Exam 3: Cost Behavior

A managerial accountant has determined the following relationships between overhead and several possible bases: Correlation with Total Basis Overhead Direct labor hours 0.842 Direct labor dollars 0.279 Machine hours -0.837 Employee minutes in coffee breaks -0.243 The best basis for overhead application is

Longhorn Enterprises rents a truck for a flat fee plus an additional charge per mile. What type of cost is the rent?

Sonor Systems undertakes its own machine maintenance. The depreciation on the equipment is $20,000 per year and operating cost is $2 per machine hour. Last year 275,000 machine hours were used to produce 100,000 units. Compute the total variable machine maintenance cost last year.

The three quantitative methods of separating a mixed cost into its fixed and variable components are: the high-low method, the scatter plot method and the method of _________.

The following computer printout estimated overhead costs using regression: t for H(0) Std. error Parameter Estimate Parameter =0 Pr > of parameter Intercept 100.41 4.81 0.0003 20.88 DLH 14.05 6.78 0.0001 2.07 R Square (R2) 0.80 Standard Error (Se) 25.03 Observations 17 Please find the following statistical table degrees of freed om 90\% 95\% degrees of freedom 1 6.314 12.708 63.657 11 1.796 2.201 3.106 2 2.920 4.303 9.925 12 1.782 2.179 3.055 3 2.353 3.182 5.841 13 1.771 2.160 3.055 4 2.132 2.776 4.604 14 1.761 2.145 3.012 5 2.015 2.571 4.032 15 1.753 2.131 2.947 6 1.943 2.447 3.707 16 1.746 2.120 2.921 7 1.895 2.365 3.499 17 1.740 2.110 2.898 8 1.860 2.306 3.355 18 1.734 2.101 2.878 9 1.833 2.262 3.250 19 1.729 2.093 2.861 10 1.812 2.228 3.169 20 1.725 2.086 2.845 During the last accounting period 10,000 DLH were worked. What is the confidence interval for the predicted overhead cost rounded to the nearest whole number for a 90 percent confidence level?

Spokane Corporation found its maintenance cost and sales dollars to be somewhat correlated. Last year's high and low observations were as follows: Maintenance Cost Sales \ \ 46,000 \ 600,000 \ 52,000 \ 800,000 What is the fixed portion of the maintenance cost?

The Sandoval Company has four process engineers that are each able to process 1,500 design changes. Last year 5,250 design changes were produced by the four engineers. Each engineer is paid $60,000 per year. What is the unused capacity in dollars?

Which of the following would be an example of a unit-based cost driver?

Which of the following is an advantage of the high-low method?

Costs that follow a step-cost behavior are defined as _________ costs.

Longberry Corporation manufactures and sells party items. The following representative direct labor hours and production costs are provided for a four-month period: Month Direct Labor Hours Production Costs May 3,600 \ 15,000 June 4,800 17,500 July 6,000 20,000 August 4,800 17,500 Total 19,200 \ 70,000 Let A = Fixed production costs per month B = Variable production costs per direct labor hour N = Number of months X = Direct labor hours per month Y = Total monthly production costs S = Summation The monthly production cost can be expressed as

The following computer printout estimated overhead costs using regression: t for H(0) Std. error Parameter Estimate Parameter =0 Pr > of parameter Intercept 100.41 4.81 0.0003 20.88 DLH 14.05 6.78 0.0001 2.07 R Square (R2) 0.80 Standard Error (Se) 25.03 Observations 17 Please find the following statistical table degrees of freed om 90\% 95\% degrees of freedom 1 6.314 12.708 63.657 11 1.796 2.201 3.106 2 2.920 4.303 9.925 12 1.782 2.179 3.055 3 2.353 3.182 5.841 13 1.771 2.160 3.055 4 2.132 2.776 4.604 14 1.761 2.145 3.012 5 2.015 2.571 4.032 15 1.753 2.131 2.947 6 1.943 2.447 3.707 16 1.746 2.120 2.921 7 1.895 2.365 3.499 17 1.740 2.110 2.898 8 1.860 2.306 3.355 18 1.734 2.101 2.878 9 1.833 2.262 3.250 19 1.729 2.093 2.861 10 1.812 2.228 3.169 20 1.725 2.086 2.845 During the last accounting period 10,000 DLH were worked. Find the t-value for a 90 percent confidence level.

When a firm acquires the resources needed to perform an activity, it is obtaining

If at a given volume total costs and fixed costs are known, the variable costs per unit may be computed as follows:

Flexible resources

Fixed cost per unit is $7 when 25,000 units are produced and $5 when 35,000 units are produced. What is the total fixed cost when nothing is produced?

The following data is available of estimated overhead costs using linear regression: Parameter Estimate tfor H(0) Interameter = Std. error of parameter Intercept 100.41 4.81 0.0003 20.88 DLH 14.05 6.78 0.0001 2.07 R Square 0.80 Standard Error 25.03 Observations 17 Table of Selected Values: t Distribution Degrees of Freedom 90\% 95\% 99\% 15 1.753 2.131 2.947 16 1.746 2.120 2.921 17 1.740 2.110 2.898 18 1.734 2.101 2.878 19 1.729 2.093 2.861 What is the interval around Y if 95 percent confidence is desired?

The basis of the learning curve is that as we perform an action over and over, we improve, and each additional performance takes less time than the preceding ones.

Variable costs are defined as costs that, in total, are constant regardless of change in an activity driver.

The account analysis method can be used to estimate costs by classifying accounts in the general ledger as variable.