Muffler Incorporated produces floor mats for cars and trucks. The owner, Kenneth M asked you to assist him in estimating his maintenance costs. Together, Mr. Muffler an determined that the single best cost driver for maintenance costs was machine hour are data from the previous fiscal year for maintenance expense and machine hours: Maintenance Machine Month Expense Hours 1 $ 3,360 2,320 3,550 2,420 3 3,730 2,520 4 3,860 2,550 5 3.860 2.400

Muffler Incorporated produces floor mats for cars and trucks. The owner, Kenneth M asked you to assist him in estimating his maintenance costs. Together, Mr. Muffler an determined that the single best cost driver for maintenance costs was machine hour are data from the previous fiscal year for maintenance expense and machine hours: Maintenance Machine Month Expense Hours 1 $ 3,360 2,320 3,550 2,420 3 3,730 2,520 4 3,860 2,550 5 3.860 2.400

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 10E: SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that...

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Ethan Manufacturing Incorporated produces floor mats for automobiles. The owner, Joseph Ethan, has asked you to assist in estimating maintenance costs. Together, you and Joseph determine that the single best cost driver for maintenance costs is machine hours. These data are from the previous fiscal year for maintenance costs and machine hours: 1. What is the cost equation for maintenance costs using the high-low method? 2. Calculate the mean absolute percentage error (MAPE) for the cost equation you developed in requirement 1. Month Maintenance Costs Machine Hours 1 $ 2,660 1,750 2 2,820 1,830 3 2,970 1,910 4 3,080 1,930 5 3,160 1,960 6 3,130 1,940 7 3,070 1,920 8 2,910 1,900 9 2,680 1,760 10 2,280 1,160 11 2,290 1,360 12 2,510 1,650
Hicks Contracting collects and analyzes cost data in order to track the cost of installing decks on new home construction jobs. The following are some of the costs that they incur. Classify these costs as fixed or variable costs and as product or period costs. Lumber used to construct decks ($12.00 per square foot) Carpenter labor used to construct decks ($10 per hour) Construction supervisor salary ($45,000 per year) Depreciation on tools and equipment ($6,000 per year) Selling and administrative expenses ($35,000 per year) Rent on corporate office space ($34,000 per year) Nails, glue, and other materials required to construct deck (varies per job)
The controller of the Blade Company wants you to estimate a cost function from the following two observations in a general ledger account called Maintenance: (Click to view the information.) Required 1. Estimate the cost function for maintenance. 2. Can the constant in the cost function be used as an estimate of fixed maintenance cost per month? Explain. Requirement 1. Estimate the cost function for maintenance. (Round your answers to the nearest cent as needed.) Maintenance costs = Maintenance costs = +( +( X X Requirement 2. Can the constant in the cost function be used as an estimate of fixed maintenance cost per month? Explain. the relevant range, not at cost levels the relevant range. If there are no months with zero The cost function in requirement 1 is an estimate of how costs behave machine-hours represented in the maintenance account, data in that account function provides the best available starting point for a straight line that approximates how a cost behaves be used to…
Hicks Contracting collects and analyzes cost data in order to track the cost of installing decks on new home construction jobs. The following are some of the costs that they incur. Classify these costs as fixed or variable costs and as product or period costs. A. Lumber used to construct decks ($12.00 per square foot) B. Carpenter labor used to construct decks ($10 per hour) C. Construction supervisor salary ($45,000 per year) D. Depreciation on tools and equipment ($6,000 per year) E. Selling and administrative expenses ($35,000 per year) F. Rent on corporate office space ($34,000 per year) G. Nails, glue, and other materials required to construct deck (varies per job)
Chips Co., maker of computers, incurred the following cost during the year. Is the following cost item a fixed or variable cost? Advertising in a newspaper monthly Variable O Fixed
