1) sales forecasting by its nature is:
a.precise
b.deterministic in nature
c.objective
d.somewhat subjective
e.mechanical
2) quick telephone response (qtr) was started several years ago to provide an outsource
telephone service for the growing number of small, specialty catalog mail-order
companies that commenced operations in recent years. since most of the calls are
received between 10 a.m. and 2 p.m., qtr began offering a telephone answering service
to attempt to fill the remainder of the day for its operators. however, as outsource
competition has recently increased, qtr analyzed its operations and concluded that it
should focus on its core business of providing service to its mail-order clients only. to
bring operating costs into line, qtr concluded that it should shed some of its full-time
operators and replace them with part-time operators in order to cover the peak mid-day
calling period.
weldon miller, director of the telephone response operations department, engaged a
consultant to assist in analyzing the situation and determining the number of full-time
and part-time employees that will be required to meet qtr’s variable operating schedule.
based on a study of one month’s activity they concluded that the number of daily orders
received for their specialty clients averaged 3,450 with the mid-day period averaging
2,250 orders. they calculated that there would be a need to retain twenty five (25)
full-time employees. they further developed two regression analyses. regression 1
relates to the average of 3,450 orders per day and regression 2 relates to the average of
2,250 peak mid-day orders. the data resulting from these analyses are presented below.
regression equation: where:
e = a + bn
e = employees
n = number of orders
required:
(1) refer to the regression data in the previous column for quick telephone response
(qtr).
(a) calculate the number of part-time employees that will be needed each day using the
regression results relating to the average number of daily orders handled. round your
response to the nearest whole number.
(b) apply the regression results that relate to the average number of orders handled
during the mid- day peak period. calculate the number of part-time employees that will
be needed daily. round your response to the nearest whole number.
(c) of the two regression analyses used select the regression analysis which appears to
be the better one and explain the reason for your conclusion.
(2) describe at least two ways that weldon miller could improve the regression
predictions. (cma adapted)
3) giddings pharmaceutical company is a maker of drugs for high blood pressure and
uses a process costing system. the following information pertains to the final
department of giddings’s blockbuster drug called solcax.
giddings calculates separate costs of spoilage by computing both normal and abnormal
spoiled units. normal spoilage costs are reallocated to good units and abnormal spoilage
costs are charged as a loss. the units of solcax that are spoiled are the result of defects
not discovered before inspection of finished units. materials are added at the beginning
of the process. using the weighted-average method, answer the following question:
what are the total conversion costs in ending inventory?
a.$430
b.$500
c.$850
d.$1,150
4) beckner inc. is a job-order manufacturer. the company uses a predetermined
overhead rate based on direct labor hours to apply overhead to individual jobs. for the
current year, estimated direct labor hours are 133,000 and estimated factory overhead is
$784,700. the following information is for september. job x was completed during
september, while job y was started but not finished.
the total ending work-in-process for september is:
a.$68,000
b.$101,000
c.$133,450
d.$157,300
e.$53,400
5) which of the following items does not have to be considered when evaluating a
make-or-buy decision?
a.the reliability of the supplier’s delivery schedule
b.quality of the supplier’s product
c.net book value of the production equipment used to make the item in question
d.contribution margin generated by an alternative use of the production equipment
e.financial stability of the supplier
6) thompson refrigerators inc. needs to prepare pro forma financial statements for the
next fiscal year. to do so, the company must forecast its total overhead cost. the actual
machine hours and total overhead cost are presented below for the past six months.
using the high-low method, unit variable overhead cost is calculated to be:
a.$1.35
b.$1.15
c.$1.40
d.$1.65
e.$1.25
7) everlast co. manufactures a variety of drill bits. the company’s plant is partially
automated. the budget for the year includes $432,000 payroll for 4,800 direct
labor-hours. listed below is cost driver information used in the product-costing system:
a current product order has the following requirements:
using abc, how much material handling overhead is assigned to the order?
a.$19,200
b.$8,000
c.$11,108
d.$9,960
e.$7,272
8) stephenson company’s computer system recently crashed, erasing much of the
company’s financial data. the following accounting information was discovered soon
afterwards on the cfo’s back-up computer disk.
the cfo of stephenson company has asked you to recalculate the following accounts and
report to him by week’s end.
if finished goods inventory has increased during the period, which of the following is
always true?
a.cost of goods sold is less than cost of goods manufactured
b.cost of goods sold is more than cost of goods manufactured
c.cost of goods manufactured is more than total manufacturing costs
d.cost of goods manufactured is less than total manufacturing costs
9) in calculating unit cost in a process costing system, “conversion cost” is defined as
the sum of:
a.direct and indirect material costs
b.direct and indirect labor costs
c.direct labor and factory overhead costs
d.indirect labor and factory overhead costs
e.indirect material and factory overhead costs
10) which of these job characteristics would result in the learning curve having less of
an effect?
a.repetitive tasks
b.working on an assembly line
c.use of robotics and computer-aided manufacturing
d.activities where teaching and learning take place
11) bradford company derived the following cost relationship from a regression
analysis of its monthly manufacturing overhead cost:
c = $80,000 + $12m
where:
c = monthly manufacturing overhead cost, and
m = machine hours
the standard error of estimate of the regression is $6,000. the standard time required to
manufacture one six-unit case of bradford’s single product is two machine hours.
bradford applies manufacturing overhead to production on the basis of machine hours,
and its normal annual production is 50,000 cases.
bradford’s estimated variable manufacturing overhead cost for a month in which
scheduled production is 5,000 cases would be:
a.$80,000
b.$120,000
c.$140,000
d.$200,000
e.some amount other than those given above