Exam 10: Determining How Costs Behave

To complete the first setup on a new machine took an employee 200 minutes.Using an 64% incremental unit-time learning model indicates that the second setup on the new machine is expected to take ________.

Because the cost driver is the same for the fringe benefits of life insurance and pension benefits cost is the same,those costs can be aggregated into one homogeneous cost pool.

Harold's Picture manufactures various picture frames.Each new employee takes 6 hours to make the first picture frame and 4.8 hours to make the second.The manufacturing overhead charge per hour is $25. Required: a.What is the learning-curve percentage,assuming the cumulative average method? b.What is the time needed to build 8 picture frames by a new employee using the cumulative average-time method? You may use an index of −0.1520. c.What is the time needed to produce the 16th frame by a new employee using the incremental unit-time method? You may use an index of −0.3219. d.How much manufacturing overhead would be charged to the 16 picture frames using the average-time approach?

Which of the following is the mathematical expression to calculate the coefficient of determination?

A learning curve is a function ________.

Write a linear cost function equation for each of the following conditions.Use y for estimated costs and X for activity of the cost driver. a.Direct materials cost is $2.70 per pound b.Total cost is fixed at $800 per month regardless of the number of units produced. c.Auto rental has a fixed fee of $90.00 per day plus $1.75 per mile driven. d.Machine operating costs include $1,000 of maintenance per month,and $15.00 of coolant usage costs for each day the machinery is in operation.

Jack Williams has just purchased the film studio of a movie company that specializes in comedies.He found that the company did not try to estimate the cost of making a movie.Instead,it just gave the producer a budget and told him/her to make a movie within budget.Mr.Williams does not like the former movie-budget concept and desires to establish a formal cost estimation system. Required: What are some of the potential problems that may be encountered in changing from a budget to a cost estimation movie making system?

Regression analysis ________.

A finance manager has to select one of the four different suppliers of raw materials.The total cost functions under the four options are given below.Assume the quality of the raw material to be the same,which of the following is preferred by the finance manager?

Grandy's Beer was to manufacture 600 cases of ale next week.The accountant provided the following analysis of total manufacturing costs. What is the estimated cost of producing the 600 cases of ale?

Fixed costs are sometimes allocated to individual products as part of the standard costing system.When this is the case,they should be treated as variable costs for purposes of future cost estimation.

For Heavy Manufacturing Company,labor-hours are 48,000 and wages $156,000 at the high point of the relevant range,and labor-hours are 32,000 and wages $112,000 at the low point of the relevant range. What is the estimated total labor costs at Heavy Manufacturing Company when 11,400 labor-hours are used?

Put the following steps in order for using the high-low method of estimating a cost function:

Which of the following statements is true of a linear cost function?

All other things being equal,the longer the time horizon the more likely a cost will be fixed.

In estimating a cost function using quantitative analysis,the dependent variable is the factor used to predict the independent variable.

A particular cost item could be variable for one cost object and fixed for another cost object.

High Tech Manufacturing Inc. ,incurred total indirect manufacturing labor costs of $490,000.The company is labor intensive.Total labor hours during the period were 4,100.Using qualitative analysis,the manager and the management accountant determine that over the period the indirect manufacturing labor costs are mixed costs with only one cost driver-labor-hours.They separated the total indirect manufacturing labor costs into costs that are fixed ($120,000 based on 8,600 hours of labor)and costs that are variable ($370,000)based on the number of labor-hours used.The company has estimated 7,300 labor hours during the next period. Which of the following represents the correct linear cost function?

A linear cost function can only represent fixed cost behavior.

Which of the following statements is true of activity-based costing?