Question 1

Discuss the potential use of nonlinear curves in cost functions and cost analysis.Give some examples.

Accepted Answer

Cost functions are not always linear.A n

Question 2

An example of a nonfinancial measure for customer satisfaction is

Accepted Answer

A) delivery delay. 
B) employee turnover. 
C) number of defects on the production line. 
D) process yield. 
E) number of employees trained. 
A) delivery delay. 
B) employee turnover. 
C) number of defects on the production line. 
D) process yield. 
E) number of employees trained.

Question 3

Brix,Inc.prepares frozen food for fast-food restaurants.It has two workstations,cooking and assembly.The cooking station is limited by the cooking time of the food.Assembly is limited by the speed of the workers.Assembly normally waits on food from cooking.Because the demand has increased in recent months to 2,800 dozen units,management is considering adding another cook station or else having the cooks start to work earlier.The monthly cost of operating the cooking station one more hour each day is $2,400.The cost of adding another cook station would add an average of $10 per hour.The current operating hours total eight hours a day,22 days a month.The contribution margin of the finished products is currently $8 per dozen.Inventory carrying costs average $2.00 per dozen per month.Either the extra hour or the new cook station would increase production by 20 dozen a day with a long-run increase of 80 dozen units in finished goods inventory to 280 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.

Accepted Answer

a.Total dozen per mo

Question 4

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?

Accepted Answer

a.Waiting time = [92 × 1.5²/[2 × (300 hr.

Question 5

A factor where the change in the factor causes a change in the speed with which an activity is undertaken is referred to as

Accepted Answer

A) a bottleneck. 
B) value added time. 
C) opportunity cost. 
D) cycle time. 
E) a time driver. 
A) a bottleneck. 
B) value added time. 
C) opportunity cost. 
D) cycle time. 
E) a time driver.

Question 6

Review the following report of the results of a simple regression program for cost estimation.
   
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?

Accepted Answer

a.y = $24.88 + $444.70x
b.Goodness of fi

Question 7

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 Monroe Company's slope coefficient per machine hour?

Accepted Answer

A) $26.91 
B) $18.00 
C) $16.67 
D) $10.00 
E) $8.00 
A) $26.91 
B) $18.00 
C) $16.67 
D) $10.00 
E) $8.00

Question 8

The average waiting time is the average amount of time an order will wait at the company's shipping office before it is sent to the customer.

Accepted Answer

A) True 
 B)False

Question 9

An example of a nonfinancial measure for customer satisfaction is

Accepted Answer

A) Average manufacturing time for for key products. 
B) Contribution margin. 
C) Percentage of products that fail soon after delivery. 
D) Number of employees trained on managing bottleneck operations. 
E) Number of units reworked. 
A) Average manufacturing time for for key products. 
B) Contribution margin. 
C) Percentage of products that fail soon after delivery. 
D) Number of employees trained on managing bottleneck operations. 
E) Number of units reworked.

Question 10

The t -value of the b coefficient measures how large the value of the estimated coefficient is relative to its specification.

Accepted Answer

A) True 
 B)False

Question 11

Diane has been asked to consider plans to add the retrieval of larger tooling fixtures to her duties.She anticipates that there would be an average of 12 tooling fixtures per day requested.Each tooling fixture would take Diane 4 minutes to retrieve.
What is the average waiting time,in minutes,if Diane continues to be the only worker that would retrieve the small tools as well as the larger tooling fixtures?

Accepted Answer

A) 5.0 minutes 
B) 10.0 minutes 
C) 15.5 minutes 
D) 18.5 minutes 
E) 31.0 minutes 
A) 5.0 minutes 
B) 10.0 minutes 
C) 15.5 minutes 
D) 18.5 minutes 
E) 31.0 minutes

Question 12

The managers of the production department have decided to use the production levels of 2014 and 2016 as examples of the highest and lowest years of operating levels.Data for those years are as follows:
   
Required:
Using the high-low method,determine the overhead cost equation for the department if litres of chemicals are used as the cost driver?

Accepted Answer

Slope (variable cost)= ($115,0

Question 13

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.

Accepted Answer

a.fixed,$80,000
b.fixed,$80,00

Question 14

Describe the two assumptions upon which managers often estimate cost functions.

