Exam 5: Cost Drivers and Cost Behavior

Which of the following is a function that shows how the amount of time required to perform a task goes down per unit as the number of units increases?

Identify capacity costs,committed costs,and discretionary costs.

Leman Suitcase Company The Leman Suitcase Company is trying to decide which independent variable would be a better predictor of advertising expense.The following regressions were run using sales dollars and units sold as the independent variables. Regression Analysis #1 Dependent variable - Advertising Expense Independent variable - Sales Dollars Regression Analysis #2 Dependent variable - Advertising Expense Independent variable - Units Sold Refer to the Leman Suitcase Company.Using sales dollars as the independent variable,what would be the prediction of advertising expense if sales are expected to be $80,000?

Boxer Electronics produces flat screen TVs that sell for $1,250.During April,total operating expenses were: Required: a.Use account analysis to determine fixed cost per month and variable cost per TV. b.Project total cost for May assuming production and sales of 150 units. c.What is the contribution margin per TV? d.Estimate total profit assuming production and sales of 150 units.

Valley Company incurred a total cost of $17,000 to produce 500 units of output.A total of 800 hours was incurred for this effort.If the variable cost was $20 per direct labor hour,then the fixed cost was

Carson Company's market for the Model A has changed significantly,and Carson has had to drop the price per unit from $265 to $125.There are some units in the work in process inventory that have costs of $150 per unit associated with them.Carson could sell these units in their current state for $100 each.It will cost Carson $10 per unit to complete these units so that they can be sold for $125 each. Based on the information about Carson,which of the following is not considered a relevant value for this problem?

What is meant by cost behavior? Explain how it relates to the following terms: fixed,variable,and mixed cost.

In regression analysis,what is the term used to describe the vertical distance between the actual and fitted values?

Wilkens Company Wilkens Company wants to determine the cost behavior pattern of maintenance costs.Wilkens has decided to use linear regression by employing the equation y = a + bx for maintenance costs.The prior year's data regarding maintenance hours and costs,and the results of the regression analysis are given in the data below. Average cost per hour $9.00 Refer to the Wilkens Company.Based upon the data derived from the regression analysis,what maintenance costs should be budgeted for a month in which 420 maintenance hours will be worked?

Which statement is true concerning semi-variable costs?

The method of cost estimation where the accountant assigns costs to each of the inputs to estimate the cost of the outputs is known as:

The total cost (TC)of an item is calculated as TC = F + VX,where F is the

Which of the following is a strength of the account analysis method of cost estimation?

What does the experience curve function show?

One of the weaknesses of the various cost estimation methods is a simplifying assumption that cost behavior patterns are

In studying how managers deal with errors and business mistakes,researchers have found that

The total cost (TC)of an item is calculated as TC = F + VX,where V is the

Which of the following is a weakness of the regression method of cost estimation?

Universal Distributors Universal Distributors,a major retailing and mail order operation,has been in business for the past 10 years.During that time,the mail order operations have grown from a sideline to represent over 80% of the company's annual sales.Of course,the company has suffered growing pains.There were times when overloaded or faulty computer programs resulted in lost sales,and the scheduling of temporary workers to augment the permanent staff during peak periods has always been a problem. Peter Ben Ezra,manager of mail order operations,has developed procedures for handling most problems.However,he is still trying to improve the scheduling of temporary workers to take telephone orders from customers.Under the current system,he keeps a permanent staff of 60 employees who handle the basics;the number of temporary workers needed for the next day is determined by Ben Ezra each afternoon based on his estimate of the upcoming telephone volume. Mr.Ben Ezra has decided to try regression analysis as a way to improve the hiring of temporary workers.By summarizing the daily labor hours into weekly totals for the past year,Ben Ezra was able to determine the number of workers that were used each week.In addition,he listed the number of orders that had been processed each week.After entering the data into a spreadsheet,Ben Ezra ran two regressions.Regression #1 related the total workers (permanent staff plus temporary workers)to the number of orders received,and Regression #2 related only temporary workers to the number of orders received.The output of these analyses is presented below. Regression Equation: W = a + bT Where: W = Workers T = Telephone Orders Refer to Universal Distributors.Peter Ben Ezra estimates that Universal Distributors will receive 12,740 orders during the second week of December.Predict the number of temporary workers that will be needed for this week using the regression results relating total workers to the number of orders received.Round your answer to the nearest whole number.

Use this information to answer the following question(s): The following output of overhead on direct labor hours was obtained using regression analysis: The company is planning to operate at a level that would call for 3,000 direct labor hours to be utilized for the coming year. Refer to the above data.Based on the regression equation,compute the estimated overhead cost for the coming year.