MANAGERIAL ACCOUNTING F/MGRS.
5th Edition
ISBN: 9781259969485
Author: Noreen
Publisher: RENT MCG
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Chapter 2A, Problem 2A.6P
1.
To determine
Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.
To calculate: The markup that company needs on the pads to achieve 24%
2.
To determine
Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.
To compute: The minimum acceptable price for the special order.
3.
To determine
Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.
To compute: The minimum acceptable price for the special order.
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Least-Squares Regression; Scattergraph; Comparison of Activity Bases
The Hard Rock Mining Company is developing cost formulas for management planning and decision-making purposes. The company’s cost analyst has concluded that utilities cost is a mixed cost, and he is attempting to find a base that correlates with the cost. The controller has suggested that tons mined might be a good base to use in developing a cost formula. The production superintendent disagrees; she thinks that direct labor-hours would be a better base. The cost analyst has decided to try both bases and has assembled the following information:
Required:
1. Using tons mined as the independent variable, prepare a scattergraph that plots tons mined on the horizontal axis and utilities cast on the vertical axis. Using the least-squares regression method, estimate the variable utilities cost per ton mined and the total fixed utilities cost per quarter. Express these estimates in the form Y = a + bX.
2. Using direct…
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
3,500
61,000
2,000
85,000
2,600
78,200
2,450
91,000
3,000
110,400
3,900
106,000
3,740
93,000
3,380
a) Calculate the variable cost per hour
b) Calculate the total fixed costs
c) Write the equation which measures the cost behavior of the costs
d) Calculate the operating costs for 3,750 hours.
The Barnett Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Barnett Company 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
$24,900 5,250
24,000 5,500
36,400 7,500
44,160 9,750
45,000 9,500
What is the estimated total cost at an operating level of 8,000 hours?
Chapter 2A Solutions
MANAGERIAL ACCOUNTING F/MGRS.
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What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY