# 11 managers apply two criteria to obtain accurate and useful cost functions these cr 4309566

11) Managers apply two criteria to obtain accurate and useful cost functions. These criteria are ________.

A) plausibility and believability

B) plausibility and reliability

C) reliability and validity

D) believability and plausibility

12) In relation to a cost function, the term reliability means ________.

A) whether the costs and activities can be easily observed

B) whether the cost function conforms to a given mathematical model

C) how well the cost function predicts future costs

D) how well the cost function explains past cost behavior

13) A cost function is an algebraic equation used to describe the relationship between a cost and its cost driver(s).

14) Managers should apply plausibility and reliability to obtain accurate and useful cost functions.

15) When referring to a cost function, plausibility refers to whether you can rely upon the cost function for predicting the future.

16) In a linear mixed cost function, the slope of the function is the fixed cost per unit of the cost driver.

17) Goodness of fit pertains to how well a cost function predicts cost behavior.

18) Cleveland Recreation Center is planning its annual fundraiser. The event committee has developed the following budget for the event.

Ballroom rental$2,900

Entertainment$4,500

Printing$600 plus $9 per guest

Food$29 per guest

Decorations$700 plus $5 per guest

The committee expects 3,000 people will attend the event.

Required:

A) Compute the fixed and variable costs of the event.

B) Prepare the cost function.

C) If Cleveland Recreation charges $100 per person, how much money will be raised by this event?