentvariable.B*.Thedependentvariable.C.Theexplanatoryvariable.D.AandC.E.BandC.Question30.TechnicalEngineeringpresentlyleasesacopyingmachineonamonthlybasis.Theleaseagreementrequiresafixedfeeeachmonthinadditiontoachargepercopy.Technicalmade2,400copiesandpaidatotalof$162inrentinSeptemberandinOctobertheypaid$195for3,500copies.DetermineTechnical’svariablecostpercopy.A.$0.07B.$0.06C.$0.04D*.$0.03E.$0.01Question31.TechnicalEngineeringpresentlyleasesacopyingmachineonamonthlybasis.Theleaseagreementrequiresafixedfeeeachmonthinadditiontoachargepercopy.Technicalmade2,400copiesandpaidatotalof$162inrentinSeptemberandinOctobertheypaid$195for3,500copiesDetermineTechnical’smonthlyfixedfee.A.$138B*.$90C.$66D.$55E.$18Question32.TechnicalEngineeringpresentlyleasesacopyingmachineonamonthlybasis.Theleaseagreementrequiresafixedfeeeachmonthinadditiontoachargepercopy.Technicalmade2,400copiesandpaidatotalof$162inrentinSeptemberandinOctobertheypaid$195for3,500copiesDeterminethetotalamountthatwouldbepaidfor1,800copies.A.$120B.$138C*.$144D.$160E.$163Question33.YangManufacturingmakesaproductcalledYin.Therelevantrangeofoperationsisbetween2,500unitsand10,000unitsofYinpermonth.Perunitcostsattwoactivitylevelsareasfollows;5,000units$17.00perunit,7,500units$13.00perunit.DeterminethecostformulathatexpressesthebehaviourofYang’stotalcosts:A.Y$0+$17XB*.Y$60,000+$5XC.Y$20,000+$13XD.Y$45,000+$4XE.Y$40,000+$9XQuestion34.YangManufacturingmakesaproductcalledYin.Therelevantrangeofoperationsisbetween2,500unitsand10,000unitsofYinpermonth.Perunitcostsattwoactivitylevelsareasfollows;5,000units$17.00perunit,7,500units$13.00perunit.DeterminetheirtotalcostifYangproduces10,000units.A.$130,000B.$125,000C*.$110,000D.$100,000E.$90,000Question35.TheLongreachToyFactoryhasdeterminedmachinehourstobethecostdriverofthecompany’selectricitycosts.Duringthefirstsixmonthsoftheyearthecompanyincurredthefollowingelectricitycosts:MonthMachineHoursElectricityCostJan780$8700Feb720$8360Mar800$8950Apr900$9360May950$9625June920$9150Usingthehigh–lowmethod,estimatethevariablecostpermachinehour:A.$0.18B.$4.50C.$5.00D*.$5.50E.$6.17Question36.TheLongreachToyFactoryhasdeterminedmachinehourstobethecostdriverofthecompany’selectricitycosts.Duringthefirstsixmonthsoftheyearthecompanyincurredthefollowingelectricitycosts:MonthMachineHoursElectricityCostJan780$8700Feb720$8360Mar800$8950Apr900$9360May950$9625June920$9150Usingthehigh–lowmethoddeterminethecostformulathatexpressesthecostbehaviourofthecompany’selectricitycosts:A.Y=$3,764+$6.17XB.Y=$8,230+$0.18XC.Y=$5,100+$4.50XD.Y=$4,760+$5,00XE*.Y=$4,400+$5.50XQuestion37.Aregressionmodelinwhichmorethanoneindependentvariableisusedtopredictthedependentvariableiscalleda:A.Simpleregressionmodel.B*.Multipleregressionmodel.C.Dependentmodel.D.AandC.E.BandC.Question38.Whichofthefollowingareproblemsfrequentlyencounteredindatacollection?A.Outliers.B.Missingdata.C.Mismatchedtimeperiods.D.Trade-offsinchoosingthetimeperiod.E*.Alloftheabove.Question39.Whichofthefollowingstatement(s)is(are)trueconcerningcostestimationmethods?A.Costbehaviourisalwaysassumedtodependonmorethanonecostdriver.B.Costbehaviourpatternsarecurvilinear.C*.Costsandbenefitsofusingmoresophisticatedandcostlycostestimationmethodsmustbeevaluated.D.AandC.E.BandC.Question40.Allcostestimationmethods(exceptmultipleregression)assumethat:1.Costbehaviourdependsononecostdriver.2.Costbehaviourislinear.3.Thevariablecostcoefficientisgreaterthanzero.Whichofthefollowingstatement(s)is(are)true?A.1only.B.2only.C*.1and2only.D.1and3only.E.2and3only.Question41.Incostestimation,whichofthefollowingisnotadatacollectionproblem?A.Missingdata.B.Outliers.C*.Fixedcosts.D.Mismatchedtimeperiods.E.Inflation.Question42.Ifveryshorttimeperiodsuchasaweekareusedforaregressionstudy,ratherthanlongerperiodssuchasamonth,A.Copingwithinflationbecomesmoredifficult.B*.Accountingmeasurementerrorsaremorelikely.C.Timeandmotionstudieswillberequiredtosupplementthecostandvolumedata.D.AandB.E.AandC.Question43.AdatacollectionproblemduetomismatchedtimeperiodsismorelikelytooccurwhenA.Overheadcostsareallocated.B.Outliersarepresentinthedataset.C.Inflationissevere.D.