Filters
Question type
Study Flashcards

Donner Company would like to estimate the variable and fixed components of its maintenance costs and has compiled the following data for the last five months of operations.  Labor Hours  Maintenance Cost  January ....... 160$617 February ...... 130$553 March ........ 180$596 April......... 190$623 May ........... 110$532\begin{array}{lcc}&\text { Labor Hours } & \text { Maintenance Cost }\\ \text { January ....... } & 160 & \$ 617 \\\text { February ...... } & 130 & \$ 553 \\\text { March ........ } & 180 & \$ 596 \\\text { April......... } & 190 & \$ 623 \\\text { May ........... } & 110 & \$ 532\end{array} -Using the least-squares regression method,the estimated variable cost per labor hour for maintenance is closest to:


A) $1.88
B) $1.52
C) $1.09
D) $1.96

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

Meleski Corporation's recent utility costs are listed below: Management believes that utility cost is a mixed cost that depends on machine-hours.  April................... May.................... June................... July.................... August............... September.......... October.............. November........... Machine-Hours  Utility Costs 3,546$16,9793,539$16,9543,554$16,9803,516$16,8503,536$16,9553,578$17,0653,551$16,9943,556$17,023\begin{array}{c}\begin{array}{lll}\\ \text { April...................}\\ \text { May....................}\\ \text { June...................}\\ \text { July....................}\\ \text { August...............}\\ \text { September..........}\\ \text { October..............}\\ \text { November...........}\end{array}\begin{array}{cc}\text { Machine-Hours } & \text { Utility Costs } \\3,546 & \$ 16,979 \\3,539 & \$ 16,954 \\3,554 & \$ 16,980 \\3,516 & \$ 16,850 \\3,536 & \$ 16,955 \\3,578 & \$ 17,065 \\3,551 & \$ 16,994 \\3,556 & \$ 17,023 \end{array}\end{array} -Using the least-squares regression method,the estimate of the variable component of utility cost per machine-hour is closest to:


A) $4.40
B) $4.79
C) $3.47
D) $3.37

E) B) and C)
F) A) and D)

Correct Answer

verifed

verified

Donner Company would like to estimate the variable and fixed components of its maintenance costs and has compiled the following data for the last five months of operations.  Labor Hours  Maintenance Cost  January ....... 160$617 February ...... 130$553 March ........ 180$596 April......... 190$623 May ........... 110$532\begin{array}{lcc}&\text { Labor Hours } & \text { Maintenance Cost }\\ \text { January ....... } & 160 & \$ 617 \\\text { February ...... } & 130 & \$ 553 \\\text { March ........ } & 180 & \$ 596 \\\text { April......... } & 190 & \$ 623 \\\text { May ........... } & 110 & \$ 532\end{array} -Using the least-squares regression equation,the total maintenance cost for March is:


A) above the regression line.
B) on the regression line.
C) below the regression line.
D) outside the relevant range.

E) B) and D)
F) A) and D)

Correct Answer

verifed

verified

C

Donner Company would like to estimate the variable and fixed components of its maintenance costs and has compiled the following data for the last five months of operations.  Labor Hours  Maintenance Cost  January ....... 160$617 February ...... 130$553 March ........ 180$596 April......... 190$623 May ........... 110$532\begin{array}{lcc}&\text { Labor Hours } & \text { Maintenance Cost }\\ \text { January ....... } & 160 & \$ 617 \\\text { February ...... } & 130 & \$ 553 \\\text { March ........ } & 180 & \$ 596 \\\text { April......... } & 190 & \$ 623 \\\text { May ........... } & 110 & \$ 532\end{array} -Using the least-squares regression method,the estimated total fixed cost per month for maintenance is closest to:


A) $470
B) $416
C) $400
D) $378

E) A) and D)
F) All of the above

Correct Answer

verifed

verified

Your boss would like you to estimate the fixed and variable components of a particular cost.Actual data for this cost over four recent periods appear below. Using the least-squares regression method,what is the cost formula for this cost?


A) Y = $24.51 + $1.08X
B) Y = $10.33 + $1.92X
C) Y = $0.00 + $2.32X
D) Y = $15.80 + $1.70X

E) B) and C)
F) All of the above

Correct Answer

verifed

verified

Magnano Inc.'s inspection costs are listed below: Management believes that inspection cost is a mixed cost that depends on units produced. February...............March...................April.....................May......................June.....................July......................August.................September............ Units Produced  Inspection Costs 933$4,592945$4,619959$4,692922$4,542950$4,669889$4,443970$4,723878$4,400\begin{array}{c}\begin{array}{lll}\\ \text {February...............}\\ \text {March...................}\\ \text {April.....................}\\ \text {May......................}\\ \text {June.....................}\\ \text {July......................}\\ \text {August.................}\\ \text {September............}\end{array}\begin{array}{cc}\text { Units Produced } & \text { Inspection Costs } \\933 & \$ 4,592 \\945 & \$ 4,619 \\959 & \$ 4,692 \\922 & \$ 4,542 \\950 & \$ 4,669 \\889 & \$ 4,443 \\970 & \$ 4,723 \\878 & \$ 4,400\end{array}\end{array} -Using the least-squares regression method,the estimate of the variable component of inspection cost per unit produced is closest to:


A) $3.51
B) $3.49
C) $4.93
D) $3.54

E) B) and D)
F) A) and B)

Correct Answer

verifed

verified

Mccatty Inc.maintains a call center to take orders,answer questions,and handle complaints.The costs of the call center for a number of recent months are listed below: Management believes that the cost of the call center is a mixed cost that depends on the number of calls taken. Required: Estimate the variable cost per call and fixed cost per month using the least-squares regression method.  Calls Taken  Call Center Cost  April ............ 2,613$60,339 May ............... 2,614$60,345 June ............ 2,640$60,495 July .......... 2,644$60,533 August .......... 2,616$60,346 September...... 2,646$60,537 October........ 2,639$60,501 November...... 2,604$60,263\begin{array} { l c c } & \text { Calls Taken } & \text { Call Center Cost } \\\text { April ............ } & 2,613 & \$ 60,339 \\\text { May ............... } & 2,614 & \$ 60,345 \\\text { June ............ } & 2,640 & \$ 60,495 \\\text { July .......... } & 2,644 & \$ 60,533 \\\text { August .......... } & 2,616 & \$ 60,346 \\\text { September...... } & 2,646 & \$ 60,537 \\\text { October........ } & 2,639 & \$ 60,501 \\\text { November...... } & 2,604 & \$ 60,263\end{array}

Correct Answer

verifed

verified

The solution using Microsoft Excel functions is: slope = $6.38 per call intercept = $43,652 per month The solution using the formulas in the text is: n = 8 sumX = 21,016 sumY = $483,359 sumXY = $1,269,796,718 sumX2 = 55,211,010 b = [n(sumXY)- (sumX)(sumY))]/[n(sumX^2)- (sumX)^2] = [8($1,269,796,718)- (21,016)($483,359))]/[8(55,211,010)- (21,016)^2] = $6.38 a = [(sumY)- b(sumX)]/n = [($483,359)- $6.38(21,016)]/8 = $43,652 Any difference in the solutions is due to rounding errors when the formulas are used.

Delreal Inc.'s inspection costs are listed below: Management believes that inspection cost is a mixed cost that depends on the number of units produced.Using the least-squares regression method,the estimates of the variable and fixed components of inspection cost would be closest to:


A) $20.27 per unit plus $5,905 per month
B) $44.44 per unit plus $10,867 per month
C) $20.68 per unit plus $5,807 per month
D) $20.57 per unit plus $5,837 per month

E) A) and B)
F) B) and C)

