Exam 10: Analysis of Cost Behaviour

Costs incurred by a nonconforming product detected before it is shipped to customers are

The customer response time reveals how quickly customers respond to a company's new products.

________ is the amount of time from when a customer places an order for a product or requests a service to when the product or service is delivered to the customer.

Costs of quality (COQ)reports usually do not consider opportunity costs.

The demand for Ballard's Glass Company's products varies, ranging from 10 to 20 windows a day with an average of 15.John Ballard is the only worker and he works a maximum of eight hours a day, five days a week.Each order is one window, and each window takes 26 minutes to install.The company plans to add doors to its product line and anticipates selling an average of 5 doors per day.Each door takes 12 minutes to install.What is the average waiting time if Ballard is the only worker?

Which of the following statements about a high correlation between two variables s and t is FALSE?

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 -Testing and inspecting of direct materials

An example of a nonfinancial measure for customer satisfaction is

The ideal database for estimating cost functions has two characteristics: 1.The database should contain numerous reliably measured observations of the cost driver (the independent variable)and the related costs (the dependent variable).2.It includes values for the independent variable over a wide range.Unfortunately, management accountants rarely have the advantage of working with a database that has both characteristics.Required: Following are a list of data problems that may be encountered.Select three, then for each selection describe the describe the cause/effect of the problem and provide a remedy. 1.The time period for measuring the dependent variable does not match the period for measuring the independent variable.2.Fixed costs are allocated as if they were variable.3.Data are either unavailable for all observations or not uniformly available.4.Extreme values of observations, or outliers, occur when recording costs.5.There is no causal, economically plausible relationship between the individual cost items in a heterogeneous mixed pool and a single cost driver.6.Inflation affects the dependent variable, the independent variable(s), or both.

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 operations, the following data were collected: Required: a.Use the high-low method to determine the estimating cost function with machine-hours as the cost driver. b.Use the high-low method to determine the estimating cost function with kilowatt-hours as the cost driver. c.For July, the company ran the machines for 3,150 hours and used 4,180,000 kilowatt-hours of power.The overhead costs totaled $114,000.Which cost driver was the best predictor for July?

The annual capacity of a machine is 12,000 hours, with the balance being taken for routine maintenance.It takes 10 hours to process one job (each job = 1 batch),.Altogether, there are seven employees who operate the machine at different times.Orders for the first six months of the year, which are typical, have averaged 50 jobs per month.The company expects 300 orders over the next six months.Which of the following is TRUE?

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 -Reinspection

Answer the following question(s)using the information below.The Taranto Company uses the high-low method to estimate it's cost function.The information for the current year is provided below: -What is the constant for the estimating cost equation?

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 -Downtime due to quality problems

LaCrosse Products has a budget of $900,000 in 2019 for prevention costs.If it decides to automate a portion of its prevention activities, it will save $80,000 in variable costs.The new method will require $40,000 in training costs and $100,000 in annual equipment costs.Management is willing to adjust the budget for an amount up to the cost of the new equipment.The budgeted production level is 150,000 units.Appraisal costs for the year are budgeted at $600,000.The new prevention procedures will save appraisal costs of $50,000.Internal failure costs average $15 per failed unit of finished goods.The internal failure rate is expected to be 3% of all completed items.The proposed changes will cut the internal failure rate by one-third.Internal failure units are destroyed.External failure costs average $54 per failed unit.The company's average external failures average 3% of units sold.The new proposal will reduce this rate by 50%.Assume all units produced are sold and there are no ending inventories.Required: a.What is the net change in the budget of prevention costs if the procedures are automated in 2019? Will management agree with the changes? b.How much will internal failure costs change if the internal product failures are reduced by 1/3 with the new procedures? c.How much do external failure costs change if all changes are as anticipated with the new prevention procedures? Assume all units produced are sold and there are no ending inventories.

Use the information below to answer the following question(s).At the high point of the relevant range, labour hours at Bradco Restoration were 10,000 and wages were $22,500.At the low point of the relevant range, labour hours were 7,500 and wages were $17,500. -Using the high-low method determine the constant at Bradco Restoration?

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. -What is the estimate of Monroe's cost function when 200 machine hours are used?

Cross-sectional data pertain to the same entity over successive past periods.

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 -Reentering data because of keypunch errors

Compute the estimated costs for each of the following equations assuming the following costs for July: 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 + (slope × cost driver) d.Total estimated costs = slope coefficient × cost driver In addition, state whether each is for a variable, fixed, or mixed cost.