ACC569 chapter 11 answers

# ACC569 chapter 11 answers - 11.21(10 min Cost-behavior...

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11.21 (10 min) Cost-behavior patterns a. Semivariable b. Step c. Variable d. Fixed 11.22 (10 min) Cost-behavior patterns a. Semivariable cost--Graph # 1. b. Step cost--Graph # 3. c. Variable cost--Graph # 4. d. Fixed cost--Graph # 2. 11.23 (30 min) Learning curves a. Cumulative Number of Average Cost Total Units Produced per Unit Costs 1 \$ 400,000.00 \$ 400,000 2 300,000.00 600,000 4 225,000.00 (\$300,000 x 75%) 900,000 8 168,750.00 (\$225,000 x 75%) 1,350,000 16 126,562.50 (\$168,750 x 75%) 2,025,000 b. Both orders meet General Electric’s margin requirement. The order of 8 units would generate a margin of

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\$1,150,000 (= \$2,500,000 - \$1,350,000) which is 46% of the sales price. (46% = \$1,150,000/\$2,500,000) The order of 16 units would generate a margin of \$1,975,000 (= \$4,000,000 - \$2,025,000) which is 49.375% of the sales price. (49.375% = \$1,975,000/\$4,000,000)
11.24 (20 min) Learning curves a. Cumulative Number of Average Time Total Statements Proofread per Statement Time 1 30.000 hours 30.000 hours 2 24.000 48.000 4 19.200 (24 hours x 80%) 76.800 8 15.360 (19.2 hours x 80%) 122.880 16 12.288 (15.36 hours x 80%) 196.608 b. At \$30 per hour, it will cost \$3,686 (= \$30 x 122.880 hours) to proofread 8 statements. 11.25 (20 min) Learning curves a. Cumulative Number of Average Time Total Units Produced per Unit Time 1 8.000 minutes 8.000 minutes 2 6.000 12.000 4 4.500 (6 minutes x 75%) 18.000 8 3.375 (4.5 minutes x 75%) 27.000 16 2.531 (3.375 minutes x 75%) 40.496 b. At \$12 per hour, it will cost \$324 (= \$12 x 27) for Scoop to produce 8 units.

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11.26 (10 min) Simple regression Insert 500 machine hours into the equation to get an estimate of the total cost of maintenance: C = \$6,000 + (\$5.25 x 500) = \$8,625 11.27 (10 min) Simple regression Insert 1,000 tax returns into the equation to get an estimate of the total costs for an office that prepares 1,000 tax returns: C = \$112,000 + (\$154 x 1,000 ) = \$266,000 11.28 (20 min) Simple regression a. Estimated total costs for a month in which 3,000 meals are sold: Total costs = \$2,619 + (\$2.77 x 3,000) = \$10,929 b. Estimated fixed costs = the intercept of the equation = \$2,619 c. Estimated total variable costs for a month in which 3,000 meals are sold: Total variable costs = \$2.77 x 3,000 = \$8,310 d. 7,000 meals is outside of the range of observations used to construct the cost function (that is, outside of the relevant range). Therefore, the cost function is likely to be invalid or at least will have to be modified. For example, at 7,000 meals, CC Catering may have to rent additional space and
acquire additional equipment, which would step up its fixed costs.

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11.29 (20 min) Simple regression a. Estimated total costs for a month in which 2,200 meals are sold: Total costs = \$2,619 + (\$2.77 x 2,200) = \$8,713 b. Estimated fixed costs = the intercept of the equation = \$2,619 c. Estimated total variable costs for a month in which 2,200 meals are sold: Total variable costs = \$2.77 x 2,200 = \$6,094 d. 400 meals is outside of the range of observations used to
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## This note was uploaded on 12/29/2009 for the course ACC569 ACC569 taught by Professor Alicebergmann during the Spring '08 term at University of Phoenix.

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ACC569 chapter 11 answers - 11.21(10 min Cost-behavior...

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