Correct Answer

verifed

verified

The management of Archie Corporation would like to better understand the behavior of the company's warranty costs.Those costs are listed below for a number of recent months: Management believes that warranty cost is a mixed cost that depends on the number of product returns. Required: Estimate the variable cost per product return and the fixed cost per month using the least-squares regression method.  Product Returns  Warranty Cost  May .............. 30$3,929 June ............. 33$3,975 July .............. 26$3,859 August .......... 36$3,996 September....... 42$4,072 Oetober......... 34$3,963 November....... 35$3,976 December ....... 39$4,022\begin{array} { l c c } & \text { Product Returns } & \text { Warranty Cost } \\\text { May .............. } & 30 & \$ 3,929 \\\text { June ............. } & 33 & \$ 3,975 \\\text { July .............. } & 26 & \$ 3,859 \\\text { August .......... } & 36 & \$ 3,996 \\\text { September....... } & 42 & \$ 4,072 \\\text { Oetober......... } & 34 & \$ 3,963 \\\text { November....... } & 35 & \$ 3,976 \\\text { December ....... } & 39 & \$ 4,022\end{array}

Correct Answer

verifed

verified

The solution using Microsoft Excel funct...

View Answer

Stamp Printing Corp. ,a book printer,has provided the following data: Management believes that the press setup cost is a mixed cost that depends on the number of titles printed.(A specific book that is to be printed is called a "title".Typically,thousands of copies will be printed of each title.Specific steps must be taken to setup the presses for printing each title-for example,changing the printing plates.The costs of these steps are the press setup costs. ) Required: Estimate the variable cost per title printed and the fixed cost per month using the least-squares regression method.  February............. March.................. April.................... May..................... June..................... July...................... Augus................... September............ Titles Printed  Press Setup Cost 39$2,19740$2,21836$2,13431$2,04448$2,42447$2,37729$1,99745$2,353\begin{array}{c}\begin{array}{lll}\\ \text { February.............}\\ \text { March..................}\\ \text { April....................}\\ \text { May.....................}\\ \text { June.....................}\\ \text { July......................}\\ \text { Augus...................}\\ \text { September............}\end{array}\begin{array}{cc}\text { Titles Printed } & \text { Press Setup Cost } \\39 & \$ 2,197 \\40 & \$ 2,218 \\36 & \$ 2,134 \\31 & \$ 2,044 \\48 & \$ 2,424 \\47 & \$ 2,377 \\29 & \$ 1,997 \\45 & \$ 2,353\end{array}\end{array}

Correct Answer

verifed

verified

The solution using Microsoft Excel funct...

View Answer

Donner Company would like to estimate the variable and fixed components of its maintenance costs and has compiled the following data for the last five months of operations.  Labor Hours  Maintenance Cost  January ....... 160$617 February ...... 130$553 March ........ 180$596 April......... 190$623 May ........... 110$532\begin{array}{lcc}&\text { Labor Hours } & \text { Maintenance Cost }\\ \text { January ....... } & 160 & \$ 617 \\\text { February ...... } & 130 & \$ 553 \\\text { March ........ } & 180 & \$ 596 \\\text { April......... } & 190 & \$ 623 \\\text { May ........... } & 110 & \$ 532\end{array} -Using the high-low method of analysis,the estimated total fixed cost per month for maintenance is closest to:


A) $440
B) $407
C) $470
D) $0

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

The R2 (i.e. ,R-squared)indicates the proportion of a mixed cost that is variable. The R2 (i.e. ,R-squared)is a measure of the goodness-of-fit in least-squares regression.

A) True
B) False

Correct Answer

verifed

verified

Magnano Inc.'s inspection costs are listed below: Management believes that inspection cost is a mixed cost that depends on units produced. February...............March...................April.....................May......................June.....................July......................August.................September............ Units Produced  Inspection Costs 933$4,592945$4,619959$4,692922$4,542950$4,669889$4,443970$4,723878$4,400\begin{array}{c}\begin{array}{lll}\\ \text {February...............}\\ \text {March...................}\\ \text {April.....................}\\ \text {May......................}\\ \text {June.....................}\\ \text {July......................}\\ \text {August.................}\\ \text {September............}\end{array}\begin{array}{cc}\text { Units Produced } & \text { Inspection Costs } \\933 & \$ 4,592 \\945 & \$ 4,619 \\959 & \$ 4,692 \\922 & \$ 4,542 \\950 & \$ 4,669 \\889 & \$ 4,443 \\970 & \$ 4,723 \\878 & \$ 4,400\end{array}\end{array} -Using the least-squares regression method,the estimate of the fixed component of inspection cost per month is closest to:


