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11 vizualizări7 paginiAssignment

Oct 04, 2019

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Assignment

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11 vizualizări

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Assignment

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1. Property taxes, factory.

2. Boxes used for packaging detergent produced by the company

3. Salespersons’ commissions

4. Supervisors’ salary, factory

5. Depreciation, executive autos..fixed. non manu

6. Wages of workers assembling computers ... Variable... Manuf.. Dl

7. Insurance, finished goods warehouses .. Fixed.. Nm

8. Lubricants for production equipment... Var... M.. Oh

9. Advertising costs.. Fixed.. Nm

10. Microchips used in producing calculators..var.. M.. DM

11. Shipping costs on merchandise sold..fixee.. V...nm

12. Magazine subscriptions, factory lunch room..fix.. M.. Oh

13. Thread in a garment factory...var.. M.. Dm

14. Billing costs...var.. Nm

15. Executive life insurance..fix.. Nm

16. Ink used in textbook production..var.. M.. Dm

17. Fringe benefits, assembly line workers..var. m.. DL

18. Yarn used in sweater production..var. m.. Dm

19. Wages of receptionist, executive offices ..var. nm

REQUIRED:

1. For each cost item, indicate whether it would be variable or fixed with respect to the

number of units produced and sold; and then whether it would be non-manufacturing cost,

or a manufacturing (product) cost. Use the format given below.

2. Which of the costs would be typically treated as direct cost with respect to units of product?

Cost Item or Fixed Cost (Product) Cost

Direct Labor V X

II. The following data have been collected for four different cost items.

A mixed P2,400 P2,880

B fixed P1,800 P2,250

Cmixed P1,900 P1,900

Dmixed P3,600 P3,720

Which of the following classifications of these cost items by cost behavior is correct?

Cost A Cost B Cost C Cost D

a) variable fixed mixed variable

b) mixed variable fixed mixed

c) variable fixed variable variable

d) mixed variable fixed variable

III. Meemon Company manufactures and sells a single product. A partially completed schedule of the

company’s total and per unit costs over the relevant range of 30,000 to 50,000 units produced and

sold annually is given below:

Total costs:

Variable costs P180,000 ? ?

Fixed costs 280,000 ?

Total P460,000 ? ?

Variable cost ? ? ?

Fixed cost ? ? ?

Total ? ? ?

Required:

a. Complete the schedule of the company’s total and unit costs above.

b. Compute income, assuming that the company produces and sells 35,000 units during a year

at a selling price of P16 per unit.

IV. Something New is a small one-person company that provides elaborate and imaginative wedding

cakes to order for very large wedding receptions. The owner of the company would like to

understand the cost structure of the company and has compiled the following records of activity

and costs incurred. The owner believes that the number of weddings catered is the best measure of

activity.

January 3 P3,800

February 2 3,600

March 6 4,000

April 9 4,300

May 16 5,300

June 100 28,200

July 20 5,200

REQUIRED:

a. Using the high-low method, estimate the variable cost per wedding and the total fixed cost

per month. (Round off the variable cost per wedding to the nearest centavo and the total

fixed cost to the nearest peso.)

b. Using the least-squares regression method, estimate the variable cost per wedding and the

total fixed cost per month. (Round off the variable cost per wedding to the nearest centavo

and the total fixed cost to the nearest peso.)

V. Butler Sales Company is a distributor that has an exclusive franchise to sell a particular product

made by another company. Butler Sales Company’s income statements for the last two years are

given below:

Units sold 200,000 160,000

Sales revenue P1,000,000 P800,000

Less cost of goods sold 700,000 560,000

Gross margin 300,000 240,000

Less operating expenses 210,000 198,000

Net operating income P90,000 P42,000

Operating expenses are a mixture of fixed costs and variable ad mixed costs that vary with respect

to the number of units sold.

REQUIRED:

a. Estimate the company’s variable operating expenses per unit, and its total fixed operating

expenses per year.

b. Compute the company’s contribution margin for this year.

c. Compute the operating income if sales is 180,000 units.

VI. Seyko Company makes prestige high-end custom watches in small lots. One of the company’s

products, a platinum diving watch, goes through an etching process. The company has observed

etching costs as follows over the last six months:

1 4 P1,800

2 3 1,700

3 8 2,500

4 6 2,000

5 7 2,400

6 2 1,600

30 P12,000

For planning purposes, management would like to know the amount of variable etching cost per

unit and the total fixed etching cost per week.

REQUIRED:

1. Using the least squares method, calculate the variable and fixed elements of etching cost.

2. If the company processes five units next week, what would be the expected total etching

cost?

