Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 6, Problem 28E
The Iowa City Veterinary Laboratory performs a variety of diagnostic tests on commercial and domestic animals. The lab has incurred the following costs over the past year.
Required:
- 1. Plot the data above in a scatter diagram. Assign cost to the vertical axis and the number of diagnostic tests to the horizontal axis. Visually fit a line to the plotted data.
- 2. Using the visually fit line, estimate the monthly fixed cost and the variable cost per diagnostic test.
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The Iowa City Veterinary Laboratory performs a variety of diagnostic tests on commercial and domestic animals. The lab has incurred the following costs over the past year.
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Required:1. Plot the data above in a scatter diagram. Assign cost to the vertical axis and the number of diagnostic tests to the horizontal axis. Visually fit a line to the plotted data.2. Using the visually fit line, estimate the monthly fixed cost and the variable cost per diagnostic test.
Albedo Incorporated manufactures high-end replacement telescope lenses for amateur and professional
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a staff accountant at Albedo, and Jordan Coleman, the controller, has asked you to help with maintenance cost
estimation for the lens manufacturing process. You review the manufacturing process and decide that the best
cost driver for maintenance costs is machine hours. The data below are from the previous fiscal year for
maintenance costs and machine hours:
Month Maintenance Costs Machine Hours
$ 3,210
4,650
5,175
3,350
3,100
1
2
3
4
5
6
7
8
9
10
11
12
2,950
2,900
2,900
4,120
4,350
3,500
3,775
2,750
3,900
4,050
2,690
2,500
2,580
2,300
2,500
3,160
3,325
2,780
3,000
Required:
1. What is the cost equation for maintenance costs using the high-low method? (Round "slope (unit variable cost)"
to 2 decimal places. Negative amounts should be indicated by a minus sign.)
Kara Meyer, owner of Flower Power, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Meyer wants to set the delivery fee based on the
distance driven to deliver the flowers. Meyer wants to separate the fixed and variable portions of her van operating costs so that she has a better idea how delivery distance affects these costs. She has the
following data from the past seven months:
(Click the icon to view the data.)
Read the requirements.
Requirement 1. Determine the company's cost equation (use the output from the Excel regression). (Ro
y =
x +
Data table
Month
January..
February
March
April
May
June
July
Miles Driven
16,400
17,500
15,000
16,100
17,300
15,600
14,500
Print
Van Operating Costs
$5,480
$5,400
$4,950
$5,270
$5,740
$5,440
$4,680
Done
-
X
Chapter 6 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 6 - Describe the importance of cost behavior patterns...Ch. 6 - Define the following terms, and explain the...Ch. 6 - Suggest an appropriate activity base (or cost...Ch. 6 - Draw a simple graph of each of the following types...Ch. 6 - Explain the impact of an increase in the level of...Ch. 6 - Explain why a manufacturers cost of supervising...Ch. 6 - Explain the impact of an increase in the level of...Ch. 6 - Prob. 8RQCh. 6 - Indicate which of the following descriptions is...Ch. 6 - Prob. 10RQ
Ch. 6 - What is meant by a learning curve? Explain its...Ch. 6 - Suggest an appropriate independent variable to use...Ch. 6 - What is an outlier? List some possible causes of...Ch. 6 - Explain the cost estimation problem caused by...Ch. 6 - Describe the visual-fit method of cost estimation....Ch. 6 - What is the chief drawback of the high-low method...Ch. 6 - Explain the meaning of the term least squares in...Ch. 6 - Prob. 18RQCh. 6 - Prob. 19RQCh. 6 - List several possible cost drivers that could be...Ch. 6 - Prob. 21RQCh. 6 - Prob. 22ECh. 6 - The behavior of the annual maintenance and repair...Ch. 6 - WMEJ is an independent television station run by a...Ch. 6 - Jonathan Macintosh is a highly successful...Ch. 6 - Jonathan Macintosh is a highly successful...Ch. 6 - The Iowa City Veterinary Laboratory performs a...Ch. 6 - Chillicothe Meat Company produces one of the best...Ch. 6 - Rio Bus Tours has incurred the following bus...Ch. 6 - Prob. 31ECh. 6 - Prob. 32ECh. 6 - Prob. 33ECh. 6 - Gator Beach Marts, a chain of convenience grocery...Ch. 6 - For each of the cost items described below, choose...Ch. 6 - The following selected data were taken from the...Ch. 6 - Antioch Extraction, which mines ore in Montana,...Ch. 6 - Nations Capital Fitness, Inc. operates a chain of...Ch. 6 - The Allegheny School of Music has hired you as a...Ch. 6 - Prob. 40PCh. 6 - (Note: Instructors who wish to cover all three...Ch. 6 - Refer to the original data in the preceding...Ch. 6 - Shortly after being hired as an analyst with...Ch. 6 - The controller of Chittenango Chain Company...Ch. 6 - Dana Rand owns a catering company that prepares...Ch. 6 - Prob. 48PCh. 6 - Earth and Artistry, Inc. provides commercial...Ch. 6 - Prob. 51CCh. 6 - Refer to the data and accompanying information in...
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