A) $4,400
B) $1,290
C) $4,585
D) $1,318

E) C) and D)
F) A) and D)

Correct Answer

verifed

verified

Recent maintenance costs of Pavelko Corporation are listed below: Management believes that maintenance cost is a mixed cost that depends on machine-hours. March..............April................May.................June................July................August............September......October.......... Machine-Hours  Maintenance Costs 620$8,027577$7,904571$7,897616$8,017549$7,826552$7,832623$8,067621$8,029\begin{array}{c}\begin{array}{lll}\\ \text {March..............}\\ \text {April................}\\ \text {May.................}\\ \text {June................}\\ \text {July................}\\ \text {August............}\\ \text {September......}\\ \text {October..........}\end{array}\begin{array}{cc}\text { Machine-Hours } & \text { Maintenance Costs } \\620 & \$ 8,027 \\577 & \$ 7,904 \\571 & \$ 7,897 \\616 & \$ 8,017 \\549 & \$ 7,826 \\552 & \$ 7,832 \\623 & \$ 8,067 \\621 & \$ 8,029 \end{array}\end{array} -Using the least-squares regression method,the estimate of the variable component of maintenance cost per machine-hour is closest to:


A) $3.26
B) $13.45
C) $2.00
D) $2.96

E) A) and D)
F) B) and C)

Correct Answer

verifed

verified

Donner Company would like to estimate the variable and fixed components of its maintenance costs and has compiled the following data for the last five months of operations.  Labor Hours  Maintenance Cost  January ....... 160$617 February ...... 130$553 March ........ 180$596 April......... 190$623 May ........... 110$532\begin{array}{lcc}&\text { Labor Hours } & \text { Maintenance Cost }\\ \text { January ....... } & 160 & \$ 617 \\\text { February ...... } & 130 & \$ 553 \\\text { March ........ } & 180 & \$ 596 \\\text { April......... } & 190 & \$ 623 \\\text { May ........... } & 110 & \$ 532\end{array} -Using the high-low method of analysis,the estimated variable cost per labor hour for maintenance is closest to:


A) $0.83
B) $1.84
C) $1.30
D) $1.14

E) None of the above
F) A) and D)

Correct Answer

verifed

verified

When analyzing a mixed cost,you should always plot the data in a scattergraph,but it is particularly important to check the data visually on a scattergraph when the R2 from a least squares regression is low.A quick look at the scattergraph can reveal that there is little relation between the cost and the activity or that the relation is something other than a simple straight line.

A) True
B) False

Correct Answer

verifed

verified

Below are cost and activity data for a particular cost over the last four periods.Your boss has asked you to analyze this cost so that management will have a better understanding of how this cost changes in response to changes in activity. Required: Using the least-squares regression method,estimate the cost formula for this cost.  Activity  Cost  Period 1 ..... 47$357 Period 2 ..... 46$351 Period 3 ..... 43$334 Period 4…….44$340\begin{array} { l c c } & \text { Activity } & \text { Cost } \\\text { Period 1 ..... } & 47 & \$ 357 \\\text { Period 2 ..... } & 46 & \$ 351 \\\text { Period 3 ..... } & 43 & \$ 334 \\\text { Period } 4 \ldots \ldots . & 44 & \$ 340\end{array}

Correct Answer

verifed

verified

n = 4 sumX = 180 sumY = 1,382 sumXY = 62,247 sumX^2 = 8,110 b = [n(sumXY)-(sumX)(sumY)]/[n(sumX^2)-(sumX)^2] = [4(62,247)-(180)(1,382)]/[4(8,110)-(180)^2] = $5.70 (rounded to nearest whole cent) a = [(sumY)-b(sumX)]/n = [(1,382)-5.70(180)]/4 = $89 (rounded to nearest whole dollar) Cost formula: Y = $89 + $5.70X.

