Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 3, Problem 42P
Thames Assurance Company sells a variety of life and health insurance products. Recently, Thames developed a long-term care policy for sale to members of university and college alumni associations. Thames estimated that the sale and service of this type of policy would be subject to a 90 percent cumulative average-time learning curve model. Each unit consists of 350 policies sold. The first unit is estimated to take 1,000 hours to sell and service.
Required:
- 1. Set up a table with columns for cumulative number of units, cumulative average time per unit in hours, and the cumulative total time in hours. Complete the table for 1, 2, 4, 8, 16, and 32 units.
- 2. Suppose that Thames revises its assumption to an 80 percent learning curve. How will this affect the amount of time needed to sell and service eight units? How do you suppose that Thames estimates the percent learning rate?
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Zengen Manufacturing Inc. produces 500 PPE for covid patient a day with its current workforce of 50 sewers. The owner has projected an increase in the demand of their PPE. They planned to hire additional 6 sewers. How many dresses will Zengen Manufacturing Inc. produce with the addition of 6 sewers?
give a solution
The manager of an e-learning company identified a new course that they could create
and sell for $100 per student. The costs for adding this new course to their product
offering would be: $2,100 per month to lease additional space, $290 per month for
insurance, $4,900 per month for support staff, $3,600 per month for sales staff, and
variable costs of $4 per student. They can sell to a maximum of 750 students per
month.
a. For the company to break even per month, how many students would have to
purchase the course?
0
Round up to the next whole number
b. If they made a profit of $34,650 last month, how many students purchased the
course?
Sure Care Health Maintenance Organization is seeking a managed care contract with a local manufacturing plant.
Sure Care estimates that the cost of providing preventative and curative care for the 300 employees and their families will be $36,000 per month.
The manufacturing company offered Sure Care a premium bid of $200 per employee per month.
If Sure Care accepts this bid and contracts with the manufacturing firm, will Sure Care earn a profit or loss for the year? How much?
Describe the steps you used to solve this question.
Chapter 3 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 3 - Why is knowledge of cost behavior important for...Ch. 3 - How does the length of the time horizon affect the...Ch. 3 - Prob. 3DQCh. 3 - What is the relationship between flexible...Ch. 3 - What is the relationship between committed...Ch. 3 - Describe the difference between a variable cost...Ch. 3 - Why do mixed costs pose a problem when it comes to...Ch. 3 - Why is a scattergraph a good first step in...Ch. 3 - What are the advantages of the scatterplot method...Ch. 3 - Prob. 10DQ
Ch. 3 - What is meant by the best-fitting line? Is the...Ch. 3 - When is multiple regression required to explain...Ch. 3 - Explain the meaning of the learning curve. How do...Ch. 3 - Assume you are the manager responsible for...Ch. 3 - Some firms assign mixed costs to either the fixed...Ch. 3 - Callies Gym is a complete fitness center. Owner...Ch. 3 - Corazon Manufacturing Company has a purchasing...Ch. 3 - Darnell Poston, owner of Poston Manufacturing,...Ch. 3 - Dohini Manufacturing Company had the following 12...Ch. 3 - Refer to Cornerstone Exercise 3.4 for data on...Ch. 3 - The controller for Dohini Manufacturing Company...Ch. 3 - Prob. 7CECh. 3 - State Universitys football team just received a...Ch. 3 - Classify the following costs of activity inputs as...Ch. 3 - SmokeCity, Inc., manufactures barbeque smokers....Ch. 3 - Cashion Company produces chemical mixtures for...Ch. 3 - For the following activities and their associated...Ch. 3 - Prob. 13ECh. 3 - Vargas, Inc., produces industrial machinery....Ch. 3 - Penny Davis runs the Shear Beauty Salon near a...Ch. 3 - Shirrell Blackthorn is the accountant for several...Ch. 3 - Deepa Dalal opened a free-standing radiology...Ch. 3 - Prob. 18ECh. 3 - The controller of the South Charleston plant of...Ch. 3 - Lassiter Company used the method of least squares...Ch. 3 - Sweet Dreams Bakery was started five years ago by...Ch. 3 - Ginnian and Fitch, a regional accounting firm,...Ch. 3 - Bordner Company manufactures HVAC (heating,...Ch. 3 - Sharon Glessing, controller for Janson Company,...Ch. 3 - The graphs below represent cost behavior patterns...Ch. 3 - Starling Co. manufactures one product with a...Ch. 3 - Alard Manufacturing Company has a billing...Ch. 3 - Prob. 28ECh. 3 - Prob. 29ECh. 3 - Natur-Gro, Inc., manufactures composters. Based on...Ch. 3 - Rolertyme Company manufactures roller skates. With...Ch. 3 - St. Teresas Medical Center (STMC) offers a number...Ch. 3 - Big Mikes, a large hardware store, has gathered...Ch. 3 - Kimball Company has developed the following cost...Ch. 3 - The management of Wheeler Company has decided to...Ch. 3 - DeMarco Company is developing a cost formula for...Ch. 3 - Weber Valley Regional Hospital has collected data...Ch. 3 - Friendly Bank is attempting to determine the cost...Ch. 3 - Randy Harris, controller, has been given the...Ch. 3 - The Lockit Company manufactures door knobs for...Ch. 3 - Harriman Industries manufactures engines for the...Ch. 3 - Thames Assurance Company sells a variety of life...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- An undergraduate engineering student and her husband operate a pet-sitting service to help make ends meet. They want to add a daily service of a photo placed online for pet owners who are traveling. The estimates are: equipment and setup cost $950; net monthly income over costs $70. Over a period of 3 years, will the service make at least 12% per year compounded monthly?arrow_forwardWaiting time, service industry. The registration advisors at a small Midwestern university (SMU) help 4,200 studentsdevelop their class schedules and register for classes each semester. Each advisor works for 10 hours a day during theregistration period. SMU currently has 10 advisors. While advising an individual student can take anywhere from 2 to 30minutes, it takes an average of 12 minutes per student. During the registration period, the 10 advisors see an average of300 students a day on a rst-come, rstserved basis. 1. Using the formula on page 747, calculate how long the average student will have to wait in the advisor’s office beforebeing advised. 2. The head of the registration advisors would like to increase the number of students seen each day because at 300students a day it would take 14 working days to see all of the students. This is a problem because the registration periodlasts for only 2 weeks (10 working days). If the advisors could advise 420 students a day, it would…arrow_forwardA hospital germ-fighting and floor cleaning robot, named Maurice, costs $104,000. Patients are billed $1 per day for Maurice’s use and upkeep. A certain 300-bed hospital is considering purchasing this robot. What is the simple payback period for Maurice? What assumptions did you make?arrow_forward
- 1) locke's distributors has has an annual demand for a port authority’s metal detector of 1400 units. The cost of a detector is $400. The transportation cost is 20% of the unit cost and the ordering cost is $25 per order. Considering that if the lead buyer orders in quantities of 300, he can get a 4% discount on the cost of the detectors. Should the company accept the discount? 2) Adam is responsible for monitoring supplies at the Hospital. During the past year, the mean lead time demand for a certain brand of antibiotic was 60. with a lead time standard deviation of 7. Adam would like to maintain a 90% service probability level. What is the most suitable reorder point?arrow_forwardA publishing company is planning on developing an SPSS Manual for graduatestudents in doctoral programs. The book will cost $16 to produce and will sell for$24; fixed costs will be $160,000. The company estimates that sales will beapproximately 60,000.a) What is the company’s breakeven point?b) Find the estimated profit.arrow_forward13. Micromedia offers computer training seminars on a variety of topics. In the seminars each student works at a personal computer, practicing the particular activity that the instructor is presenting. Micromedia is currently planning a two-day seminar on the use of Microsoft Excel in statistical analysis. The projected fee for the seminar is $600 per student. The cost for the conference room, instructor compensation, lab assistants, and promotion is $9600. Micromedia rents computers for its seminars at a cost of $60 per computer per day. a. Develop a model for the total cost to put on the seminar. Let x represent the number of students who enroll in the seminar. b. Develop a model for the total profit if x students enroll in the seminar. e. Micromedia has forecasted an enrollment of 30 students for the seminar. How much profit will be earned if its forecast is accurate? d. Compute the breakeven point.arrow_forward
