Exam 2: Cost Concepts, Behaviour, and Estimation

Three different divisions of a toy manufacturing company are estimating costs for their human resources departments. Each division has a cost structure that is different from the other divisions' and those structures are represented by the following cost behaviour patterns (A, B, and C). Number of Employees Cost A Cost B Cost C 0 $ 0 $120 $118 25 50 118 180 50 100 123 245 75 125 124 296 100 200 119 360 Which cost is best described as fixed?

Strawser Company is developing a cost function for its maintenance costs using the high-low method. The following data have been collected for the past year: Direct Labour Maintenance Quarter Hours Costs Incurred 1 5,000 $ 745 2 6,500 820 3 7,000 850 4 8,000 1,000 Calculate the following amounts: a)The variable cost per direct labour hour b)The fixed cost c)The estimated total cost for 9,000 direct labour hours d)The estimated total cost for 6,000 direct labour hours

Bob and Andrea were recently hired as accountants for PTR Corporation. PTR uses an enterprise resource planning (ERP)system to coordinate its accounting, sales, and manufacturing operations. Bob and Andrea must learn to use the ERP system effectively to perform their job duties. Their supervisor expects a 70% learning curve to apply to that task. a)Define the concept of a "learning curve" in your own words. b)Identify two reasons why the rate of learning might be different than 70%.

Suppose you are a newly hired accountant for a television production studio. One of your first tasks is to estimate the costs of an upcoming episode of the studio's hit unscripted show, "Who Wants to Be an Accountant?". Identify three potential methods for estimating the costs and describe them.

Liva Company wants to develop a cost function for its maintenance costs to estimate such costs for the coming year. The following data are available: Direct Maintenance Month Labour Hours Costs Incurred January 4,000 $ 900 February 6,500 1,325 March 7,000 1,500 April 5,500 1,150 Using the high-low method, what is the variable maintenance cost per direct labour hour?

Traceability can be used as a criterion to differentiate direct and indirect costs.

Jackie's Kennels is located in a small city in Western Canada. The company employs three pet attendants, four pet groomers, and two front office staff who book appointments and keep records. The Kennel provides a range of services for dogs and cats including boarding, grooming, and obedience training. The grooming area includes a small retail section that carries dog and cat food, pet supplies, and toys. If the cost object is the total cost of the grooming product line, which of the following is an indirect cost?

(CMA)Cost drivers are:

The average cost to produce 10,000 units is $88, and the average cost to produce 15,000 units is $84. a)Develop a cost function for this cost. b)Estimate the average cost to produce 18,000 units.

Following are the results from two different simple regression analyses, estimating the costs of the purchasing department using number of purchase orders and number of vendors as potential cost drivers. a)Which independent variable explains more of the variation in purchasing costs? Explain your choice. b)Choose the most appropriate cost driver and write the cost function. c)For an upcoming month, the number of vendors is estimated to be 150, while the number of purchase orders is estimated to be 340. Using the most appropriate cost driver, estimate the total cost for that month. d)List several uncertainties that could affect the accuracy of the cost function in estimating the cost for the upcoming month.

A learning curve is the rate at which:

Simple regression analysis output produces a variety of information and statistics. Which of the following statistics provides information for fixed costs?

Liva Company wants to develop a cost function for its maintenance costs to estimate such costs for the coming year. The following data are available: Direct Maintenance Month Labour Hours Costs Incurred January 4,000 $ 900 February 6,500 1,325 March 7,000 1,500 April 5,500 1,150 Using the high-low method, what is the cost function for maintenance costs?

Which of the following are forms of regression analysis?

Cosby Company is attempting to develop the cost function for repair costs. The following past data are available: Machine Hours Repair Costs 4,800 $6,385 3,400 4,585 4,000 5,285 5,900 7,085 Using the high-low method, what is the fixed repair cost?

The rent on a store, where the landlord charges $1,200 per month plus a percentage of sales revenue, is a:

Reviewing cost behaviour patterns over time from the accounting records and using that review to predict future costs best describes:

Past costs are irrelevant for decision-making, but may be relevant for predicting future costs.

Simple regression analysis output produces a variety of statistics. Which of the following statistics best summarizes how well the cost driver explains the behaviour of the cost?

Indirect costs are: