112. Figure 3-4.
Botana Company constructed the following formula for monthly utility cost.
Total utility cost = $1,200 + ($8.10 ´ labor hours)
Assume that 775 labor hours are budgeted for the month of April.
Refer to Figure 3-4. If Botana Company incurs 9,600 labor hours for the year, what would be the estimate of
total utility cost?
113. Figure 3-5.
Maxwell Company makes treadmills. The company controller wants to calculate the fixed and variable costs
associated with the janitorial costs incurred in the factory. Data for the past four months were collected.
Janitorial
Machine
Month
costs
hours
September
$11,000
575
October
11,400
610
November
10,200
510
December
10,725
550
Refer to Figure 3-5. Using the high-low method calculate the fixed cost of the janitorial services
114. Figure 3-5.
Maxwell Company makes treadmills. The company controller wants to calculate the fixed and variable costs
associated with the janitorial costs incurred in the factory. Data for the past four months were collected.
Janitorial
Machine
Month
costs
hours
September
$11,000
575
October
11,400
610
November
10,200
510
December
10,725
550
Refer to Figure 3-5. What would Maxwell Company’s estimate of total janitorial cost be at a level of 600 machine hours?
115. Figure 3-7.
Margola Company produces hand-held calculators. The company controller wanted to calculate the fixed and
variable costs associated with the maintenance cost incurred by the factory. Data for the past four months were
collected.
Maintenance
Machine
Month
cost
hours
June
$4,180
328
July
3,956
310
August
4,686
386
September
4,240
352
Coefficients shown by a regression program are:
Intercept
1,150
X Variable 1
9.06
Refer to Figure 3-7. Using the results of regression, calculate the fixed cost of maintenance.
116. Figure 3-7.
Margola Company produces hand-held calculators. The company controller wanted to calculate the fixed and
variable costs associated with the maintenance cost incurred by the factory. Data for the past four months were
collected.
Maintenance
Machine
Month
cost
hours
June
$4,180
328
July
3,956
310
August
4,686
386
September
4,240
352
Coefficients shown by a regression program are:
Intercept
1,150
X Variable 1
9.06
Refer to Figure 3-7. Using the results of regression, calculate the variable rate of maintenance cost.
117. Figure 3-7.
Margola Company produces hand-held calculators. The company controller wanted to calculate the fixed and
variable costs associated with the maintenance cost incurred by the factory. Data for the past four months were
collected.
Maintenance
Machine
Month
cost
hours
June
$4,180
328
July
3,956
310
August
4,686
386
September
4,240
352
Coefficients shown by a regression program are:
Intercept
1,150
X Variable 1
9.06
Refer to Figure 3-7. Using the results of regression, the cost formula for maintenance cost was
118. Figure 3-7.
Margola Company produces hand-held calculators. The company controller wanted to calculate the fixed and
variable costs associated with the maintenance cost incurred by the factory. Data for the past four months were
collected.
Maintenance
Machine
Month
cost
hours
June
$4,180
328
July
3,956
310
August
4,686
386
September
4,240
352
Coefficients shown by a regression program are:
Intercept
1,150
X Variable 1
9.06
Refer to Figure 3-7. Using the results of regression, what would be the budgeted cost for maintenance next month assuming that 340 machine hours
are budgeted?
119. Figure 3-8.
Martin Company makes cell phones. The company controller wanted to calculate the fixed and variable costs
associated with electricity use in the factory. Data for the past four months were collected.
Electricity
Machine
Month
cost
hours
January
$7,560
570
February
8,220
625
March
7,480
546
April
7,186
518
Coefficients shown by a regression program are:
Intercept
2,255
X Variable 1
9.48
Refer to Figure 3-8. Using the results of regression, calculate the variable rate of the electricity cost.
120. Figure 3-8.
Martin Company makes cell phones. The company controller wanted to calculate the fixed and variable costs
associated with electricity use in the factory. Data for the past four months were collected.
Electricity
Machine
Month
cost
hours
January
$7,560
570
February
8,220
625
March
7,480
546
April
7,186
518
Coefficients shown by a regression program are:
Intercept
2,255
X Variable 1
9.48
Refer to Figure 3-8. Using the results of regression, calculate the fixed cost of electricity.
121. Figure 3-8.
Martin Company makes cell phones. The company controller wanted to calculate the fixed and variable costs
associated with electricity use in the factory. Data for the past four months were collected.
Electricity
Machine
Month
cost
hours
January
$7,560
570
February
8,220
625
March
7,480
546
April
7,186
518
Coefficients shown by a regression program are:
Intercept
2,255
X Variable 1
9.48
Refer to Figure 3-8. Using the results of regression, the cost formula for electricity cost was
122. Figure 3-8.
Martin Company makes cell phones. The company controller wanted to calculate the fixed and variable costs
associated with electricity use in the factory. Data for the past four months were collected.
Electricity
Machine
Month
cost
hours
January
$7,560
570
February
8,220
625
March
7,480
546
April
7,186
518
Coefficients shown by a regression program are:
Intercept
2,255
X Variable 1
9.48
Refer to Figure 3-8. Using the results of regression, what would be the total budgeted cost for electricity next month assuming that 615 machine
hours are budgeted?
123. Figure 3-9.
The following cost formula was developed using monthly data for a retail clothing store.
Total cost = $75,620 + ($242 ´ number of customers)
Refer to Figure 3-9. The term $75,620
124. Figure 3-9.
The following cost formula was developed using monthly data for a retail clothing store.
Total cost = $75,620 + ($242 ´ number of customers)
Refer to Figure 3-9. The term $242
125. Figure 3-9.
The following cost formula was developed using monthly data for a retail clothing store.
Total cost = $75,620 + ($242 ´ number of customers)
Refer to Figure 3-9. The term “number of customers”
126. Figure 3-9.
The following cost formula was developed using monthly data for a retail clothing store.
Total cost = $75,620 + ($242 ´ number of customers)
Refer to Figure 3-9. The term “total cost”
127. Figure 3-10.
The following cost formula was developed using the monthly data for an accounting firm.
Total cost = $87,100 + ($210 ´ number of tax returns)
Refer to Figure 3-10. The term $87,100
128. Figure 3-10.
The following cost formula was developed using the monthly data for an accounting firm.
Total cost = $87,100 + ($210 ´ number of tax returns)
Refer to Figure 3-10. The term “number of tax returns”
129. Figure 3-10.
The following cost formula was developed using the monthly data for an accounting firm.
Total cost = $87,100 + ($210 ´ number of tax returns)
Refer to Figure 3-10. The term $210
130. Figure 3-10.
The following cost formula was developed using the monthly data for an accounting firm.
Total cost = $87,100 + ($210 ´ number of tax returns)
Refer to Figure 3-10. The term “total cost”
131. Figure 3-11.
The following four months of data were collected on utility cost and the number of labor hours in a factory.
Utility
Labor
Month
cost
hours
January
$22,100
3,975
February
24,600
5,430
March
23,500
4,400
April
20,140
3,200
Refer to Figure 3-11. Select the correct set of high and low months.
High Low
132. Figure 3-11.
The following four months of data were collected on utility cost and the number of labor hours in a factory.
Utility
Labor
Month
cost
hours
January
$22,100
3,975
February
24,600
5,430
March
23,500
4,400
April
20,140
3,200
Refer to Figure 3-11. Using the high-low method, compute the variable rate for the utility cost.
133. Figure 3-11.
The following four months of data were collected on utility cost and the number of labor hours in a factory.
Utility
Labor
Month
cost
hours
January
$22,100
3,975
February
24,600
5,430
March
23,500
4,400
April
20,140
3,200
Refer to Figure 3-11. Using the high-low method, compute the fixed cost of electricity.
134. Figure 3-11.
The following four months of data were collected on utility cost and the number of labor hours in a factory.
Utility
Labor
Month
cost
hours
January
$22,100
3,975
February
24,600
5,430
March
23,500
4,400
April
20,140
3,200
Refer to Figure 3-11. What would be the estimate of electricity cost if the factory incurred 4,700 labor hours next month?
