Indicate whether each statement is true T or false F 1 The

Indicate whether each statement is true (T) or false (F). ___ 1. The main purpose for estimating cost functions is to improve the accuracy of cost predictions. ___ 2. In the regression equation y = a + bX, the constant a is an estimate of fixed costs. ___ 3. To obtain reliable estimated cost functions using the account analysis method, the cost-classification decisions should be made by individuals thoroughly knowledgeable about the operations. ___ 4. Usually, data collection is the most difficult step in estimating a cost function based on quantitative analysis. ___ 5. If the high-low method is used, the constant in the cost function equation is always computed after computing the slope coefficient. ___ 6. The closer the predicted amounts of y in a cost function are to the actual cost amounts, the better the economic plausibility. ___ 7. The main purpose of the learning curve is to assist managers in developing techniques for increasing the speed and efficiency of production. ___ 8. A higher learning-curve percentage indicates a faster pace of learning. ___ 9. (Appendix) If the t-value of the slope coefficient is less than 2.00, the independent variable is not a cost driver. ___ 10. (Appendix) When simple regression is used, specification analysis tests the assumption regarding the reliability of data collection procedures. ___ 11. (Appendix) In simple regression, a scatter diagram is useful to check for constant variance of residuals. ___ 12. (Appendix) Multicollinearity exists whenever residuals, considered sequentially, have a systematic pattern.

Solution

1. True

2 True
3False

4False

5True

6True

7false

8true

9False

10True

11False

12True