Exam 10: Analysis of Cost Behaviour

Use the information below to answer the following question(s).Presented below is the production data for the last six months of the year for the mixed costs incurred by Wagner Company. -The total cost at an operating level of 10,000 units would be

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 correct, and inspection hours for the 8,000 vehicles painted in September totaled 2,000 hours by 14 employees, who earn an average of $28 an hour.Ten litres of paint were used on average for each vehicle.The standard amount of paint per vehicle is nine litres.The cost of inspection for September was equal to the budgeted amount of $56,000.What are appraisal costs as a percentage of sales?

Aunt Lydia's Cookies, Inc., prepares frozen gourmet cookies for shipment to upscale grocery stores as well as mailing to web and catalog customers.The company has two workstations, cooking and distribution.The cooking station is limited by the cooking time of the food.Distribution is limited by the speed of the workers.Distribution normally waits on food from cooking.Because the demand has increased in recent months to 4,000 dozen cookies, management is considering adding another oven in the cooking station or else having the cooks start to work earlier.The monthly cost of operating the cooking station one more hour each day is $1,500.The cost of adding another cooking station would add an average of $8 per hour.The current operating hours total eight hours a day, 24 days a month.The contribution margin of the finished products is currently $2 per dozen.Inventory carrying costs average $0.50 per dozen per month.Either the extra hour or the new cooking station would increase production by 50 dozen a day, with a long-run increase of 100 dozen units in finished goods inventory to 500 dozen.Required: a.What is the total production per month if the change is made? b.What is the increase in the expected monthly product contribution for each of the possible changes? Assume long-run production equals sales. c.What course of action would you recommend?

Answer the following question(s)using the information below: At the Todd Company, the cost of the personnel department has always been charged to the various departments based upon the number of employees.Recently, opinions gathered from the department managers indicated that the number of new hires might also be a predictor of personnel costs to be assigned.Total personnel costs are $320,000. -If the number of employees is considered the cost driver, what amount of personnel costs will be allocated to Department A?

Answer the following question(s)using the information below.Jenny's Pottery Store is a small retail company that has the following information pertaining to current year operations. -What was the Jenny's Pottery Store variable cost per unit sold?

Nidek manufactures sport swear.Classify each of the following quality costs as prevention, appraisal, internal failure or external failure. A)Internal failure B)Prevention C)Appraisal D)External failure -Expediting work to meet delivery schedule

For April, the month just ended, the cost components to make tapes were $2 per tape plus fixed costs of $10,000.One thousand tapes were produced.For May the cost to make tapes will be $2.20 per tape plus fixed costs of $10,000.Fifteen hundred tapes are expected to be produced.What are the estimates for the intercept and slope coefficient for May, respectively?

For cost estimation purposes data must be collected using both time-series data and cross-sectional data.

Canevil Unlimited makes small motorcycles.The monthly demand ranges from 80 to 100 motorcycles.The average demand is 92 motorcycles.The plant operates 300 hours a month.Each cycle takes approximately 1.5 hours.If the company adds a new line of scooters, initial demand will be 20 per month.Each scooter will take 1 hour to make.To offset approaching production capacity, expanding the assembly line is possible.This will decrease manufacturing time for all products by 20 percent.However, this will increase the costs of cycles from $400 to $500 and scooters from $200 to $240.The change will also cause increases in prices from $700 to $750 for cycles and from $450 to $500 for scooters.Required: a.What is the average waiting time for cycles if they are the only item manufactured? b.What is the average waiting time if both cycles and scooters are produced and the assembly line is not enlarged? c.What is the average waiting time if both cycles and scooters are produced and the assembly line is enlarged? d.What is the expected monthly margin without scooters if the company sells all 92 cycles it manufactures? e.What are the expected monthly contribution margins if scooters are made with the current assembly line and with the new assembly line? Assume average sales and that sales equal production. f.What action do you recommend?

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)Internal failure C)Prevention D)External failure -The ideal database for estimating cost functions quantitatively includes values for the independent variable over a wide range.

The costs relating to new materials testing are classified as appraisal costs.