135. Figure 3-12.
The method of least squares was used to develop a cost equation to predict the cost of monthly equipment
maintenance. The following computer output was received:
Intercept
32,000
Slope
25
The driver used was the number of machine hours.
Refer to Figure 3-12. What was the cost formula for equipment maintenance?
136. Figure 3-12.
The method of least squares was used to develop a cost equation to predict the cost of monthly equipment
maintenance. The following computer output was received:
Intercept
32,000
Slope
25
The driver used was the number of machine hours.
Refer to Figure 3-12. Using the cost formula for the equipment maintenance cost, what is the predicted cost of equipment maintenance for April
assuming that 5,000 machine hours will be incurred in April?
137. Figure 3-12.
The method of least squares was used to develop a cost equation to predict the cost of monthly equipment
maintenance. The following computer output was received:
Intercept
32,000
Slope
25
The driver used was the number of machine hours.
Refer to Figure 3-12. What is the independent variable of the cost formula for equipment maintenance?
138. Figure 3-13.
The following six months of data were collected on electricity cost and the number of machine hours in a
factory.
Electricity
Machine
Month
cost
hours
June
$25,160
4,500
July
26,170
4,810
August
27,250
5,120
September
26,680
5,010
October
27,950
5,430
November
27,500
5,190
Refer to Figure 3-13. Select the correct set of high and low months.
High Low
139. Figure 3-13.
The following six months of data were collected on electricity cost and the number of machine hours in a
factory.
Electricity
Machine
Month
cost
hours
June
$25,160
4,500
July
26,170
4,810
August
27,250
5,120
September
26,680
5,010
October
27,950
5,430
November
27,500
5,190
Refer to Figure 3-13. An independent variable value used in calculating the cost line using the high-low method is:
140. Figure 3-13.
The following six months of data were collected on electricity cost and the number of machine hours in a
factory.
Electricity
Machine
Month
cost
hours
June
$25,160
4,500
July
26,170
4,810
August
27,250
5,120
September
26,680
5,010
October
27,950
5,430
November
27,500
5,190
Refer to Figure 3-13. A dependent variable value used in calculating the cost line using the high-low method is:
141. Margolo Company makes cross-country skis. The company controller wants to calculate the fixed and
variable costs associated with janitorial services incurred by the factory. Data for the past six months were
collected.
Janitorial
Labor
Month
cost
hours
January
$9,200
10,120
February
8,800
9,500
March
9,350
10,500
April
9,620
11,100
May
8,400
8,660
June
9,400
10,650
Select the correct set of high and low months.
High Low
142. Advantages of the method of least squares over the high-low method include all of the following except
143. If an automobile manufacturer changes from skilled labor to computer-controlled assembly procedures, the
past data
144. Which of the following is an advantage of using the scatter-graph method over the high-low method to
estimate costs?
145. If at a given volume total costs and fixed costs are known, the variable costs per unit may be computed as
follows:
146. Figure 3-14.
Blacken Company manufactures motorcycles. The company’s management accountant wants to calculate the
fixed and variable costs associated with utility cost incurred by the factory. Data for the past five months were
collected.
Utility
Machine
Month
cost
hours
March
$30,255
2,200
April
32,750
2,525
May
34,712
2,710
June
31,850
2,410
July
30,720
2,290
Refer to Figure 3-14. Using a regression program, the value of the intercept (rounded to the nearest penny) is
147. Figure 3-14.
Blacken Company manufactures motorcycles. The company’s management accountant wants to calculate the
fixed and variable costs associated with utility cost incurred by the factory. Data for the past five months were
collected.
Utility
Machine
Month
cost
hours
March
$30,255
2,200
April
32,750
2,525
May
34,712
2,710
June
31,850
2,410
July
30,720
2,290
Refer to Figure 3-14. Using a regression program, the value of the X Variable 1 (rounded to the nearest penny) is
148. Figure 3-14.
Blacken Company manufactures motorcycles. The company’s management accountant wants to calculate the
fixed and variable costs associated with utility cost incurred by the factory. Data for the past five months were
collected.
