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Study Resources (Accounting)

10.7   Describe quality control and its implications as a cost driver. 1) The number of defects in units shipped to customers as a percentage of total units shipped, is a non-financial measure. 2) Costs of quality (COQ) reports usually do not consider opportunity costs. 3) Costs of Quality (COQ) are classified into.
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31) As part of his job as cost analyst, Max Thompson collected the following information concerning the operations of the Machining Department: ObservationMachine-hoursTotal Operating Costs January4,000$45,000 February4,60049,500 March3,80045,750 April4,40048,000 May4,50049,800 Required: a.Use the high-low method to determine the estimating cost function with machine-hours as the cost driver. b.If June's estimated machine-hours total 4,200, what are the total estimated.
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The Door Company manufactures doors. Classify each of the following quality costs as prevention costs, appraisal costs, internal failure costs, or external failure costs. A) Appraisal B) External failure C) Internal failure D) Prevention 49) Retesting of reworked products 50) Downtime due to quality problems 51) Analysis of the cause of defects in production 52) Depreciation of test.
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  11.1   Distinguish relevant from irrelevant information in decision situations. 1) A decision model is a formal method of making a choice that uses only quantitative analyses. 11.2   Identify the differences among relevant costs for short-term and long-term production output decisions. 1) The purpose of evaluating performance in the decision process is to provide.
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11.3   Contrast relevant and irrelevant costs and revenue as well as quantitative and qualitative information influencing pricing decisions. 1) Quantitative factors are always expressed in financial terms. 2) If a manufacturer chooses to continue purchasing direct materials from a supplier because of the on-going relationship that has developed over the years, the.
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11) Which of the following represents a qualitative factor? A) any nonfinancial factor B) historical costs C) relevant costs D) the timing of variable costs E) an outcome that cannot be measured in numerical terms 12) A one-time-only special order decision A) should consider only long-term costs and benefits. B) must still consider short-term and long-term costs and.
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10.3   Understand the various methods of cost estimation. 1) The account analysis method estimates cost functions by classifying various cost accounts as variable, fixed, or mixed with respect to the identified level of activity. 2) All of the following are approaches to cost estimation EXCEPT A) the account analysis method. B) the conference method. C).
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27) Newton Company used linear regression analysis to obtain the following output: Payroll Department Cost Explained by Number of Employees Constant$5,800 Standard error of Y estimate630 r2 0.8924 Number of observations20 X coefficient$1.902 Standard error of coefficient0.0966 Required: a.What is the total fixed cost? b.What is the variable cost per employee? c.Prepare the linear cost function. d.What is the coefficient of determination?.
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11) Try-Us-First Motors manufactures and sells off-road vehicles. The September sales were $6,000,000. Monthly design costs are $112,000 and rework is running at $75,000 per month. Its painting department is fully automated and requires substantial inspection to keep the machines operating properly. An improperly painted vehicle is very expensive to.
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Nidek manufactures sport swear. Classify each of the following quality costs as prevention, appraisal, internal failure or external failure. A) External failure B) Internal failure C) Appraisal D) Prevention 35) Disposal of spoiled work in process 36) Downtime due to quality problems 37) Expediting work to meet delivery schedule 38) Field testing 39) Maintaining a complaint department 40) Product liability 41).
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39) Are relevant revenues and relevant costs the only information needed by managers to select among alternatives? Explain using examples. 40) A restaurant is deciding whether it wants to update its image or not. It currently has a cozy appeal with loyal customers. The outdated décor that is still in.
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10.2   Explain the importance of causality in estimating cost functions. 1) A cause-and-effect relationship, relative to cost drivers and resulting costs, may develop because of physical relationships, contractual relationships, or implicit relationships. 2) The selection of the best measure of benefit will depend upon the corresponding change in the cost pool. 3) There.
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10.5   Explain nonlinear cost functions 1) An "economy of scale" function is an example of a linear cost function. 2) A step cost function is an example of a linear function. 3) A nonlinear cost function A) has two constants and a single slope. B) does not effectively describe the behaviour of outside the.
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36) Axle and Wheel Manufacturing is approached by a European customer to fill a one-time-only special order for a product similar to one offered to domestic customers. The following per unit data apply for sales to regular customers: Direct materials$33 Direct labour15 Variable manufacturing support24 Fixed manufacturing support52 Total manufacturing costs$124 Markup (50%)62 Targeted selling price$186 Axle and.
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25) Carl Clarkson and Lenny Lenid have been assigned to review the costs of quality at the Sprotton Chemicals Ltd. for the month of September. All amounts are in thousands (000's). Cost ItemAmount Product testing$350 Clean up of toxic spills within the plant$14,200 Employee training$200 Quality Engineering$675 Supplies used in testing$500 Statistical Process Control$1,750 Payments on lawsuits from.
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21) The contribution per machine-hour is A) $18 for Standard, $20 for Premium. B) $54 for Standard, $80 for Premium. C) $15 for Standard, $16 for Premium. D) $6 for Standard, $5 for Premium. E) $5 for Standard, $6 for Premium. 22) If there are 496 machine-hours available per week, how many rockers of each model.
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10.9   Discuss the interpretation of regression models. 1) Statistical significance of independent variables is determined by comparing the t-value to a threshold called degrees of freedom. 2) The standard error of the estimated coefficient indicates whether a relationship exists between the predictor variable and the outcome variable that cannot be attributed to.
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Use the information below to answer the following question(s). Northwoods manufactures rustic furniture. The cost accounting system estimates manufacturing costs to be $90 per table, consisting of 80% variable costs and 20% fixed costs. The company has surplus capacity available. It is Northwoods' policy to add a 50% markup to full.
