Costing MCQ Questions and Solutions with Explanations | Commerce

Relationship based on unrelated level of activity and past data of cost is measured with help of cost estimation. Cost estimation is the art of assigning value.

Model which states decline in extra time needed to produce last unit, every time for cumulative quantity of doubled units produced is classified as incremental unit time learning model. Incremental unit-time learning model can be defined as Learning curve model in which the incremental unit time (the time needed to produce the last unit) is reduced by a constant percentage each time the cumulative quantity of units produced is doubled.

A helpful technique, for accurate forecasts about costs to be incurred in future is a part of cost estimation. Cost estimation is the art of assigning value.

In specification analysis, assumptions related to residuals states must be independent. The goal of the Requirements Analysis and Specification is to clearly understand customer requirements and to systematically organize these requirements in a specification document.

Deviations between estimated regression line and vertical deviations are classified as residual terms.

In regression analysis, if observed cost value is 50 and predicted cost value is 7, then disturbance term will be 43.
Disturbance term = Observed cost value - Predicted cost value
= 50 - 7 = 43.

Number of observations in regression analysis is considered as degree of freedom. In a regression model, each term is an estimated parameter that uses one degree of freedom. In the regression output below, you can see how each term requires a DF.

Estimation of cost functions, an ignoring information from all points but considering two observation points can be classified as disadvantage of high low method.

Graphical representation of cost driver data and costs is considered as plotting data.

Evaluation criteria of regression equation must be considered as goodness of fit, economic plausibility and significance of independent variable.