Smithson Electric provides residential and business electric... [The following information applies to the questions displayed below.] Smithson Electric provides residential and business electric repair services. While direct labor and materials costs are traced to individual customers, administrative labor and transportation costs are considered overhead and applied as a percentage of direct labor costs. At the beginning of the year, Smithson estimates $10,000 of overhead costs and $50,000 of direct labor costs. Actual costs for the year are $12,000 for overhead and $48,000 for direct labor. Ending balances for WIP Inventory, Finished Goods Inventory, and Cost of Goods Sold are $4,000, $15,000, and $141,000 respectively. PR 4-5 (Static) Questions a-c. Answer the following questions based on the details provided. Question a. What is Smithson's predetermined overhead rate as a percentage of direct labor? Note: Round your answer to the nearest percent. b. The Jackson account accumulated…
The following selected information was extracted from the 20x1 accounting records of Lone Oak Products: Required:1. Calculate Lone Oak’s manufacturing overhead for the year.2. Calculate Lone Oak’s cost of goods manufactured.3. Compute the company’s cost of goods sold.4. Determine net income for 20x1, assuming a 30% income tax rate.5. Determine the number of completed units manufactured during the year.6. Build a spreadsheet: Construct an Excel spreadsheet to solve all of the preceding requirements. Show how the solution will change if the following data change: indirect labor is $115,000 and other factory costs amount to $516,000.
Presented below are Carla Vista Company's monthly manufacturing cost data related to its personal computer products. (Assume that all raw materials used were direct materials.) (a) (b) (c) (d) Wages for assembly line workers (a) (b) Taxes on factory building Raw materials transferred to production Depreciation on manufacturing equip. (c) (d) Enter each cost item in the following table, placing an "X" under the appropriate headings. Direct Materials $967,600 X 77,880 247,800 401,200 Product Costs Direct Labor X Manufacturing Overhead X X
The following account balances are from Woods Corporation accounting records for theyear ended December 31, 2008.Required:1. A schedule for factory/manufacturing overhead costs2. A schedule of the Cost of goods manufactured3. Determine the prime cost & conversion costs4. An Income Statement5. What is the unit cost of Woods corporation if they produced 20,000 pieces of furniture were produced?6. How does the format of the income statement for a manufacturing concern differ from the income statement of a merchandising business? Advertising expense $ 85,000Amortization expense – Patents 16,000Special Design Cost 10,000Bad Debts expense 28,000Depreciation expense – Office equipment 37,000Depreciation expense – Factory Building 133,000Depreciation expense – Factory equipment 78,000Direct Labour 250,000Factory insurance expired 62,000Factory supervision 74,000Factory supplies used 21,000Factory Utilities 115,000Finished goods inventory, Jan 1 2008 15,000Finished goods inventory, Dec 31…
3. Amy Company makes calculators. During the most recent accounting period, Amy paid $3,000 for raw materials, $5,000 for labor, and $2,000 for overhead costs that were incurred to make calculators. Amy started and completed 10,000 calculators, of which 6,000 were sold. Based on this information, how much expense would Amy recognize on the income statement?
A. If overhead for the year was $205,000, what were the profits of the residential and commercial services using labor-hours as the allocation base? B. Overhead consists of costs of traveling to the site, using equipment (including vehicle rental), and using supplies, which can be traced as follows.
Cover-to-Cover Company is a manufacturer of shelving for books. The company has compiled the following cost data, and wants your help in determining the cost behavior. After reviewing the data, complete requirements (1) and (2) that follow. UnitsProduced TotalLumberCost TotalUtilitiesCost Total MachineDepreciationCost 12,000 shelves $144,000 $14,800 $130,000 24,000 shelves 288,000 28,600 130,000 48,000 shelves 576,000 56,200 130,000 60,000 shelves 720,000 70,000 130,000 1. Determine whether the costs in the table are variable, fixed, mixed, or none of these. Lumber Variable Cost Utilities Mixed Cost Depreciation Fixed Cost 2. For each cost, determine the fixed portion of the cost, and the per-unit variable cost. If there is no amount or an amount is zero, enter "0". Recall that, for N = Number of Units Produced, Total Costs = (Variable Cost Per Unit x N) + Fixed Cost. Complete the following table with your answers. Round…