Recent maintenance costs of Pavelko Corporation are listed below: Management believes that maintenance cost is a mixed cost that depends on machine-hours. March..............April................May.................June................July................August............September......October.......... Machine-Hours  Maintenance Costs 620$8,027577$7,904571$7,897616$8,017549$7,826552$7,832623$8,067621$8,029\begin{array}{c}\begin{array}{lll}\\ \text {March..............}\\ \text {April................}\\ \text {May.................}\\ \text {June................}\\ \text {July................}\\ \text {August............}\\ \text {September......}\\ \text {October..........}\end{array}\begin{array}{cc}\text { Machine-Hours } & \text { Maintenance Costs } \\620 & \$ 8,027 \\577 & \$ 7,904 \\571 & \$ 7,897 \\616 & \$ 8,017 \\549 & \$ 7,826 \\552 & \$ 7,832 \\623 & \$ 8,067 \\621 & \$ 8,029 \end{array}\end{array} -Using the least-squares regression method,the estimate of the fixed component of maintenance cost per month is closest to:


A) $7,826
B) $6,036
C) $7,950
D) $6,199

E) B) and C)
F) A) and B)

Correct Answer

verifed

verified

The management of Buff Sports Stadium believes that the number of sporting events each month is an measure of activity for total clean-up cost.Shown below are event figures and total clean up costs for the past four months: Required: a.Estimate Buff's cost formula for monthly clean-up cost using the high-low method. b.Estimate Buff's cost formula for monthly clean-up cost using the least-squares regression method.  Number of  Total  Sporting  Clean-up  Events  Cost  July ........... 28$30,900 August ........ 34$34,200 September..... 16$20,700 October......... 22$28,200\begin{array}{lcc}&\text { Number of } & \text { Total } \\&\text { Sporting } & \text { Clean-up }\\&\text { Events } & \text { Cost }\\ \text { July ........... } & 28 & \$ 30,900 \\\text { August ........ } & 34 & \$ 34,200 \\\text { September..... } & 16 & \$ 20,700 \\\text { October......... } & 22 & \$ 28,200\end{array}

Correct Answer

verifed

verified

a.
Variable cost = Change in cost ÷ Chan...

View Answer

CPE for CPAs,Inc. ,provides continuing professional education for certified public accountants.The company is relatively new and management is seeking information regarding the company's cost structure.The following information has been gathered for the first six months of the current year: Required: a.Using the high-low method,estimate the variable cost per seminar and the total fixed cost per month. b.Using the least-squares regression method,estimate the variable cost per seminar and the total fixed cost per month.  Seminars OfferedCosts Incurred  January …….8$15,200 February …….10$17,000 March ……….13$19,400 April ........ 16$21,800 May .......... 14$20,000 June ........ 11$18,200\begin{array}{lcc}&\text { Seminars Offered}& \text {Costs Incurred }\\ \text { January } \ldots \ldots . & 8 & \$ 15,200 \\\text { February } \ldots \ldots . & 10 & \$ 17,000 \\\text { March } \ldots \ldots \ldots . & 13 & \$ 19,400 \\\text { April ........ } & 16 & \$ 21,800 \\\text { May .......... } & 14 & \$ 20,000 \\\text { June ........ } & 11 & \$ 18,200\end{array}

Correct Answer

verifed

verified

a.High-Low Method
Variable cost = Change...

View Answer

Showing 1 - 20 of 22

Related Exams

Exam 1

Absorption Costing and Variable Costing

28 Questions

Exam 2

Statement of Cash Flows

56 Questions

Exam 3

Further Classification of Labor Costs

18 Questions

Exam 4

Cost of Quality

24 Questions

Exam 6

Absorption Costing and Variable Costing

38 Questions

Exam 7

Abc Action Analysis

16 Questions

Exam 8

Use Activity-Based Costing Technique to Compute Product Costs for External Reports

16 Questions

Exam 9

Fifo Method

72 Questions

Exam 10

Compute and Interpret the Fixed Overhead Variances

87 Questions

Exam 11

Journal Entries to Record Variances

46 Questions

Exam 12

Transfer Pricing

18 Questions

Exam 13

The Concept of Present Value

14 Questions

Exam 14

Income Taxes in Capital Budgeting Decisions

33 Questions

Exam 15

Pricing Products and Services

84 Questions

Exam 16

Profitability Analysis

76 Questions

Show Answer