Utility
Machine
Month
cost
hours
March
$30,255
2,200
April
32,750
2,525
May
34,712
2,710
June
31,850
2,410
July
30,720
2,290
Refer to Figure 3-14. Using a regression program, the forecasted utility cost at 2,300 machine hours (rounded to the nearest dollar) is
149. Figure 3-14.
Blacken Company manufactures motorcycles. The company’s management accountant wants to calculate the
fixed and variable costs associated with utility cost incurred by the factory. Data for the past five months were
collected.
Utility
Machine
Month
cost
hours
March
$30,255
2,200
April
32,750
2,525
May
34,712
2,710
June
31,850
2,410
July
30,720
2,290
Refer to Figure 3-14. Using a regression program, the forecasted utility cost at 2,600 machine hours (rounded to the nearest dollar) is
150. Figure 3-14.
Blacken Company manufactures motorcycles. The company’s management accountant wants to calculate the
fixed and variable costs associated with utility cost incurred by the factory. Data for the past five months were
collected.
Utility
Machine
Month
cost
hours
March
$30,255
2,200
April
32,750
2,525
May
34,712
2,710
June
31,850
2,410
July
30,720
2,290
Refer to Figure 3-14. Using a regression program, the forecasted utility cost at 2,550 machine hours (rounded to the nearest dollar) is
151. Figure 3-14.
Blacken Company manufactures motorcycles. The company’s management accountant wants to calculate the
fixed and variable costs associated with utility cost incurred by the factory. Data for the past five months were
collected.
Utility
Machine
Month
cost
hours
March
$30,255
2,200
April
32,750
2,525
May
34,712
2,710
June
31,850
2,410
July
30,720
2,290
Refer to Figure 3-14. Using a regression program, the yearly utility cost equation (with all variables to the nearest penny) is
152. Laconic Company manufactures ultra sound equipment. Based on past experience, Laconic has found that
total annual repair and maintenance cost can be represented by the following formula: total annual repair and
maintenance cost = $205,000 + $7.50x, where x = machine hours. Last year, Laconic incurred 145,000 machine
hours.
Required:
What was the total repair and maintenance cost incurred by Laconic last year?
What was the total fixed repair and maintenance cost incurred by Laconic last year?
What was the total variable repair and maintenance cost incurred by Laconic last year?
What was the repair and maintenance cost per machine hour last year?
What was the fixed repair and maintenance cost per machine hour last year?
What was the variable repair and maintenance cost per machine hour last year?
153. Harnow Company manufactures drill presses. Based on past experience, Harnow has found that its total
overhead cost can be represented by the following formula: Total overhead cost = $35,500 + $1.25x, where x =
number of machine hours. Last year Harnow incurred 120,000 machine hours.
Required:
What was the total overhead cost incurred by Harnow last year?
What was the total variable overhead cost incurred by Harnow last year?
What was the total overhead cost per machine hour last year?
What was the fixed overhead cost per machine hour last year?
If Harnow incurs 140,000 machine hours next year, what will be the total overhead cost per machine hour?
$185,500 = $35,500 + ($1.25 ´ 120,000)
$1.25 ´ 120,000 = $150,000
$185,500/120,000 = $1.55
$35,500/120,000 = $.296
$210,500 = $35,500 + ($1.25 ´ 140,000)
$210,500/140,000 = $1.50
$205,000 + ($7.50 ´ 145,000) = $1,292,500
B.
$205,000
C.
$7.50 ´ 145,000 = $1,087,500
D.
$1,292,500/145,000 = $8.91
E.
$205,000/145,000 = $1.41
F.
$7.50
154. The average unit cost at a monthly volume of 9,000 units is $3, and the average unit cost at a monthly
volume of 22,500 units is $2.10.
Required:
Develop an equation for total monthly costs.
What are the total monthly costs if 15,000 units are produced?
(22,500 ´ $2.10) = $47,250
Fixed costs per month = $27,000 – ($1.50 ´ 9,000) = $13,500
B.
$13,500 + (15,000 ´ $1.50) = $13,500 + $22,500 = $36,000