Accepted Answer

Managers often estimate cost functions b

Question 15

A learning curve is a function

Accepted Answer

A) that measures the decline in labour-hours per unit due to workers becoming better at a job. 
B) that increases at a greater rate as workers become more familiar with their tasks. 
C) where unit costs increase as productivity increases. 
D) that is linear. 
E) that measures productivity improvements from new technology. 
A) that measures the decline in labour-hours per unit due to workers becoming better at a job. 
B) that increases at a greater rate as workers become more familiar with their tasks. 
C) where unit costs increase as productivity increases. 
D) that is linear. 
E) that measures productivity improvements from new technology.

Question 16

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

Accepted Answer

a.fixed,$40,000
b.fixed,$40,00

Question 17

The account analysis method estimates cost functions by classifying various cost accounts as variable,fixed,or mixed with respect to the identified level of activity.

Accepted Answer

A) True 
 B)False

Question 18

Presented below are the production data for the first six months of the year for the mixed costs incurred by Gallup Company.
   
Required:
Using the high-low method determine the forecasted cost for July if the number of units produced is expected to be 5,000.

Accepted Answer

b = ($8,840 - $4,024)/(7,500 -

Question 19

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 variable cost per unit sold?

Accepted Answer

A) $180,000 
B) $320 
C) $312 
D) $240 
E) $72 
A) $180,000 
B) $320 
C) $312 
D) $240 
E) $72

Question 20

A Manufacturing Company uses two different independent variables in two different equations to evaluate the cost activities of the packaging department,machine-hours and number of packages.The most recent month's results of the two regressions are as follows:
Machine hours:
   
r2 = 0.29
Number of packages:
   
r2 = 0.61
Required:
a.What are the estimating equations for each cost driver?
b.Which cost driver is best and why?

Accepted Answer

a.machine-hours y = $652.32 + $44.30x
nu

Discuss the potential use of nonlinear curves in cost functions and cost analysis.Give some examples.

An example of a nonfinancial measure for customer satisfaction is

A factor where the change in the factor causes a change in the speed with which an activity is undertaken is referred to as

Review the following report of the results of a simple regression program for cost estimation. 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?

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 Monroe Company's slope coefficient per machine hour?

The average waiting time is the average amount of time an order will wait at the company's shipping office before it is sent to the customer.

An example of a nonfinancial measure for customer satisfaction is

The t -value of the b coefficient measures how large the value of the estimated coefficient is relative to its specification.

Describe the two assumptions upon which managers often estimate cost functions.

A learning curve is a function

The account analysis method estimates cost functions by classifying various cost accounts as variable,fixed,or mixed with respect to the identified level of activity.

Presented below are the production data for the first six months of the year for the mixed costs incurred by Gallup Company. Required: Using the high-low method determine the forecasted cost for July if the number of units produced is expected to be 5,000.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets,variances,and Management Control: I

Flexible Budgets,variances,and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Decision Making and Relevant Information

Pricing Decisions, product Profitability Decisions, and Cost Management

Strategy,balanced Scorecard,and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 10: Analysis of Cost Behaviour

Discuss the potential use of nonlinear curves in cost functions and cost analysis.Give some examples.

An example of a nonfinancial measure for customer satisfaction is

A factor where the change in the factor causes a change in the speed with which an activity is undertaken is referred to as

Review the following report of the results of a simple regression program for cost estimation. 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?

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 Monroe Company's slope coefficient per machine hour?

The average waiting time is the average amount of time an order will wait at the company's shipping office before it is sent to the customer.

An example of a nonfinancial measure for customer satisfaction is

The t -value of the b coefficient measures how large the value of the estimated coefficient is relative to its specification.

Describe the two assumptions upon which managers often estimate cost functions.

A learning curve is a function

The account analysis method estimates cost functions by classifying various cost accounts as variable,fixed,or mixed with respect to the identified level of activity.

Presented below are the production data for the first six months of the year for the mixed costs incurred by Gallup Company. Required: Using the high-low method determine the forecasted cost for July if the number of units produced is expected to be 5,000.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets,variances,and Management Control: I

Flexible Budgets,variances,and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Decision Making and Relevant Information

Pricing Decisions, product Profitability Decisions, and Cost Management

Strategy,balanced Scorecard,and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters