Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 10.27E
1.
To determine
The cost function under High-low method.
2.
To determine
The costs that would be included in
a
and
b
3.
To determine
Operating budget for the helicopter for 1,200 round-trips.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Resling Travel offers helicopter service from suburban towns to John F. Kennedy International Airport in New York City. Each of its six helicopters makes between 1,300 and 2,300 round-trips per year. The records indicate that a
helicopter that has made 1,300 round-trips in the year incurs an average operating cost of $600 per round-trip, and one that has made 2,300 round-trips in the year incurs an average operating cost of $450 per round-trip.
Read the requirements.
Requirement 1. Using the high-low method, estimate the linear relationship y = a +bX, where y is the total annual operating cost of a helicopter and X is the number of round-trips it makes to JFK airport during the year.
Requirements
1. Using the high-low method, estimate the linear relationship y= a +bX, where y
is the total annual operating cost of a helicopter and X is the number
of round-trips it makes to JFK airport during the year.
Give examples of costs that would be included in a and in b.
2.
3. If Resling Travel…
Rapp Travel offers helicopter service from suburban towns to John F. Kennedy International Airport in New York City. Each of its nine helicopters makes
between 1,200 and 2,400 round-trips per year. The records indicate that a helicopter that has made 1,200 round-trips in the year incurs an average
operating cost of $535 per round-trip, and one that has made 2,400 round-trips in the year incurs an average operating cost of $500 per round-trip.
Read the requirements.
Requirement 1. Using the high-low method, estimate the linear relationship y = a +bX, where y is the total annual operating cost of a helicopter and X is
the number of round-trips it makes to JFK airport during the year.
=
+
Reisen Travel offers helicopter service from suburban towns to John F. Kennedy International Airport in New York City. Each of its 10 helicopters makes between 1,000 and 2,000 round-trips per year. The records indicate that a helicopter that has made 1,000 round-trips in the year incurs an average operating cost of $350 per round-trip, and one that has made 2,000 round-trips in the year incurs an average operating cost of $300 per round-trip.
Q.If Reisen Travel expects each helicopter to make, on average, 1,200 round-trips in the coming year, what should its estimated operating budget for the helicopter fleet be?
Chapter 10 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 10 - What two assumptions are frequently made when...Ch. 10 - Describe three alternative linear cost functions.Ch. 10 - What is the difference between a linear and a...Ch. 10 - High correlation between two variables means that...Ch. 10 - Name four approaches to estimating a cost...Ch. 10 - Describe the conference method for estimating a...Ch. 10 - Describe the account analysis method for...Ch. 10 - List the six steps in estimating a cost function...Ch. 10 - When using the high-low method, should you base...Ch. 10 - Describe three criteria for evaluating cost...
Ch. 10 - Define learning curve. Outline two models that can...Ch. 10 - Discuss four frequently encountered problems when...Ch. 10 - Prob. 10.13QCh. 10 - All the independent variables in a cost function...Ch. 10 - Multicollinearity exists when the dependent...Ch. 10 - HL Co. uses the high-low method to derive a total...Ch. 10 - A firm uses simple linear regression to forecast...Ch. 10 - In regression analysis, the coefficient of...Ch. 10 - A regression equation is set up, where the...Ch. 10 - What would be the approximate value of the...Ch. 10 - Estimating a cost function. The controller of the...Ch. 10 - Identifying variable-, fixed-, and mixed-cost...Ch. 10 - Various cost-behavior patterns. (CPA, adapted)....Ch. 10 - Matching graphs with descriptions of cost and...Ch. 10 - Account analysis, high-low. Stein Corporation...Ch. 10 - Account analysis method. Gower, Inc., a...Ch. 10 - Prob. 10.27ECh. 10 - Estimating a cost function, high-low method. Lacy...Ch. 10 - Linear cost approximation. Dr. Young, of Young and...Ch. 10 - Cost-volume-profit and regression analysis....Ch. 10 - Regression analysis, service company. (CMA,...Ch. 10 - High-low, regression. May Blackwell is the new...Ch. 10 - Learning curve, cumulative average-time learning...Ch. 10 - Learning curve, incremental unit-time learning...Ch. 10 - High-low method. Wayne Mueller financial analyst...Ch. 10 - High-low method and regression analysis. Market...Ch. 10 - High-low method; regression analysis. (CIMA,...Ch. 10 - Regression, activity-based costing, choosing cost...Ch. 10 - Interpreting regression results. Spirit...Ch. 10 - Cost estimation, cumulative average-time learning...Ch. 10 - Cost estimation, incremental unit-time learning...Ch. 10 - Regression; choosing among models. Apollo Hospital...Ch. 10 - Multiple regression (continuation of 10-42). After...Ch. 10 - Cost estimation. Hankuk Electronics started...Ch. 10 - Prob. 10.45PCh. 10 - Interpreting regression results, matching time...Ch. 10 - Purchasing department cost drivers, activity-based...Ch. 10 - Purchasing department cost drivers, multiple...
Knowledge Booster
Similar questions
- Reisen Travel offers helicopter service from suburban towns to John F. Kennedy International Airport in New York City. Each of its 10 helicopters makes between 1,000 and 2,000 round-trips per year. The records indicate that a helicopter that has made 1,000 round-trips in the year incurs an average operating cost of $350 per round-trip, and one that has made 2,000 round-trips in the year incurs an average operating cost of $300 per round-trip. Q. Give examples of costs that would be included in a and in b.arrow_forwardReisen Travel offers helicopter service from suburban towns to John F. Kennedy International Airport in New York City. Each of its 10 helicopters makes between 1,000 and 2,000 round-trips per year. The records indicate that a helicopter that has made 1,000 round-trips in the year incurs an average operating cost of $350 per round-trip, and one that has made 2,000 round-trips in the year incurs an average operating cost of $300 per round-trip. Q. Using the high-low method, estimate the linear relationship y = a + bX, where y is the total annual operating cost of a helicopter and X is the number of round-trips it makes to JFK airport during the year.arrow_forwardRadig Travel offers helicopter service from suburban towns to John F. Kennedy International Airport in New York City. Each of its fourteen helicopters makes between 1,100 and 2,200 round-trips per year. The records indicate that a helicopter that has made 1,100 round-trips in the year incurs an average operating cost of $500 per round-trip, and one that has made 2,200 round-trips in the year incurs an average operating cost of $400 per round-trip. Read the requirements LOADING... . Requirement 1. Using the high-low method, estimate the linear relationship y=a+bX, where y is the total annual operating cost of a helicopter and X is the number of round-trips it makes to JFK airport during the year. = + Requirement 2. Give examples of costs that would be included in a and in b. Begin by selecting which type of costs "a" and "b" represent, then select the costs that correlate with that cost type, use each cost only once.…arrow_forward
- Travel offers helicopter service from suburban towns to John F. Kennedy International Airport in New York City. Each of its 10 helicopters makes between 1,000 and 2,000 round-trips per year. The records indicate that a helicopter that has made 1,000 round-trips in the year incurs an average operating cost of $350 per round-trip, and one that has made 2,000 round-trips in the year incurs an average operating cost of $300 per round-trip. Read the requirements LOADING... . Requirement 1. Using the high-low method, estimate the linear relationship y=a+bX, where y is the total annual operating cost of a helicopter and X is the number of round-trips it makes to JFK airport during the year.arrow_forwardThe Mayflower Transport Company operates a fleet of delivery trucks in the Ottawa area. It has been determined that if a truck is driven 105,000 kilometers over a one year period the average operating cost is $0.114 per kilometer. If a truck is driven only 70,000 kilometers annually, the operating costs increases to $0.134 per kilometer. a) Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. b) Using the formula Y=a + bX, present the fixed and variable costs. c) If a truck were driven 80,000 kilometers over a one year period, what total cost would your expect to be incurred?arrow_forwardBorges Machine Shop, Inc., has a 1-year contract for the production of 75,000 gear housings for a new off-road vehicle. Owner Luis Borges hopes the contract will be extended and the volume increased next year. Borges has developed costs for three alternatives. They are general-purpose equipment (GPE), flexible manufacturing system (FMS), and expensive, but efficient, dedicated machine (DM) The cost data follow General Purpose Equipment (GPE) Flexible Manufacturing System (FMS) 75,000 $125,000 $15.00 Annual contracted units Annual fixed cost Per unit vanable cost Based on the total cost, the process that is best suited for the current contracted volume is Suppose the contracted volume changes to 275,000 gear housings. Based on the total cost, the process that is best suited for the new volume is Suppose the contracted volume changes to 375,000 gear housings. Based on the total cost, the process that is best suited for the new volume is Dedicated Machine (DM) 75,000 $225,000 $14.00…arrow_forward
- 119. Unified Parcel, Inc., operates a local parcel delivery service. The company keeps detailed records relating to operating costs of trucks, and has found that if a truck is driven 110,000 miles per year the operating cost is 7.5 cents per mile. This cost increases to 8.75 cents per mile if a truck is driven 60,000 miles per year. Required: Estimate the cost formula for truck operating costs using the high-low method.arrow_forwardBBMLOVESLENI Company operates a fleet of delivery trucks in Luzon. The company has determined that if a truck is driven 105,000 kilometers during a year, the average operating cost is P11.40 per kilometer. If a truck is driven only 70,000 kilometers during a year, the average operating cost increases to P13.40 per kilometer. Assuming that in a given year, a truck were driven 80,000 kilometers, what total cost would you expect to be incurred? * A. P1,012,000 B. P1,407,000 C. P1,225,143 D. P1,072,000arrow_forwardAt Aspen Trucking Company, the average driver out of its 200 driver employees travels 1,600 miles per week (50 weeks per year) and it charges customers $2.15 per mile. Aspen provides each driver a $95,000 big rig and pays the driver $0.58 per mile. It estimates that the direct cost, other than the driver, for operating a truck is $0.75 per mile. Jack, the sales manager has been working on several ways to grow the revenue of the business by 10%. Since he has had to turn away business, Jack has now decided that the best way to do that is a combination of adding drivers and equipment along with a price increase of 2.5% next year. He knows that a first time driver will only be 75% productive in his or her first year and it will cost $5,500 to recruit each one. Assuming he can get all needed drivers hired by the first working day of the year, what will Aspen’s first year approximate cash flow be from this growth initiative? Please solve with excel. Group of answer choices a. $8,500 b.…arrow_forward
- Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $40 per unit. Variable expenses are $20.00 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Sales $ 1,080,000 Variable expenses 540,000 Contribution margin 540,000 Fixed expenses 180,000 Net operating income $ 360,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point in dollar sales. 3. Assume this year’s unit sales and total sales increase by 51,000 units and $2,040,000, respectively. If the fixed expenses do not change, how much will net operating income increase? 4-a. What is the degree of operating leverage based on last year's sales? 4-b. Assume the president expects this year's unit sales to increase by 11%. Using the degree of operating leverage from last year, what percentage increase in net operating…arrow_forwardFeather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $40 per unit. Variable expenses are $20.00 per unit, and fixed expenses total $200,000 per year. Its operating results for last year were as follows: Sales $ 1,040,000 Variable expenses 520,000 Contribution margin 520,000 Fixed expenses 200,000 Net operating income $ 320,000 Required: Answer each question independently based on the original data: 3. Assume this year’s unit sales and total sales increase by 58,000 units and $2,320,000, respectively. If the fixed expenses do not change, how much will net operating income increase? 4-a. What is the degree of operating leverage based on last year's sales? 4-b. Assume the president expects this year's unit sales to increase by 19%. Using the degree of operating leverage from last year, what percentage increase in net operating income will the company realize this year?arrow_forwardFeather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $40 per unit. Variable expenses are $20.00 per unit, and fixed expenses total $160,000 per year. Its operating results for last year were as follows: Sales $ 1,000,000 Variable expenses 500,000 Contribution margin 500,000 Fixed expenses 160,000 Net operating income $ 340,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point in dollar sales. 3. Assume this year’s unit sales and total sales increase by 50,000 units and $2,000,000, respectively. If the fixed expenses do not change, how much will net operating income increase? 4-a. What is the degree of operating leverage based on last year's sales? 4-b. Assume the president expects this year's unit sales to increase by 18%. Using the degree of operating leverage from last year, what percentage increase in net…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education