Accounting Expert Answers & Study Resources : Page 125

28) The Wildcat Company has provided the following information for the factory overhead cost pool: Units of Output30,000 Units42,000 Units Indirect materials$180,000$252,000 Indirect labour1,080,0001,512,000 Supervisors' salaries312,000312,000 Equipment depreciation151,200151,200 Maintenance81,600110,400 Utilities   384,000   528,000 Total$2,188,800$2,865,600 Required: Using the high-low method and the information provided above, a.identify the linear cost function equation and b.estimate the total cost at 36,000 units of output. 29) Patrick.

11) Cost items that do not change between the alternative choices involved in the decision are not relevant to the decision to be made as they will be incurred no matter which alternative is chosen. 12) An expected value is the weighted average of the outcomes, with the probability of each.

17) What is the high-low estimate of the labour costs at Bradco Restoration when 8,000 hours are used? A) $21,500 B) $18,500 C) $17,750 D) $17,250 E) $17,125 18) When using the high-low method, the denominator in the equation that determines the slope is the A) outcome variable. B) predictor variable. C) difference between the high and low observations.

73) Ewing Company planned to be in operation for three years. During the first year, it had no sales but incurred $120,000 in variable manufacturing expenses and $40,000 in fixed manufacturing expenses. In the next year, it sold half of the finished goods inventory from the previous year for $100,000.

  10.1   Use standard mathematical notation to specify a cost function that can be graphed as a straight line. 1) There is a homogeneous relationship between the individual cost items in the dependent variable pool and the cost driver when each activity whose costs are included in the dependent variable has the.

36) Which cost estimation method is being used by Miller's Good Value Appliance Store? 37) What are two of the assumptions against which data should be evaluated when used to develop a linear cost function? Briefly explain the three ways that a linear cost function may behave? 38) List and briefly.

  Use the information below to answer the following question(s). Beauty Supply Company manufactures shampoo. The supervisor has provided the following information and stated that standard costing is used for manufacturing, marketing, and administrative costs. January February Beginning inventory 0 --- Production 2,500 3,000 Sales 2,250 3,025 Other information: Selling price $20.00 Standard variable manufacturing cost/unit $8.00 Standard variable market/admin. cost/unit $4.00 Standard fixed manufacturing overhead cost/month $40,000 Standard fixed market/admin. cost/month.

21) For make-or-buy decisions, relevant costs include A) direct material costs plus direct labour costs. B) incremental costs plus opportunity costs. C) differential costs plus sunk costs. D) incremental costs plus fixed costs. E) variable costs plus fixed overhead. 22) The opportunity cost of holding significant inventory includes A) contribution margin on the.

  11.1   Contrast relevant and irrelevant costs and revenues as well as quantitative and qualitative information influencing decisions. 1) The purpose of evaluating performance in the decision process is to provide feedback. 2) Anticipated future costs that differ with alternative courses of action are known as relevant costs. 3) Divisional revenues which remain at.

  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.

39) Lewis Auto Company manufactures a part for use in its production of automobiles. When 10,000 items are produced, the costs per unit are: Direct materials$12 Direct manufacturing labour60 Variable manufacturing overhead24 Fixed manufacturing overhead32 Total$128 Monty Company has offered to sell Lewis Auto Company 10,000 units of the part for $120 per unit. The.

20) Schotte Manufacturing Company uses two different independent variables (machine-hours and number of packages) in two different equations to evaluate costs of the packaging department. The most recent results of the two regressions are as follows: Machine-hours: VariableCoefficientStandard Errort-Value Constant$748.30$341.202.19 Predictor Variable $52.90$35.201.50 r2 = 0.33 Number of packages: VariableCoefficientStandard Errort-Value Constant$242.90$75.043.24 Predictor Variable$5.60$2.002.80 r2 = 0.73 Required: a.What are the estimating.

21) What would be their estimated cost per unit if Raymaster expects to sell 2,000 units next year? A) $300 B) $312 C) $370 D) $498 E) $500 22) What is the predicted indirect manufacturing labour cost if 160 machine-hours are budgeted and 170 are actually worked, assuming the estimated cost function is y = $81.04.

42) Southwestern Company needs 1,000 motors in its manufacture of automobiles. It can buy the motors from Jinx Motors for $1,250 each. Southwestern's plant can manufacture the motors for the following costs per unit: Direct materials$500 Direct manufacturing labour250 Variable manufacturing overhead200 Fixed manufacturing overhead350 Total$1,300 If Southwestern buys the motors from Jinx, 30% of.

15) Jamboree Manufacturing Ltd. produces two products, steel and wood beams. Steel beams have a unit contribution margin of $400, and wood beams have a unit contribution margin of $300. The demand for steel beams exceeds their production capacity, which is limited by available direct labour and machine hours. The.

