Managerial Accounting
3rd Edition
ISBN: 9780077826482
Author: Stacey M Whitecotton Associate Professor, Robert Libby, Fred Phillips Associate Professor
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 5, Problem 2.6GAP
To determine
Concept introduction:
Least square regression method: It is a statistical procedure which is used to find best fit for a set of data (points) by minimizing the sum of the residual points from the plotted curve.
To create:
The linear equation
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Cal’s Sporting Goods has three product lines and has decided to apply ABC analysis to these three product lines: Running, Golfing and Kayaking. He identifies four activities and their activity cost rates as follows:
Ordering
$95 per purchase order
Delivery and receipt of merchandise
$76 per delivery
Shelf stocking
$19 per hour
Customer support and assistance
$0.15 per item sold.
The revenues, cost of goods sold and activity usage are listed below:
Running
Golfing
Kayaking
Financial Data
Revenues
$60,000
$66,500
$50,500
Cost of goods sold
$41,000
$51,000
$32,000
Store support costs (overhead)
Activity Area Usage
Ordering (purchase orders
44
24
14
Delivery (deliveries)
120
60
36
Shelf stocking (hours)
170
150
20
Customer support (items sold)
15,400
20,200
7,960
Under the simple costing system. Cal’s Sporting Goods…
World View Outfitters operates a large outdoor clothing and equipment store with three main product lines: clothing, equipment, and shoes. World View Outfitters operates at capacity and allocates selling, general, and administration (S, G & A) costs to each product line using the cost of merchandise of each product line. The company wants to optimize the pricing and cost management of each product line and is wondering if its accounting system is providing it with the best information for making such decisions.
Store manager Abe Barry gathers the following information regarding the three product lines:
For2017,World View Outfitters budgets the following selling, general, and administration costs:
1.
Suppose
World View
Outfitters uses cost of merchandise to allocate all S, G & A costs. Prepare budgeted product-line and total company income statements.
2.
Identify an improved method for allocating costs to the three product lines. Explain. Use the…
Match each of the following cost items with the value chain business function where you would expect the cost to be incurred:
Cost Item
1. Labor time to repair products under warranty
2. Radio commercials
3. Labor costs of delivering customer orders
4. Testing of competitor's product
5. Direct manufacturing labor costs
6. Development of order tracking system for online sales
7. Design cost of new product brochures
8. Hours spent designing childproof bottles
9. Training costs for representatives to staff the customer call center
10. Installation of robotics equipment in manufacturing plant
Business Function
Chapter 5 Solutions
Managerial Accounting
Ch. 5 - Define each of the following terms variable cost,...Ch. 5 - Prob. 2QCh. 5 - Prob. 3QCh. 5 - Prob. 4QCh. 5 - Prob. 5QCh. 5 - Describe the three methods used to estimate cost...Ch. 5 - Prob. 7QCh. 5 - Prob. 8QCh. 5 - Prob. 9QCh. 5 - Prob. 10Q
Ch. 5 - Prob. 11QCh. 5 - Prob. 12QCh. 5 - Prob. 13QCh. 5 - Prob. 14QCh. 5 - Which of the following increases when activity...Ch. 5 - Prob. 2MCCh. 5 - Prob. 3MCCh. 5 - Consider the following information for a local...Ch. 5 - Prob. 5MCCh. 5 - Prob. 6MCCh. 5 - Prob. 7MCCh. 5 - Prob. 8MCCh. 5 - Prob. 9MCCh. 5 - Hathaway Corp, manufactures garden hoses. Last...Ch. 5 - Identifying Cost Behavior Heather Oak is trying to...Ch. 5 - Prob. 2MECh. 5 - Defining Cost Behavior Match each of the following...Ch. 5 - Prob. 4MECh. 5 - Defining Terms for the High-Low Method Indicate...Ch. 5 - Prob. 6MECh. 5 - Prob. 7MECh. 5 - Prob. 8MECh. 5 - Prob. 9MECh. 5 - Prob. 10MECh. 5 - Prob. 11MECh. 5 - Prob. 12MECh. 5 - Prob. 13MECh. 5 - Prob. 14MECh. 5 - Prob. 15MECh. 5 - Prob. 16MECh. 5 - Compare full absorption costing to variable...Ch. 5 - Identifying Cost Behavior Patterns Steve...Ch. 5 - Prob. 2ECh. 5 - Prob. 3ECh. 5 - Prob. 4ECh. 5 - Estimating Cost Behavior Using High-Low Method...Ch. 5 - Prob. 6ECh. 5 - Prob. 7ECh. 5 - Prob. 8ECh. 5 - Prob. 9ECh. 5 - Estimating Cost Behavior Using Scattergraph and...Ch. 5 - Estimating Cost Behavior Using Least-Squares...Ch. 5 - Comparing High-Low Method and Least-Squares...Ch. 5 - Preparing Contribution Margin Income Statement...Ch. 5 - Determining Cost Behavior, Preparing Contribution...Ch. 5 - Prob. 15ECh. 5 - Prob. 16ECh. 5 - Prob. 17ECh. 5 - Prob. 18ECh. 5 - Comparing Full Absorption Costing and Variable...Ch. 5 - Estimating Cost Behavior Using Least-Squares...Ch. 5 - Prob. 1.1GAPCh. 5 - Prob. 1.2GAPCh. 5 - Prob. 1.3GAPCh. 5 - Prob. 1.4GAPCh. 5 - Prob. 1.5GAPCh. 5 - Prob. 1.6GAPCh. 5 - Prob. 2.1GAPCh. 5 - Prob. 2.2GAPCh. 5 - Prob. 2.3GAPCh. 5 - Prob. 2.4GAPCh. 5 - Prob. 2.5GAPCh. 5 - Prob. 2.6GAPCh. 5 - Prob. 2.7GAPCh. 5 - Prob. 3.1GAPCh. 5 - Prob. 3.2GAPCh. 5 - Prob. 3.3GAPCh. 5 - Prob. 3.4GAPCh. 5 - Prob. 3.5GAPCh. 5 - Prob. 4.1GAPCh. 5 - Prob. 4.2GAPCh. 5 - Prob. 4.3GAPCh. 5 - Comparing Full Absorption and Variable Costing...Ch. 5 - Comparing Full Absorption and Variable Costing...Ch. 5 - Prob. 5.3GAPCh. 5 - Prob. 6.1GAPCh. 5 - Prob. 6.2GAPCh. 5 - Prob. 6.3GAPCh. 5 - Prob. 6.4GAPCh. 5 - Prob. 6.5GAPCh. 5 - Prob. 6.6GAPCh. 5 - Prob. 1.1GBPCh. 5 - Prob. 1.2GBPCh. 5 - Prob. 1.3GBPCh. 5 - Prob. 1.4GBPCh. 5 - Estimating Cost Behavior Using Scattergraph,...Ch. 5 - Prob. 1.6GBPCh. 5 - Prob. 2.1GBPCh. 5 - Estimating Cost Behavior Using Scattergraph,...Ch. 5 - Prob. 2.3GBPCh. 5 - Prob. 2.4GBPCh. 5 - Prob. 2.5GBPCh. 5 - Prob. 2.6GBPCh. 5 - Prob. 2.7GBPCh. 5 - Prob. 3.1GBPCh. 5 - Prob. 3.2GBPCh. 5 - Prob. 3.3GBPCh. 5 - Prob. 3.4GBPCh. 5 - Prob. 3.5GBPCh. 5 - Prob. 4.1GBPCh. 5 - Prob. 4.2GBPCh. 5 - Prob. 4.3GBPCh. 5 - Prob. 5.1GBPCh. 5 - Prob. 5.2GBPCh. 5 - Prob. 5.3GBPCh. 5 - Prob. 6.1GBPCh. 5 - Prob. 6.2GBPCh. 5 - Prob. 6.3GBPCh. 5 - Prob. 6.4GBPCh. 5 - Prob. 6.5GBPCh. 5 - Prob. 6.6GBP
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
- The following is a financial information from MayPagAsaPa Company: Additional information:The company purchase office supplies from big manufacturers and distributes among different segments. Cost of goods sold and shipping expenses are both variable. 1.Prepare a new contribution format segmented income statement. 2.Analyze your requirement #1. What points that might help to improve the company’s performance would you bring to management’s attention? 3.Compare your output with Requirement 1 with the information above. List the items you think that is an error/disadvantage/weakness of the given data.arrow_forwardThe Chocolate Baker specializes in chocolate baked goods. The firm has long assessed the profitability of a product line by comparing revenues to the cost of goods sold. However, Barry Love, the firm’s new accountant, wants to use an activity-based costing system that takes into consideration the cost of the delivery person. Listed below are activity and cost information relating to two of Chocolate Baker’s major products. Muffins Cheesecake Revenue $53,000 $46,000 Cost of goods sold 26,000 21,000 Delivery activity: Number of deliveries 150 85 Average length of delivery 10 minutes 15 minutes Cost per hour for delivery $20.00 $20.00 Using activity-based costing, which one of the following statements is correct? A. The cheesecakes are $75 more profitable. B. The muffins have a higher profitability as a percentage of sales and therefore are more advantageous. C. The muffins are $2,000 more…arrow_forwardHigado Confectionery Corporation has a number of store locations throughout North America. In income statements segmented by store, which of the following would be considered a common fixed cost with respect to the stores? Multiple Choice cost of goods sold at each store store manager salaries store building depreciation expense the cost of corporate advertising aired during the Super Bowlarrow_forward
- Essential College Supplies (ECS) is a store on the campus on a large Midwestern university. The store has both an apparel section (t-shirts with the school logo) and a convenience section. ECS reports revenues for the apparel section separately from the convenience section. Requirement Classify each cost item (A-H) as follows: a. Direct or indirect (D or I) costs of the total number of t-shirts sold. b. Variable or fixed (V or F) costs of how the total costs of the apparel section change as the total number of t-shirts sold changes. (If in doubt, select on the basis of whether the total costs will change substantially if there is a large change in the total number of t-shirts sold.) Requirement a. Classify each cost item (A-H) as direct or indirect (D or I) costs of the total number of t-shirts sold. Cost Item D or I A. Annual fee for licensing the school logo B. Cost of store manager's salary C.…arrow_forwardClassify Costs Seymour Clothing Co. manufactures a variety of clothing types for distribution to several major retail chains. The following costs are incurred in the production and sale of blue jeans: Required: Identify each cost listed below as variable costs, fixed costs, or mixed cost. A. Shipping boxes used to ship orders B. Consulting fee of $200,000 paid to industry specialist for marketing advice C. Straight-line depreciation on sewing machines D. Salesperson's salary, $10,000 plus 2% of the total sales E. Fabric F. Dye G. Thread H. Salary of designers I. Brass buttons J. Legal fees paid to attorneys in defense of the company in a patent infringement suit, $50,000 plus $87 per hour K. Insurance premiums on property, plant, and equipment, $70,000 per year plus $5 per $30,000 of insured value over $8,000,000 L. Rental costs of warehouse, $5,000 per month plus $4 per square foot of storage used M. Supplies N.…arrow_forwardTechPro offers instructional courses in e-commerce website design. The company holds classes in a building that it owns. Identify each of TechPro’s costs below as (a) variable or fixed and (b) direct or indirect by selecting the appropriate dropdowns. Assume the cost object is an individual class. Variable or Fixed Direct or Indirect 1. Instructional manuals for students 2. Advertising Fixed Indirect 3. Salesperson salary 4. Sales commissions 5. Computer printer ink 6. Depreciation on classroom buildingarrow_forward
- Colby Company makes cases for cell phones of all sizes and types for sale through specialty retailers. The company makes a standard model for the most recent iPhone as well as a deluxe model. Management has designed an ABC system with the following activity cost pools and activity rates for these models: Activity Cost Pool Activity Rates Supporting manufacturing $ 2 per direct labour-hour Order processing $ 12 per order Customer service $ 53 per customer Management would like an analysis of the profitability of a particular customer, Cell City, which has ordered the following products over the last 12 months: Standard Model Deluxe Model Number of cases 120 20 Number of orders 5 2 Direct labour-hours per case 0.25 0.40 Selling price per case $ 32 $ 52 Direct materials cost per case $ 9 $ 12 The company’s direct labour rate is $12 per hour. Required: Using the company’s ABC system, compute the customer margin…arrow_forwardThe Chocolate Baker specializes in chocolate baked goods. The firm has long assessed the profitability of a product line by comparing revenues to the cost of goods sold. However, Barry White, the firms new accountant, wants to use an activity-based costing system that takes into consideration the cost of the delivery person. Following are activity and cost information relating to two of Chocolate Bakers major products: Using activity-based costing, which of the following statements is correct? a. The muffins are 2,000 more profitable. b. The cheesecakes are 75 more profitable. c. The muffins are 1,925 more profitable. d. The muffins have a higher profitability as a percentage of sales and, therefore, are more advantageous.arrow_forwardVentana Window and Wall Treatments Company provides draperies, shades, and various window treatments. Ventana works with the customer to design the appropriate window treatment, places the order, and installs the finished product. Direct materials and direct labor costs are easy to trace to the jobs. Ventanas income statement for last year is as follows: Ventana wants to find a markup on cost of goods sold that will allow them to earn about the same amount of profit on each job as was earned last year. Required: 1. What is the markup on cost of goods sold (COGS) that will maintain the same profit as last year? (Round the percentage to two significant digits.) 2. A customer orders draperies and shades for a remodeling job. The job will have the following costs: What is the price that Ventana will quote given the markup percentage calculated in Requirement 1? (Round the price to the nearest dollar.) 3. What if Ventana wants to calculate a markup on direct materials cost, since it is the largest cost of doing business? What is the markup on direct materials cost that will maintain the same profit as last year? (Round the percentage to two significant digits.) What is the bid price Ventana will use for the job given in Requirement 2 if the markup percentage is calculated on the basis of direct materials cost? (Round to the nearest dollar.)arrow_forward
- The following information is from Good Read Books. Good Read is a regional book store with three regional stores. The May income statement for all stores is shown. A. Comment on the operating income results for each store. B. Now assume the costs allocated from corporate is an uncontrollable cost for each store. How does this change your assessment of each store?arrow_forwardThe following information is from Daves Sporting Goods. Daves is a Midwest sporting goods store with three regional stores. The August income statement for all stores is shown. A. Comment on the operating income results for each store. B. Now assume the costs allocated from corporate is an uncontrollable cost for each store. How does this change your assessment of each store?arrow_forwardMuscat Pharmaceutical Manufacturing Company (Muscat Pharma) is a company devoted to manufacturing and exporting of veterinary medicine and veterinary products. Mr. Mazin is the accounts manager of the company, who spent his valuable time and effort in providing half-yearly accounting reports to the suppliers of the company. This is an example of O a. Monitoring Cost O b. Residual Cost O c Bonding Cost O d. Indirect Agency Costarrow_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 LearningPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeEssentials of Business Analytics (MindTap Course ...StatisticsISBN:9781305627734Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. AndersonPublisher:Cengage Learning
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
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
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Cost Accounting - Definition, Purpose, Types, How it Works?; Author: WallStreetMojo;https://www.youtube.com/watch?v=AwrwUf8vYEY;License: Standard YouTube License, CC-BY