*Timeperiodsareveryshort.E.Overheadcostand/oractivitydataaremissing.Question44.Thelearningcurvewillimpactonproductionefficiencyto:A.Increasecumulativeaveragelabourtimes.B.Decreasecumulativeaveragelabourtimes.C.Decreaselabourtimeperunit.D.AandC.E*.BandC.Question45.Learningcurvesmaybeappliedto:A.Manufacturinglabourcostsonly.B.Manufacturinganddownstreamlabourcosts.C.Manufacturingandupstreamlabourcosts.D*.Manufacturing,downstreamandupstreamlabourcosts.E.Downstreamandupstreamlabourcostsonly.Question46.Ifthefirst100unitstake200hourstoproduceandthenext100unitstake150hourstoproduce,thecumulativeaveragelabourtimeis:A.1hour15minutes.B.1hour30minutes.C*.1hour45minutes.D.2hours.E.3hours30minutes.Question46.Inassessingthecostsandbenefitsofusingaparticularcostdriver,whichofthefollowingmustbetakenintoaccount?Theavailabilityofcostdata.Thetimeframeforanalysingthecostbehaviour.Whetheritisafixedorvariablecost.A.1B.2C.3D*.1and2E.1and3Question47.Activitybasedcostinganalysescostsatwhichlevels?A.Unitandbatch.B.Unitandproduct.C.Productandfacility.D.BandC.E*.AandC.Question48.Inactivitybasedcostinganalysis,themanufacturingmanager’ssalaryisclassifiedas:A.Unitcost.B.Batchcost.C.Productcost.D*.Facilitycost.E.Noneoftheabove.Question49.Inactivitybasedcostinganalysis,directmaterialsareclassifiedas:A*.Unitcost.B.Batchcost.C.Productcost.D.Facilitycost.E.Noneoftheabove.Question50.Inactivitybasedcostinganalysis,setupcostsareclassifiedas:A.Unitcost.B*.Batchcost.C.Productcost.D.Facilitycost.E.Noneoftheabove.Question51.Inactivitybasedcostinganalysis,packagedesignisclassifiedas:A.Unitcost.B.Batchcost.C*.Productcost.D.Facilitycost.E.Noneoftheabove.Question52.Taskanalysisisusedinwhichapproachtocostsestimation?A.Accountclassification.B*.Engineeringmethod.C.High-lowmethod.D.Regressionanalysis.E.Managerialjudgement.Question53:Leastsquaresisusedinwhichapproachtocostestimation?A.Accountclassification.B.Engineeringmethod.C.High-lowmethod.D*.Regressionanalysis.E.Managerialjudgement.Question54.Whichofthefollowingstatementsareassumptionsunderlyingcostestimation?A.Costbehaviourdependsononeorafewactivities.B.Allcostsareproductiondriven.C.Thereisastrongcorrelationbetweenthecostandthecostdriver.D.AandB.E*.AandC.Question55.whichofthefollowingarevalidreasonsforafirmnotusingobjectivetechniquesDatamaynotbeavailable.Costestimatesaresufficientlyaccurateforthefirm’spurposes.Accountantsmaybeignorantofappropriatetechniques.Thefirmgiveslowprioritytocostestimation.A.1and2.B.3and4.C.1,2and3.D.2,3and4.E*.1,2,3and4.Question56.WhatisthebenchmarkfordeterminingsignificancewhenusingF-statisticA.3%B.4%C*.5%D.7.5%E.10%Question57.Ifthefixedcostofdeliverysystemis$7,200perannumandthevariablecostis$6.perdelivery,whatistheestimatedcostforthemonthofAprilwhen120deliveriestookplace?A*.$1320B.$1360C.$1450D.$1530E.$1595Question58.Whichofthefollowingareimportantinestimatingthecostofmachinemaintenance?A.Therelevantrange.B.Thetimeperiodselected.C.Thecostdriverselected.D*.A,BandC.E.Noneoftheabove.Question59.whenusingregressionanalysistodetermineestimatedcosts,whatcriteriarenecessarytoevaluateaparticularregressionline?A.Closenesstopre-analysisguessB.Goodnessoffit.C.Coefficientofdetermination.D.AandB.E*.BandC.Question60.IntheregressionformulaY=a+bX,bis:A.Theindependentvariable.B*.Theslopeoftheline.C.Thecistdriver.D.Theinterceptontheverticalaxis.E.Thedependentvariable.Question61.SeparatingcostsintofixedandvariablePinenoCompanywouldliketodeterminethevariablerateperdirectmachinehourinordertoestimatetheelectricitycostsforthemonthsofMayandJune.Relevantinformationisasfollows:MonthsMachinehoursworkedElectricitycostJanuary2,400$2,060February2,6002,122March2,8002,241April3,0002,420Estimatedunitstobeproduced:May2,150June2,260Eachunitrequires1.5machinehours.REQUIRED:A.Calculatethevariableandfixedcostcomponentsofthetotalelectricitycostusingthehigh–lowmethod.B.Usingthedatacalculatedabove,estimatetheelectricityforthemonthsofMayandJune.PINENOCOMPANY(Maximumcost–minimumcost)/(Maximumactivity–Minimumactivity)=Variablecostperunitofactivity($2,420–$2,060)/(3,000–2,400)=$360/600=$0.60Therefore:Totalcost–Variablecost=Fixedcost$2,420–(3,000X$.60)=$620(or)$2,060–(2,400X$.60)=$620A.Variable=$.60permachinehourFixed=$620B.May2,150($.60)(1.5)=1935+$620=$2,555TotalcostJune2,260($.60)(1.5)=2034+$620=$2,654TotalcostQuestion62.Accountclassificationmethod;foodprocessingClarionValleyMeatCompanyproducesoneofthebestsausageproductsinNewSouthWales.Thecompany’saccountantusedtheaccountclassificationmethodtocompilethefollowinginformation.a.Inspectionofseveralinvoicesfrommeatpackersindicatedthatmeatcoststhecompany$2.00perkiloofsausageproduced.b.Depreciationschedulesrevealedthatmonthlydepreciationonbuildingsandequipmentis$40,000.c.Wagerecordsshowedthatpaymentforproductionemployeescosts$1.60perkiloofsausageproduced.d.Payrollrecordsshowedthatsupervisors’salariestotal$16,000permonth.e.Electricitybillsrevealedthatthecompanyincurselectricitycostsof$8,000permonthplus$.40perkiloofsausageproduced.REQUIRED:A.Classifyeachcostitemasvariable,fixedorsemi-variable.B.Writeacostformulatoexpressthecostbehaviourofthefirm’sproductioncost.(UsetheformY=a+bX,whereYdenotesproductioncostandXdenotesquantityofsausageproduced.)A.a.Variableb.Fixedc.Variabled.Fixede.Semi-variable(ormixed)B.Productioncostpermonth=$64,000+$4.00Xwhere$64,000=$40,000+$16,000+$8,000and$4.00=$2.00+$1.60+$.40Question63.Estimatingcostbehaviour;high–lowmethodTheprioryear’scostsformonthlyelectricityincurredbytheSheppartonCanningCompanyareasfollows:MonthKilosofFoodCannedCostJanuary2,100$2,210February2,200$2,200March2,400$2,245April3,000$2,290May3,200$2,335June4,000$2,800July4,100$2,410August3,900$2,495September3,500$2,340October3,000$2,280November3,000$2,300December2,800$2,270REQUIRED:A.Usethehigh–lowmethodtoestimatethecompany’selectricitycostbehaviourandexpressitinequationform.B.Predicttheelectricitycostforamonthinwhich2,500kilosoffoodarecanned.A.Variablecostperkilooffoodcanned=$2410–$2210/4,100–2,100=$0.10Totalcostat4,100kilos$2,410Variablecostat4,100kilos(4,100x$.10perkilo)$410Fixedcost$2,000B.Costpredictionwhen2,500kilosoffoodarecanned:Electricitycost=$2,000+($.10)(2,500)=$2,250Question64.Interpretingleast-squaresregression;manufacturerBrownCompanyLtdmanufacturesseveraldifferentproducts.Thecompanyismakingplansfortheintroductionofanewproduct,whichitwillsellfor$4perunit.Thefollowingestimateshavebeenmadeformanufacturingcostson5millionunitstobeproducedthefirstyear.Directmaterials$2,500,000Directlabour$1,000,000(at$8perhour)Overheadcostshavenotyetbeenestimatedforthenewproduct,butmonthlydataontotalproductionandoverheadcostforthepast12monthshavebeenanalysedusingleast-squaresregression.Thefollowingresultswerederivedfromtheregressionandwillprovidethebasisforoverheadcostestimatesforthenewproduct.RegressionAnalysisResults(Y=a+bX)Dependentvariable(Y):FactoryoverheadcostsIndependent,variable(X):DirectlabourhoursCalculatedvalues:Intercept$2,000,000Coefficientofindependentvariable$11.00REQUIRED:A.Writetheregressionequationusingtheestimatesgivenabove.B.Calculatethepredictedoverheadcostatanactivitylevelof250,000directlabourhours.C.Whatsuggestionswouldyoumaketothecompanyaccountantregardingtheevaluationoftheregressionequation?A.Y=$2,000,000+($11.00)XWhereY=factoryoverheadcostX=directlabourhoursB.Predictedoverheadat250,000directlabourhours:Predictedoverhead=$2,000,000+($11.00x250,000)=$4,750,000C.Therearetwowaystoevaluatetheregressionequation:(a)Determinewhethertherelationshipmakeseconomicsense.Isitplausiblethatoverheadcostisrelatedtodirectlabourhours?Doestheestimatedregressionequationlookreasonable?Answeringthesequestionsrequiresagoodunderstandingoftheproductionprocess.(b)Usethecoefficientofdetermination,Rx2z,toassesstheregressionequation’sgoodnessoffit.Question65.Usingthehigh–lowmethodWiththefollowinginformationapproximatethevariableandfixedcostbehaviourofthemonthlyrepairsforadeliverytruckusingthehigh–lowmethod.KmTravelledMonthlyRepairCosts6,000$1,35012,000$1,50016,000$3,05010,000$2,100Variablerate=($3,050–$1,350)/(16,000–6,000)=$0.17Fixedcost=$3,050–(16,000X$0.17)=$330or$1,350–(6,000X0.17)=$330Question66.Definethetermrelevantrangeandexplainitsimportancetounderstandingcostbehaviour.Therelevantrangeistherangeofactivitywithinwhichmanagementexpectstheorganisationtooperate.Thiscanbeusedonpastexperienceand/orsalesprojections.Thereasonthatthistermisimportantisbecausemanagementneednotconcernitselforwasteprecioustimewithextremelyhighorlowlevelsofactivitythatareunlikelytooccur.Statisticalmeasuressuchasregressionalsolimitthescopetoanorganisationrelevantrange.Question67.Compareandcontrastthefollowingtypesofcosts:A.variableandstep-variableB.fixedandstep-fixedAvariablecostchangesintotalindirectproportiontothechangeinactivitylevelorcostdrivers(directmaterial).Astep-variablecostisnearlyvariable,butitincreasesinsmallsteps,insteadofcontinuously(e.g.additionaldirectlabour).Afixedcostremainsunchangedastheactivitylevelvariesintotal(rent).Astep-fixedcostremainsfixedoverasizeablerangeofactivity,butjumpstoadifferentamountforactivitiesoutsidethatrange(thesalariesofhiringadditionalemployees).Question68.Explainhowthehigh–lowcostestimationmethodiscalculatedandrestatetheformulausedtocalculatethefixedcostcomponent.Thesemi-variablecostapproximationiscalculatedusingthehighandlowactivitylevelsfromthedata.These,togetherwiththeassociatedcostlevels,areusedinthefollowingformula:VariablecostDifferenceincostlevels/peritem=DifferenceinactivitylevelsFromthisformula,acostperitemcanbeascertainedandmultipliedbytheexpectedactivityleveltoobtainthetotalvariablecost.Subtractingthetotalvariablecostfromthetotalcostwillproducethefixedcostestimate.Question69.Distinguishbetweenleastsquaresregression(simple)andmultipleregressionascostestimationmethods.Intheleast-squaresregression(LSR)method,thecostlineispositionedsoastominimisethesumofthesquareddeviationsbetweenthecostlineandthedatapoints.ThecostlinefittothedatausingLSRiscalledaregressionline.Thestatisticalequationforthislineisrepresentedbytheformula:Y=a+bX,withXdenotingactivitylevel(independentvariable)andYdenotingthetotalcost(dependentvariable).Theinterceptofthelineontheverticalaxisisdenotedasaandtheslopeofthelineisdenotedasb.Thefixedcostcomponentisaandbisanestimateofthevariablecostperunitofactivity.ThemultipleregressionlinehasallthesamepropertiesofthesimpleLSRline,butmorethanoneindependentvariableistakenintoconsideration.Theequationissimilarandlookslikethis:Y=a+bX1+b2x2.Theuseofmoreexplanatoryvariablescanexplainmoreofthecostbehaviourthansimpleregression.Question70.“Regardlessofthemethodused,theresultingcostestimationwillonlybeasgoodasthedataonwhichitisbased.”Discusssometheproblemsthatcomplicatetheprocessofdatacollection.1.Missingdata.Misplacedsourced