37) Clinton Company sells two items, product A and product B. The company is considering dropping product B. It is expected that sales of product A will increase by 40% as a result. Dropping product B will allow the company to cancel its monthly equipment rental costing $100 per month..

41) For Consumer Lumber what would be the total difference between operating incomes under absorption costing and variable costing? Beginning fixed manufacturing overhead in inventory $47,500 Fixed manufacturing overhead in production $37,500 Ending fixed manufacturing overhead in inventory $12,500 Beginning variable manufacturing overhead in inventory $5,000 Variable manufacturing overhead in production $25,000 Ending variable manufacturing overhead in inventory $7,500 A) $35,000 B) $25,000 C) $20,000 D).

  Answer the following question(s) using the information below. Greene Manufacturing incurred the following expenses during 2012: Fixed manufacturing costs $45,000 Fixed nonmanufacturing costs $35,000 Unit selling price $100 Total unit cost $40 Variable manufacturing cost rate $20 Units produced 1,340 units 9) What will be the break-even point if variable costing is used? A) 1,334 units B) 1,000 units C) 1,125 units D).

70) For 2012, Nichols Inc., had sales of 75,000 units and production of 100,000 units. Other information for the year included: Direct manufacturing labour$187,500 Variable manufacturing overhead100,000 Direct materials150,000 Variable selling expenses100,000 Fixed administrative expenses100,000 Fixed manufacturing overhead200,000 There was no beginning inventory. Required: a.Compute the ending finished goods inventory under both absorption and variable costing. b.Compute the cost of.

76) Johnson and Sons Company was concerned that increased sales did not result in increased profits for 2012. Both variable unit and total fixed manufacturing costs for 2011 and 2012 remained constant at $20 and $2,000,000, respectively. In 2011 the company produced 100,000 units and sold 80,000 units at a price.

11) Which of the following is true concerning opportunity costs? A) They are incorporated into formal financial accounting reports. B) They entail cash receipts. C) They entail cash disbursements. D) They require accounting journal entries. E) They are relevant for the make/buy decision. 12) If Harry Inc. doesn't use one of its limited resources in the.

31) Compute the estimated costs for each of the following equations, assuming the following costs for July: Fixed manufacturing cost$40,000 Variable cost per machine-hour6 Number of hours used1,000 In addition, state whether each is for a variable, fixed, or mixed cost. a.Total estimated costs = intercept b.Total estimated costs = constant c.Total estimated costs = constant +.

20) What is throughput costing? What advantages is it purported to have over variable and absorption costing? 9.5   Explain productivity measurement under each of the three costing policies. 1) The break-even points are the same under both variable costing and absorption costing. 2) The break-even point under absorption costing depends on.

11.3   Explain why opportunity cost is relevant and book value is irrelevant in decision making. 1) The gain or loss on the disposal of a machine is a relevant factor when considering replacing the machine. 2) Opportunity cost is the contribution to income that is recognized through the use of limited resources.

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.

82) a.Explain the difference between the variable and absorption costing methods. b.Which method(s) are required for external reporting? For internal reporting? 83) SamTech Company has two identical divisions, East and West. Their sales, production volume, and fixed manufacturing costs have been the same for the last five years. The amounts.

86) Normandeau Corporation manufactures and sells laptop computers and uses standard costing. For the month of September there was no beginning inventory, there were 1,500 units produced and 1,250 units sold. The manufacturing variable cost per unit is $770 and the operating cost per unit was $625. The fixed manufacturing.

27) The maximum price that Konrade's Engine Company should be willing to pay the outside supplier is A) $80 per TE456 part. B) $82 per TE456 part. C) $98 per TE456 part. D) $100 per TE456 part. E) $50 per TE456 part. Answer the following question(s) using the information below. Schmidt Corporation.

61) Helton Company has the following information for the current year: Beginning fixed manufacturing overhead in inventory $95,000 Fixed manufacturing overhead in production 375,000 Ending fixed manufacturing overhead in inventory 25,000 Beginning variable manufacturing overhead in inventory $10,000 Variable manufacturing overhead in production 50,000 Ending variable manufacturing overhead in inventory 15,000 What is the difference between operating incomes under absorption costing and.

25) Cari's Locker Service ran its freezer in January, a slow month, for 200 hours for a total cost of $60,000. In June, a peak month, the freezer ran for 1,000 hours for a total cost of $92,000. Required: Using the high-low method determine the average cost of running the machine one.

79) Stoll Bottling Works manufactures glass bottles. January and February operations were identical in every way except for the planned production. January had a production denominator of 35,000 units. February had a production denominator of 36,000 units. Fixed manufacturing costs totalled $126,000. Sales for both months totalled 45,000 units with.