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10.10   Describe a learning curve model. 1) In the incremental unit-time learning model, the incremental unit time decreases by a constant percentage each time the cumulative quantity of units produced is doubled. 2) A learning curve measures the effect of learning on efficiency. 3) Plotting learning curve observations is helpful in selecting.
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35) The Gangwere Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Gangwere Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation. MonthCostHours January$40,0003,500 February24,4002,000 March31,2802,450 April36,4003,000 May44,1603,900 June42,4003,740 Required: Using the high-low method.
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32) Brix, Inc. prepares frozen food for fast-food restaurants. It has two workstations, cooking and assembly. The cooking station is limited by the cooking time of the food. Assembly is limited by the speed of the workers. Assembly normally waits on food from cooking. Because the demand has increased in.
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32) A corporation can measure its quality performance by using financial or nonfinancial measures of quality. Discuss the merits of each method and whether the use of one precludes the use of the other. 33) Wilson's Language School manufactures CDs and DVDs to teach English as a Second Language. Wilson has.
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24) The new cost analyst in your accounting department has just received a computer-generated report that contains the results of a simple regression program for cost estimation. The summary results of the report appear as follows: VariableCoefficientStandard Errort-Value Constant$35.92$16.022.24 Independent Variable$563.80$205.402.74 r2 = 0.75 Required: a.What is the cost estimation equation according to.
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Match the description with the appropriate term. A) specification analysis B) standard error of the regression C) Durbin-Watson statistic D) t-value E)  heteroscedasticity F) autocorrerlation G) homoskedasticity H) goodness of fit I) economic plausibility J) constant variance of residuals 30) Measures how large the value of the estimated coefficient is relative to its standard error. 31) The testing of the assumptions of.
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19) Harry's Picture manufactures various picture frames. Each new employee takes 5 hours to make the first picture frame and 4 hours to make the second. The manufacturing overhead charge per hour is $20. Required: a.What is the learning-curve percentage, assuming the cumulative average method? b.What is the time needed to build 8.
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Answer the following question(s) using the information below.   Central Medical Supply Inc., a manufacturer of medical testing equipment, has $240,000 worth of an obsolete line of testing equipment. The obsolete equipment can be adapted to fit another line of testing equipment at a cost of $64,000; the market value would then.
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11) Which cost estimation method is being used by Penny's TV and Appliance Store? A) the industrial engineering method B) the conference method C) the high-low method D) the quantitative analysis method E) the account analysis method Use the information below to answer the following question(s). Raymaster is a small computer software.
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11) Craig's Cola was to manufacture 1,000 cases of cola next week. The accountant provided the following analysis of total manufacturing costs. VariableCoefficientStandard Errort-Value Constant10071.941.39 Independent Variable20091.742.18 r2 = 0.82 What is the estimated cost of producing the 1,000 cases of cola? A) $200,100 B) $72,032 C) $100,200 D) $9,000 E) $91,812 12) What common.
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10.6   Describe the impact of time as a cost driver. 1) The customer response time reveals how quickly customers respond to a company's new products. 2) Customer response time is the time between when a company first markets a new product, and when sales exceed supplies on hand (test inventory). 3) Uncertainty about.
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28) Tessmer Manufacturing Company produces inventory in a highly automated assembly plant in Windsor, Ontario. The automated system is in its first year of operation and management is still unsure of the best way to estimate the overhead costs of operations for budgetary purposes. For the first six months of.
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11) The Gameshop manufactures specialized board games. Management is attempting to search for ways to reduce costs and is considering two alternatives for an upcoming project of special games that must be delivered to the customer in 12 months' time. Management agreed to the special project job as they have.
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11.4   Explain the opportunity-cost concept and why it is used in decision making. 1) Opportunity cost is the contribution to income that is recognized through the use of limited resources available in the best alternative. 2) Quantitative factors are relevant, and qualitative factors are irrelevant, in making outsourcing decisions. 3) If the $17,000.
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29) Car Parts Company manufactures a part for use in its production of automobiles. The costs per unit when 10,000 items are produced are: Direct materials$6 Direct manufacturing labour30 Variable manufacturing overhead12 Fixed manufacturing overhead16 Total$64 Auto Company has offered to sell to Car Parts Company 10,000 units of the part for $60. The plant facilities.
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Use the information below to answer the following question(s). The Monroe Company uses the high-low method to estimate the cost function. The information for the current year is provided below. Machine HoursLabour Costs Highest observation of cost driver240$4,000 Lowest observation of cost driver1102,960 11) What is Monroe Company's slope coefficient per machine hour? A) $26.91 B) $18.00 C) $16.67 D) $10.00 E).
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10.4   Outline the steps in estimating a cost function. 1) There is poor goodness of fit if the predicted values do not match actual cost observation. 2) Cross-sectional data pertain to the same entity over successive past periods. 3) The advantage of the high-low method when compared to regression analysis is that it.
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21) A paper company manufactures cardboard boxes. Because the efforts of manufacturing are approximately equal between labour and machinery, management is considering other possible cost drivers. By considering different cost drivers, it is anticipated that the estimating process can be improved. The following cost estimating equations with their r, values.
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11) Which of the following is NOT included in customer response time? A) order delivery time B) order manufacturing time C) order waiting time D) order receipt time E) order opening time 12) Manufacturing lead time includes A) all indirect time. B) waiting time. C) marketing time. D) time to process the customer's order to delivery. E) all indirect time and.
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Answer the following question(s) using the information below. Jim's 5-year-old Geo Prizm requires repairs estimated at $3,000 to make it road worthy again. His friend, Julie, suggested that he should buy a 5-year-old used Honda Civic instead for $3,000 cash. Julie estimated the following costs for the two cars: Geo Prizm Honda Civic Acquisition.
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