PracticeChapter03 - CHAPTER 3 32 1 2 3 4 5 6 7 8 Driver for...

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CHAPTER 3 3–2 1. Driver for overhead activity: Number of speakers 2. Total overhead cost = $350,000 + $2.20(70,000) = $504,000 3. Total fixed overhead cost = $350,000 4. Total variable overhead cost = $2.20(70,000) = $154,000 5. Unit cost = $504,000/70,000 = $7.20 per unit 6. Unit fixed cost = $350,000/70,000 = $5.00 per unit 7. Unit variable cost = $2.20 per unit 8. a. and b. 50,000 Units 100,000 Units Unit cost a $9.20 $5.70 Unit fixed cost b 7.00 3.50 Unit variable cost c 2.20 2.20 a [$350,000 + $2.20(50,000)]/50,000; [$350,000 + $2.20(100,000)]/100,000. b $350,000/50,000; $350,000/100,000. c Given in cost formula. 3–2 Concluded The unit cost increases in the first case and decreases in the second. This is because fixed costs are spread over fewer units in the first case and over more units in the second. The unit variable cost stays constant. 32
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3–6 1. Yes, there appears to be a linear relationship. 2. Low: 700, $2,628 High: 3,100, $6,564 V = ( Y 2 Y 1 )/( X 2 X 1 ) = ($6,564 – $2,628)/(3,100 – 700) = $3,936/2,400 = $1.64 per visit F = $6,564 – $1.64(3,100) = $1,480 OR F = $2,628 – $1.64(700) = $1,480 Y = $1,480 + $1.64 X 3. Y = $1,480 + $1.64(1,900) = $1,480 + $3,116 = $4,596 3–7 33 Scattergraph for Tanning Services 0 1,00 0 2,00 0 3,000 4,00 0 5,00 0 6,000 $7,000 0 1,00 0 2,00 0 3,00 0 4,00 0 Number of tanning visits Cos t
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1. Regression output from spreadsheet program: SUMMARY OUTPUT Regression Statistics
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