10.5   Appendix. Use statistics reported from simple linear regression to reliably and confidently predict the range within which the total value of the cost pool will fall. Use multiple linear regression to determine how more than one cost driver (Xi) improves the prediction of the MOH cost value (y). 1) Statistical.

40) Write a linear cost function equation for each of the following conditions. Use y for estimated costs and X for activity of the cost driver. a.Direct manufacturing labour is $10 per hour. b.Direct materials cost $9.20 per cubic yard. c.Utilities have a minimum charge of $1,000, plus a charge of $0.05.

11) The coefficient of determination (r2) measures the percentage of variation in Y explained by X (the predictor variable). 12) Which of the following is an equation of a variable cost function? A) Y = ax + bx B) Y = a + bx C) Y = b D) Y = a E) Y =.

27) Under what conditions might a manufacturing firm sell a product for less than its long-term price? Why? 28) For short-term pricing decisions, what costs are relevant when there is available surplus capacity? When there is no available surplus capacity? 11.4   Identify key concepts and apply them to product and.

45) A florist produces table settings for weddings. Based on an annual volume of 10,000 units it incurs $100,000 in fixed manufacturing costs. Variable costs per unit are $16 for direct materials, $3 for direct manufacturing labour, and $14 for variable factory overhead. Another company has offered to supply empty baskets.

11) Generally Accepted Accounting Principles require that ________ costing is/are the inventory method(s) to be used in Canada for financial reporting. A) variable B) direct C) throughput D) super-variable E) absorption 12) "Super-variable costing" assumes that A) all costs are variable in the long run. B) all costs are variable in the short run. C) only direct.

10.3   Apply OLS linear regression to analyze goodness of fit and the values of a and b to predict the MOH cost pool. 1) The use of a single predictor variable (X) to estimate the outcome variable (y) is known as A) high-low method. B) multiple linear regression. C) simple linear regression. D) singular regression. E).

9.4   Distinguish throughput costing from variable costing and absorption costing, and explain differences in operating income under each costing policy. 1) Throughput costing treats all costs as period costs. 2) Throughput costing provides more incentive to produce for inventory than does absorption costing. 3) Throughput costing is also referred to as super-variable.

7) Brad Henry has just purchased the film studio of a movie company that specializes in action adventures. He found that the company did not try to estimate the cost of making a movie. Instead it just gave the producer a budget and told him/her to make a movie within.

11) C. M. Chain was to manufacture 1,000 chain saws next month. Its accountant has provided the following analysis of the total manufacturing costs. Variable Coefficient Standard Error t-Value Constant 200 143.88 1.39 Predictor Variable 400 183.49 2.18 r2 = 0.71 What is the estimated cost of producing the 1,000 chain saws? A) $400,200 B) $284,142 C) $200,400 D) $18,000 E) $9,000 12) Goodness-of-fit measures how well the predicted values.

17) Northwoods is invited to bid on a one-time-only special order to supply 100 rustic tables. What is the lowest price Northwoods should bid on this special order? A) $6,300 B) $7,200 C) $10,800 D) $13,500 E) $9,000 Answer the following question(s) using the information below. Welch Manufacturing is approached by a European.

51) Which of the following criteria should be used to evaluate management according to critics of absorption costing? A) the extent to which inventory production matches demand B) the extent to which financial performance measures are used C) the extent to which operating income is increased in the short run D) the extent to.

21) 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 22) When making decisions, it is best to use A) average costs. B) fixed costs that would be incurred. C) unit cost, rather than.

7) Which cost estimation method would be described as a formal method to fit linear cost functions to past data observations? A) the account analysis method B) the conference method C) the industrial-engineering method D) the quantitative analysis method E) the departmental analysis method Use the information below to answer the following question(s). Presented below is the.

10) Review the following report of the results of a simple regression program for cost estimation. VariableCoefficientStandard Errort-Value Constant24.8817.901.39 Predictor Variable444.70179.312.48 r2 = 0.72 Required: a.What is the cost estimation equation according to the report? b.What is the goodness of fit? What does it tell about the estimating equation? 11) The new cost analyst in your accounting department.

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.

7) Companies periodically confront decisions about discontinuing or adding branches or business segments. In order to determine the best course of action, a ________ should be performed in order to make the optimal decision. A) relevant feasibility study B) relevant risk assessment C) relevant-revenue and relevant-cost analysis D) relevant-risks and relevant-loss analysis E) relevant capital.

34) Scott is the new manager of the credit card department of a large bank. One of his first changes, directed by the president, was to reorganize the activities of the department. He is reluctant to start the reorganization without including a comprehensive report from accounting about the current costs.

7) Which of the following terms represents additional costs required to obtain an additional quantity, over and above existing or planned quantities of a cost object? A) contract increase costs B) contract pocket costs C) contract expense D) outlay costs E) super variable costs 8) A one-time-only special order decision A) should consider only long-term costs and.