Chap5_homework
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Chap5_homework

Course Number: ACCT 116B 00138, Fall 2009

College/University: Mesa CC

Word Count: 1665

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Homework Manager - 116B Managerial Accounting OLFA09 - Seymour http://mh10.brownstone.net/modules/unproctoredTest.Print Online Homework System Name: Class #: ____________________________ Class: Section #: 116B Managerial Accounting OLFA09 - Seymour Assignment Worksheet 9/21/09 - 3:22 PM ____________________________ Assignment: Chapter 5 Homework due 9/27 ____________________________ Instructor: Walt Seymour...

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Manager Homework - 116B Managerial Accounting OLFA09 - Seymour http://mh10.brownstone.net/modules/unproctoredTest.Print Online Homework System Name: Class #: ____________________________ Class: Section #: 116B Managerial Accounting OLFA09 - Seymour Assignment Worksheet 9/21/09 - 3:22 PM ____________________________ Assignment: Chapter 5 Homework due 9/27 ____________________________ Instructor: Walt Seymour Question 1: (2 points) Exercise 5-3 High-Low Method [LO3] The Edelweiss Hotel in Vail, Colorado, has accumulated records of the total electrical costs of the hotel and the number of occupancy-days over the last year. An occupancy-day represents a room rented out for one day. The hotel's business is highly seasonal, with peaks occurring during the ski season and in the summer. OccupancyDays 2,610 2,865 3,520 1,432 520 1,115 3,164 3,719 1,291 319 1,082 2,033 Electrical Costs $ 6,254 $ 6,566 $ 7,101 $ 4,024 $ 2,277 $ 3,598 $ 7,261 $ 8,088 $ 3,700 $ 1,730 $ 3,321 $ 5,199 Month January February March April May June July August September October November December Requirement 1: Using the high-low method, estimate the variable cost of electricity per occupancy-day and the fixed cost of electricity per month. (Round the fixed cost to the nearest whole dollar and the variable cost to the nearest whole cent. Omit the "$" sign in your response.) Variable cost Fixed cost $ ____________ per occupancy day $ ____________ per month Requirement 2: Which of the following statement(s) is true? (Select all that apply.) (a) Less systematic factors such as frugality of individual guests may also affect electrical costs (b) Electrical cost may reflect seasonal factors other than just the variation in occupancy days (c) Fixed cost will not be affected by the number of days in a month 1 of 9 9/21/2009 12:32 PM Homework Manager - 116B Managerial Accounting OLFA09 - Seymour http://mh10.brownstone.net/modules/unproctoredTest.Print Question 2: (2 points) Exercise 5-4 Contribution Format Income Statement [LO4] Haaki Shop, Inc., is a large retailer of water sports equipment. An income statement for the company's surfboard department for a recent quarter is presented below: The Haaki Shop, Inc. Income StatementSurfboard Department For the Quarter Ended May 31 Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses. Net operating income $ 250,000 166,000 416,000 $ 116,950 $ 829,730 296,780 532,950 The surfboards sell, on the average, for $397 each. The department's variable selling expenses are $55 per surfboard sold. The remaining selling expenses are fixed. The administrative expenses are 30% variable and 70% fixed. The company purchases its surfboards from a supplier at a cost of $142 per surfboard. Requirement 1: Prepare an income statement for the quarter using the contribution approach. (Omit the "$" sign in your response.) The Haaki Shop, Inc Income StatementSurfboard Department For the Quarter Ended May 31 __________ Variable expenses: __________ __________ __________ __________ Fixed expenses: $ ____________ ____________ ____________ ____________ ____________ $ ____________ 2 of 9 9/21/2009 12:32 PM Homework Manager - 116B Managerial Accounting OLFA09 - Seymour http://mh10.brownstone.net/modules/unproctoredTest.Print __________ __________ __________ ____________ ____________ ____________ $ ____________ Requirement 2: What was the contribution toward fixed expenses and profits from each surfboard sold during the quarter? (State this figure in a single dollar amount per surfboard.) (Round your answer to the nearest dollar amount. Omit the "$" sign in your response.) Contribution margin per surfboard $ ____________ Question 3: (2 points) Exercise 5-5 (Appendix 5A) Least-Squares Regression [LO5] EZ Rental Car offers rental cars in an off-airport location near a major tourist destination in Florida. Management would like to better understand the behavior of the company's costs. One of those costs is the cost of washing cars. The company operates its own car wash facility in which each rental car that is returned is thoroughly cleaned before being released for rental to another customer. Management believes that the costs of operating the car wash should be related to the number of rental returns. Accordingly, the following data have been compiled: Rental Returns 2,192 2,335 2,523 2,756 3,422 4,743 5,314 5,150 4,510 3,602 1,988 2,377 Car Wash Costs $ 9,713 $ 12,291 $ 10,505 $ 12,549 $ 14,934 $ 21,055 $ 20,870 $ 19,630 $ 21,560 $ 18,083 $ 9,530 $ 10,781 Month January February March April May June July August September October November December 3 of 9 9/21/2009 12:32 PM Homework Manager - 116B Managerial Accounting OLFA09 - Seymour http://mh10.brownstone.net/modules/unproctoredTest.Print Required: Using least-squares regression, estimate the fixed cost and variable cost elements of monthly car wash costs. (Round fixed cost to the nearest dollar amount and the variable cost element to 2 decimal places. Omit the "$" sign in your response.) Fixed cost Variable cost $ ____________ $ ____________ Question 4: (2 points) Exercise 5-6 Cost Behavior; Contribution Format Income Statement [LO1, LO4] Parker Company manufactures and sells a single product. Requirement 1: A partially completed schedule of the company's total and per unit costs over a relevant range of 53,000 to 93,000 units produced and sold each year is given. Complete the schedule of the company's total and unit costs below. (Round the "total costs" to the nearest dollar amount and the "cost per unit" to 2 decimal places. Omit the "$" sign in your response.) Units produced and sold 53,000 Total costs: Variable costs Fixed costs Total costs Cost per unit: Variable cost Fixed cost Total cost per unit $ ____________ ____________ $ ____________ $ ____________ ____________ $ ____________ $ ____________ ____________ $ ____________ $ $ 190,800 440,000 630,800 $ ____________ ____________ $ ____________ $ ____________ ____________ $ ____________ 73,000 93,000 Requirement 2: Assume that the company produces and sells 83,000 units during the year at the selling price of $8.5 per unit. Prepare a contribution format income statement for the year. (Input all amounts as positive Omit values. the "$" sign in your response.) Income Statement For the Year Ended 4 of 9 9/21/2009 12:32 PM Homework Manager - 116B Managerial Accounting OLFA09 - Seymour http://mh10.brownstone.net/modules/unproctoredTest.Print __________ __________ __________ __________ __________ $ ____________ ____________ ____________ ____________ $ ____________ Question 5: (2 points) Exercise 5-12 High-Low Method; Predicting Cost [LO1, LO3] Resort Inns, Inc., has a total of 2,000 rooms in its nationwide chain of motels. On average, 72% of the rooms are occupied each day. The company's operating costs are $21.20 per occupied room per day at this occupancy level, assuming a 30-day month. This $21.20 figure contains both variable and fixed cost elements. During October, the occupancy rate dropped to only 43%. A total of $828,840 in operating cost was incurred during October. Requirement 1: Estimate the variable cost per occupied room per day. (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Variable cost per day $ ____________ Requirement 2: Estimate the total fixed operating costs per month. (Omit the "$" sign in your response.) Total fixed operating cost $ ____________ Requirement 3: Assume that the occupancy rate increases to 55% during November. What total operating costs would you expect the company to incur during November? (Omit the "$" sign in your response.) Fixed costs Variable costs Total expected costs $ ____________ ____________ $ ____________ 5 of 9 9/21/2009 12:32 PM Homework Manager - 116B Managerial Accounting OLFA09 - Seymour http://mh10.brownstone.net/modules/unproctoredTest.Print Question 6: (4 points) Problem 5-17 Identifying Cost Behavior Patterns [L01] A number of graphs displaying cost behavior patterns are shown below. The vertical axis on each graph represents total cost and the horizontal axis represents the level of activity (volume). Requirement 1: For each of the following situations, identify the graph that illustrates the cost behavior pattern involved. Any graph may be used more than once. a. Electricity billa flat fixed charge, plus a variable cost after a certain number of kilowatt-hours are used. b. City water bill, which is computed as follows: First 1,000,000 gallons or less Next 10,000 gallons Next 10,000 gallons $ 1,000 flat fee $ 0.003 per gallon used $ 0.006 per gallon used 6 of 9 9/21/2009 12:32 PM Homework Manager - 116B Managerial Accounting OLFA09 - Seymour http://mh10.brownstone.net/modules/unproctoredTest.Print Next 10,000 gallons Etc. $ 0.009 per gallon used Etc. c. Depreciation of equipment, where the amount is computed by the straight-line method. When the depreciation rate was established, it was anticipated that the obsolescence factor would be greater than the wear and tear factor. d. Rent on a factory building donated by the city, where the agreement calls for a fixed fee payment unless 200,000 labor-hours or more are worked, in which case no rent need be paid. e. Cost of raw materials, where the cost starts at $7.50 per unit and then decreases by 5 cents per unit for each of the first 100 units purchased, after which it remains constant at $2.50 per unit. f. Salaries of maintenance workers, where one maintenance worker is needed for every 1,000 hours of machine-hours or less (that is, 0 to 1,000 hours requires one maintenance worker, 1,001 to 2,000 hours requires two maintenance workers, etc.). g. Cost of raw material used. h. Rent on a factory building donated by the county, where the agreement calls for rent of $100,000 less $1 for each direct labor-hour worked in excess of 200,000 hours, but a minimum rental payment of $20,000 must be paid. i. Use of a machine under a lease, where a minimum charge of $1,000 is paid for up to 400 hours of machine time. After 400 hours of machine time, an additional charge of $2 per hour is paid up to a maximum charge of $2,000 per period. Situation a. b. c. d. e. f. g. h. i. Graph __________ __________ __________ __________ __________ __________ __________ __________ __________ Requirement 2: Does a knowledge of cost behavior patterns such as those above be of help to a manager in analyzing the cost structure of his or her company? (a) Yes (b) No 7 of 9 9/21/2009 12:32 PM Homework Manager - 116B Managerial Accounting OLFA09 - Seymour http://mh10.brownstone.net/modules/unproctoredTest.Print Question 7: (4 points) Problem 5-19 (Appendix 5A) Least-Squares Regression Method [LO5] Sebolt Wire Company heats copper ingots to very high temperatures by placing the ingots in a large heat coil. The heated ingots are then run through a shaping machine that shapes the soft ingot into wire. Due to the long heat-up time, the coil is never turned off. When an ingot is placed in the coil, the temperature is raised to an even higher level, and then the coil is allowed to drop to the "waiting" temperature between ingots. Management needs to know the variable cost of power involved in heating an ingot and the fixed cost of power during "waiting" periods. The following data on ingots processed and power costs are available: Month January February March April May June July August September October Ingots 160 140 130 150 180 170 120 110 100 90 Power Cost $ 6,800 $ 5,600 $ 5,500 $ 6,500 $ 6,700 $ 6,300 $ 5,400 $ 4,400 $ 4,600 $ 3,700 Requirement 1: Using the least-squares regression method, estimate a cost formula for power cost, where "X" represents number of ingots processed. (Round the variable cost to the nearest cent and the fixed cost to the nearest dollar. Omit the "$" sign in your response.) Y = $ ____________ + $ ____________ X Requirement 2: Which of the following statements are correct: (Select all that apply.) (a) The least squares regression method is generally considered to be the most accurate method of cost analysis. (b) The high-low method is accurate only in those situations where the variable cost is truly constant, or where the high and the low points happen to fall on the correct regression line. (c) The quick-and-dirty scattergraph method is not imprecise. 8 of 9 9/21/2009 12:32 PM Homework Manager - 116B Managerial Accounting OLFA09 - Seymour http://mh10.brownstone.net/modules/unproctoredTest.Print 9 of 9 9/21/2009 12:32 PM

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