Exam 10: Analysis of Cost Behaviour

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. -What is the high-low estimate of the labour costs at Bradco Restoration when 8,000 hours are used?

All of the following are approaches to cost estimation EXCEPT

What is the time needed to produce the last unit when production doubles from 100 units to the 200 unit level,given that the incremental unit time learning model has a 60% learning curve,and the corresponding time at the 100 unit level of production is 4.0 minutes?

List and describe the assumptions that must hold if simple regression procedures are to give reliable estimates of coefficient values.

When an average unit of time declines by a constant percentage each time that the cumulative quantity of units produced is doubled,it is known as

Use the information below to answer the following question(s). Raymaster is a small computer software company which uses the account analysis method and has hired you to perform some management advisory services.The company sold 2,500 high quality payroll programs last year. -What would be their estimated cost per unit if Raymaster expects to sell 2,000 units next year?

An experience curve

As part of his job as cost analyst,Max Thompson collected the following information concerning the operations of the Machining Department: 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 costs of the Machining Department?

To complete the first setup on a new machine took an employee 200 minutes.Using an 80% incremental unit-time learning curve indicates that the second setup on the new machine is expected to take

Use the information below to answer the following question(s). Dylan Products has a budget of $1,200,000 in 2015 for prevention costs.If it decides to automate a portion of its prevention activities,it will save $90,000 in variable costs.The new method will require $40,000 in training costs and $150,000 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 210,000 units. Appraisal costs for the year are budgeted at $500,000.The new prevention procedures will save appraisal costs of $50,000.Internal failure costs average $20 per failed unit of finished goods.The internal failure rate is expected to be 4% of all completed items.The proposed changes will cut the internal failure rate by one-half.Internal failure units are destroyed.External failure costs average $48 per failed unit.The company's average external failures average 2.5% of units sold.The new proposal will reduce this rate to 1%.Assume all units produced are sold and there are no ending inventories. -How much do external failure costs change if all the changes are as the new prevention procedures anticipated? Assume all units produced are sold and there are no ending inventories.

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: Required: a.What are the estimating equations for each cost driver? b.Which cost driver is best and why?

Manufacturing lead time is a combination of order receipt time and order manufacturing time.

Compare financial and nonfinancial performance,and explain why planning and control systems should consider both.

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?

A learning curve measures the effect of learning on efficiency.

Answer the following question(s)using the information below. Penny's TV and Appliance Store is a small company that has the following information pertaining to current year operations. -Which cost estimation method is being used by Penny's TV and Appliance Store?

Munir Hassan,controller,gathered data on overhead costs and direct labour-hours over the past 12 months.List and discuss the different approaches Munir can use to estimate a cost function for overhead costs using direct labour-hours as the cost driver.

Use the information below to answer the following question(s). Raymaster is a small computer software company which uses the account analysis method and has hired you to perform some management advisory services.The company sold 2,500 high quality payroll programs last year. -What is the total cost per unit sold?

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 constant for the estimating cost equation?

Answer the following question(s)using the information below. Penny's TV and Appliance Store is a small company that has the following information pertaining to current year operations. -What are the estimated total costs if Penny's expects to sell 3,000 units next year?