5. The MTN Company has assembled the following data pertaining to certain costs which cannot be easily identified as either fixed or variable. MTN has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation Cost Hours $100,000 61,000 85,000 78,200 91,000 110,400 106,000 3,500 2,000 2,600 2,450 3,000 3,900 3,740 3,380 93,000 Calculate the variable cost per hour Calculate the total fixed costs Write the equation which measures the cost behaviour of the costs Calculate the operating costs for 3,750 hours.

A-3

The JAG Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. JAG Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation. The following are data from the most recent periods: Cost Hours $25,000 5,025 25,100 4,000 34,000 7,515 60,370 15,500 38,000 9.500 Required: (a) Using the high-low method, estimate the cost function. Round to two decimal places. Show work to receive partial credit!! (b) Calculate the estimated total costs at an operating level of 6,000 hours. Show work to receive partial credit!!!

1. Top-down versus bottom-up estimates. pts. a. Describe the methods and uses of each of the approaches. 2. Compare the advantages and disadvantages of each of the approaches.         3. What are the three types of costs discussed in the text? Define them.   4. For a small project requiring 120 hours at $50/hr and having a direct overhead rate of 40%, calculate the direct cost (Exercise 1 in Chapter 5). To that add indirect costs (G&A) at 20% and then profit at 20% for a total project price.  What are the estimated costs for: Design Programming In-house testing Which “approach to estimating” is this? What weaknesses are inherent in this approach? 5. Take another look at Exercise #5. Use Exercise Figure 5.1 on page 160.  But now you are asked to do a bottom-up estimate based on the following data and compare it with the top-down estimate of $800,000.  If confronted with these two estimates, what, if any, actions would you take?     Deliverables Estimated Hours Rate:…

For questions 5-6, please classify the costs of each of the following as variable, fixed, mixed, or step. Sales volume is the cost driver. 5. Real estate taxes A) Variable В) Fixed C) Mixed D) Step Your answer is Explain your answer: 6. Electric power in a factory A) Variable B) Fixed с) Mixed D) Step Your answer is Explain your answer:

High-low method Ziegler Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the total cost. The data for various levels of production are as follows: X Open spreadsheet 105,000 118,000 134,000 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Variable cost: Total fixed cost: Units Produced a. Determine the variable cost per unit and the total fixed cost. Round your answer for variable cost to the nearest cent. Round your answer for total fixed costs to the nearest dollar. Total Costs per unit Total cost for 86,000 units: $30,307,500 32,745,000 35,745,000 b. Based on part (a), estimate the total cost for 86,000 units of production. Round your answer to the nearest dollar.

The information and data in Tables 1, 2, and 3 will be used to determine cost drivers and calculate overheads.                              Table 1 (Product information)                                 X                              Y                               Z High volume Medium volume Low volume Large batches Medium batches Low batches Few purchaseOrders placed Medium purchaseOrders placed Many purchaseOrders placed Few customerOrders placed Medium customerOrders placed Many customerOrders placed                        Table 2 (Product Information)   X  Y Z Total Typical batch size 2000 600 325   No. of production runs 25 50 50 125 No. of inspections 25 50 50 125 Purchase orders placed 25 100 200 325 Customer orders received 10 100 200 310                                                                            Table 3                                                             Analysis of indirect labour     K'000 K'000 Machining:…

(a) What is the customer margin under activity-based costing when the number of orders increases to 11? (Enter a loss as a negative amount.) Customer margin under activity-based costing  [         ] I got $7,640 but it was not correct :(   (b) What is the product margin under the traditional costing system when the number of orders increases to 11? (Enter a loss as a negative amount.)   Product margin under the traditional costing system [         ] I got $(21,600) but it was not correct. :( (c) Which of the following statements are true? (You may select more than one answer.)   check all that apply If a customer orders more frequently, but orders the same total number of units over the course of a year, the customer margin under activity based costing will decrease. If a customer orders more frequently, but orders the same total number of units over the course of a year, the product margin under a traditional costing system will decrease. If a customer orders more…

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