VII. An analysis of past janitorial costs indicates that the average janitorial cost is P5.00 per machine

hour at an activity level of 25,000 machine hours. Assuming that this activity is within the relevant

range, what is the total expected janitorial cost if the activity is 23,000 machine hours?

VIII. The Mix Company uses the high-low method to estimate the cost function. The information for 2019

is provided below:

Highest observation of cost driver 300 P6,000

Lowest observation of cost driver 160 3,200

IX. Black Forest Clinic contains 450 beds. The average occupancy rate is 80% per month. In other words,

an average of 80% of the clinic’s beds are occupied by patients. At this level of occupancy, the

clinic’s operating costs are P32 per occupied bed per day, assuming a 30-day month. This P32

contains both variable and fixed cost elements.

During April, the clinic’s occupancy rate was only 60%. A total of P326,700 in operating costs was

incurred during the month.

REQUIRED:

1. Using the high-low method, estimate the (a) variable cost per occupied bed on a daily basis

and (b) the total fixed operating costs per month.

2. Assume an occupancy rate of 70% per month. What amount of total operating costs would

you expect the clinic to incur?

X. Goljess Company is a manufacturing company whose total factory overhead costs fluctuate

considerable from year to year according to increases and decreases in the number of direct labor-

hours worked in the factory. Total factory overhead costs at high and low levels of activity for recent

years are given below:

LOW HIGH

Direct labor hours 50,000 75,000

Total factory overhead costs P14,250,000 P17,625,000

The factory overhead costs above consist of indirect materials, rent and maintenance. The company

has analyzed these costs at the 50,000-hour level of activity as follows:

Rent (Fixed) 6,000,000

Maintenance (Mixed) 3,250,000

Total overhead costs P14,250,000

To have data available for planning, the company wants to break down the maintenance cost into its

variable and fixed costs elements.

REQUIRED:

1. Estimate how much of the P17,625,000 factory overhead cost at the high level of activity

consists of maintenance cost.

2. By mean of the high-low method, estimate a cost formula for maintenance.

3. Express the company’s total overhead costs in the linear equation form Y = a + bX

4. What total overhead costs would you expect to be incurred at an operating activity level of

70,000 direct labor hours?

XI. Velman Company wants to determine the factors that are associated with overhead. The controller

for Velman constructed a multiple regression equation using the following independent variables:

direct labor hours, number of setups, and number of purchase orders. The analysis was run using

the past 60 months of data. From the printout, the following data were obtained:

Parameter Estimate

Intercept 2,130

Direct labor hours (H) 17

Number of setups (S) 810

Number of purchase orders (P) 26

Number of observations (n) 60

r2 = 0.95

REQUIRED:

1. Write out the cost formula for monthly overhead for Velman Company.

2. If Velman budgets the following for next month, what is the budgeted overhead cost?

Direct labor hours 600

Number of setups 50

Number of purchase orders 120

3. Suppose that Velman’s engineers found a way to reduce the number of setups by 50

percent. How much would be saved in overhead cost for the following month?

XII. The chief statistician of Aloha Company has developed the following cost formula:

Y = P50,000 + 2L + 3M

L = labor hours

M = machine hours

The measure of goodness of fit is good and no evidence of multicolinearity exists. The company will

use 10,000 labor hours and 3,000 machine hours next month.

REQUIRED:

1. Determine the total manufacturing overhead costs that Aloha should incur next month.

2. Aloha makes a product that has P6.00 in material costs. It requires two hours of labor time

and 30 minutes of machine time. Laborers earn P10 per hour. What is the product’s per unit

variable manufacturing cost?

3. Suppose that Aloha could reduce the labor time for the product described in requirement 2

by 30 minutes, to 1.50 hours. Machine time will remain the same. By how much would the

per unit variable manufacturing cost fall?

XIII. M. Munda Company produces and sells rattan baskets. The number of units produced and the

corresponding total production costs for six months, which are representatives for the year, are as

follows:

April 500 P4,000

May 700 8,000

June 900 6,000

July 600 7,500

August 800 8,500

September 550 7,250

a. is linear

b. is curvilinear

c. is parabolic

d. must be tested for minimum and maximum points

13b.Using the least squares method, the variable production cost per unit is approximately

a. P5

b. P10

c. P0,27

d. P3.74

13c.Using the least squares method, the monthly fixed production cost is approximately

a. P1,500

b. P18,000

c. P4,350

d. P52,200

13d. If the high-low points method is used, the results when compared with those under the

method of least squares, are

a. Equal Equal

b. Higher by P1.26 Lower by P2,850

c. Lower by P1.26 Higher by P2,850

d. Higher by P5 Lower by P1,500

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