- A professional division at a business school provides several development programs that have been tailored to the specific training needs of both the public and private sectors. The program director is planning to offer a one-full-day course in risk management to be sold at $2,250 plus orientation fee (5%) per participant. The division incurs a cost of $45,000 for promotion, classroom space, staff and instructor’s salary, as well as a cost of $240 per participant for refreshments, lunch, course material, a gift package, and a framed certificate of completion. How many participants need to register in the course for it to be worthwhile to offer it? Round to two decimal places. Group of answer choices 21.20 26.86 36.72arrow_forwardYou are considering starting a walk-in clinic. Your financial projections for the first year of operations are as follows: Revenue (10000 visits) $394,007 Wages and benefit $226,585 Rent $4,095 Depreciation $29,179 Utilities $2,164 Medical supplies $49,632 Administrative supplies $9,163 Assume that all costs are fixed, except supply costs, which are variable. Furthermore, assume that the clinic must pay taxes at a 31 percent rate. What number of visits is required to provide you with an after-tax profit of $108,247? [Hint: Remember that after-tax profit = before-tax profit * (1- tax rate).] (Do not round intermediate calculations. Round your final answer to 2 decimal places. For example, 12.3456 should be entered as 12.35. REMINDER: quantities are always rounded UP. Canvas does not have this capability.)arrow_forwardHumana Hospital Corporation installed a new MRI machine at a cost of $750,000 this year in its medical professional clinic in Cedar Park. This state-of-the-art system is expected to be used for 5 years and then sold for $125,000. Humana uses a return requirement of 15% per year for all of its medical diagnostic equipment. As a bioengineering student currently serving a coop semester on the management staff of Humana Hospital Corporation in Louisville, Kentucky, you are asked to determine the minimum revenue required each year to realize the expected recovery and return. If the AOC is expected to be $80,000 per year, what is the total revenue required to provide for recovery of capital, the 15% return, and the annual expenses? -258917 -343654 -285197 -334654arrow_forward
- Assume that a prospect is interested in purchasing 4 tickets in a 20-game season ticket package. The prospect estimated that the sales force can close 20% of the deals after attending a game with an average of 1.5 transactions per customer. On average, those sales will be approximately $1,500. Assuming the cost of the package is $10,000, calculate the return on investment for the business. would like you to identify the following: • Total number of tickets in the ticket package? • Assuming the prospect will send 1 sales person to each game, how many tickets will they use in total for their potential customers? • How many customers will they gain using 20% as a conversion rate ? • Total number of transactions from customers ? • Total Revenue Generated ? • Return on Investment ? Explain how you arrived at your final numbers.arrow_forwardI need d) pleasearrow_forwardA medical supply company has customers in eight cities. It is trying to decide how many salespeople it needs to service these customers. Each salesperson needs to be located in one of the eight cities and needs to be assigned to a subset of the customers. For example, the company might base a salesperson in New York and have this person service customers in New York, Boston, and Philadelphia. Each salesperson receives an annual salary of $70,000 and can work as many as 230 days per year. This includes days working with customers and days traveling to and from customers. The file P06_90.xlsx contains data on the annual travel costs (for example, $15,900 for a salesperson based in New York traveling for customers in Orlando), the annual number of days of work required for the customers, and the annual number of days traveling to and from customers. Find an assignment that minimizes the total cost of salaries and traveling. The solution should indicatethe number of salespeople to employ,…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Essentials of Business Analytics (MindTap Course ...StatisticsISBN:9781305627734Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. AndersonPublisher:Cengage Learning
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Essentials of Business Analytics (MindTap Course ...
Statistics
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY