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 35P
For each of the cost items described below, choose the graph (see below) that best represents it.
- 1. The salary costs of the shift supervisors at a truck depot. Each shift is eight hours. The depot operates with one, two, or three shifts at various times of the year.
- 2. The salaries of the security personnel at a factory. The security guards are on duty around the clock.
- 3. The wages of table-service personnel in a restaurant. The employees are part-time workers, who can be called upon for as little as two hours at a time.
- 4. The cost of electricity during peak-demand periods is based on the following schedule.
The price schedule is designed to discourage overuse of electricity during periods of peak demand.
- 5. The cost of sheet metal used to manufacture automobiles.
- 6. The cost of utilities at a university. For low student enrollments, utility costs increase with enrollment, but at a decreasing rate. For large student enrollments, utility costs increase at an increasing rate.
- 7. The cost of online back-up storage at a rate of $2.50 per gigabyte, up to 50 gigabytes, beyond which storage is unlimited, at no additional cost.
- 8. The cost of the nursing staff in a hospital. The staff always has a minimum of nine nurses on duty. Additional nurses are used depending on the number of patients in the hospital. The hospital administrator estimates that this additional nursing staff costs approximately $195 per patient per day.
- 9. The cost of chartering a private airplane. The cost is $390 per hour for the first three hours of a flight. Then the charge drops to $280 per hour.
- 10. Under a licensing agreement with a South American import/export company, your firm has begun shipping machine tools to several countries. The terms of the agreement call for an annual licensing fee of $100,000 to be paid to the South American import company if total exports are under $5,000,000. For sales in excess of $5,000,000, an additional licensing fee of 10 percent of sales is due.
- 11. Your winery exports wine to several Pacific Rim countries. In one nation, you must pay a tariff for every case of wine brought into the country. The tariff schedule is the following:
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"For each of the cost items described below, choose the graph (see next page) that best represents it.
1.The salary costs of the shift supervisors at a truck depot. Each shift is eight hours. The depot operates with one, two, or three shifts at various times of the year.
2.The salaries of the security personnel at a factory. The security guards are on duty around the clock.
3.The wages of table-service personnel in a restaurant. The employees are part-time workers, who can be called upon for as little as two hours at a time.
4.The cost of electricity during peak-demand periods is based on the following schedule.
Up to 9,500 kilowatt-hours (kwh) ......................................................$.10 per kwh
Above 9,500 kilowatt-hours ..............................................................$.13 per kwh
The price schedule is designed to discourage overuse of electricity during periods of peak demand.
5.The cost of sheet metal used to manufacture automobiles.
6.The cost of…
Question 2: Walker Co. designs and builds computer servers for data centers. They use job costing to determine the cost of
the systems that they install which consist of server racks. Each system requires a different number of server racks to be installed.
Use the forecasts below to determine the total cost of each customer's system.
One manager must be hired for every twenty direct labor hours that will be spent on installations in total (round up for fractions),
and the advertising expenses are used to run local television advertisements in the hopes of enticing new business.
The cost of a typical project is shown below, along with details about several customer orders.
Direct Materials
$5,000 per server rack
Direct Labor
$60 per hour
$3,000 per person
Manager Salary
Advertising Expenses
$10,000 per month
Direct Labor Time
2 hours per server rack
Customers
Alice
Ben
Chris
Doris
Hours
Alice
Ben
Chris
Doris
Size of System in Racks
10
4
15
20
14
30
(A) What driver should Walker Co. use…
Classifying Variable and Fixed Costs and Product and Period Costs
Below are listed various costs that are found in organizations.
1. Hamburger buns in a Wendy’s restaurant.
2. Advertising by a dental office.
3. Apples processed and canned by Del Monte.
4. Shipping canned apples from a Del Monte plant to customers.
5. Insurance on a Bausch & Lomb factory producing contact lenses.
6. Insurance on IBM’s corporate headquarters.
7. Salary of a supervisor overseeing production of printers at Hewlett-Packard.
8. Commissions paid to automobile salespersons.
9. Depreciation of factory lunchroom facilities at a General Electric plant.
10. Steering wheels installed in BMWs.
Required:
Using the table shown below, describe each of the costs mentioned above in two ways. In terms of cost classifications for predicting cost behavior (column 1), indicate whether the cost is fixed or variable with respect to the number of units produced and sold. With respect to cost classifications for preparing…
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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