Managerial 13e Ch 10 HW - Cost Accounting 13 edition...

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Cost Accounting 13 edition CHAPTER 10 Activity Based Costing & Management 18, 21, 22, 24, 26, 31, 34, and 40 Not on My Accounting Lab Problem 29 was not included because you are not required to know how to calculate the learning curves. 10-18 Various cost-behavior patterns. 1. K 2. B 3. G 4. J Note that A is incorrect because, although the cost per pound eventually equals a constant at $9.20, the total dollars of cost increases linearly from that point onward. 5. I The total costs will be the same regardless of the volume level. 6. L 7. F This is a classic step-cost function. 8. K 9. C 10-21 Account analysis 1. The electricity cost is clearly variable since it entirely depends on number of kilowatt hours used. The Waste Management contract is a fixed amount if the cost object is not number of quarters, since it does not depend on amount of activity or output during the quarter. The telephone cost is a mixed cost because there is a fixed component and a component that depends on number of calls made. 2. The electricity rate is $573 ÷ 3000 kw hour = $0.191 per kw hour The waste management fixed cost is $270 for three months, or $90 (270 ÷ 3) per month. The telephone cost is $20 + ($0.03 per call 1,200 calls) = $56 Adding them together we get: Fixed cost of utilities = $90 (waste management) + $20 (telephone) = $110 = $146 + $764 + $36 = $910 10-1
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10-22 Account analysis method. 1. Manufacturing cost classification for 2009: Account Total Costs (1) % of Total Costs That is Variable (2) Variable Costs (3) = (1) × (2) Fixed Costs (4) = (1) – (3) Variable Cost per Unit (5) = (3) ÷ 75,000 Direct materials Direct manufacturing labor Power Supervision labor Materials-handling labor Maintenance labor Depreciation Rent, property taxes, admin $300,000 225,000 37,500 56,250 60,000 75,000 95,000 100,000 100% 100 100 20 50 40 0 0 $300,000 225,000 37,500 11,250 30,000 30,000 0 0 $ 0 0 0 45,000 30,000 45,000 95,000 100,000 $4.00 3.00 0.50 0.15 0.40 0.40 0 0 Total $948,750 $633,750 $315,000 $8.45 Total manufacturing cost for 2009 = $948,750 Variable costs in 2010: Account Unit Variable Cost per Unit for 2009 (6) Percentage Increase (7) Increase in Variable Cost per Unit (8) = (6) × (7) Variable Cost per Unit for 2010 (9) = (6) + (8) Total Variable Costs for 2010 (10) = (9) × 80,000 Direct materials Direct manufacturing labor Power Supervision labor Materials-handling labor Maintenance labor Depreciation Rent, property taxes, admin. $4.00 3.00 0.50 0.15 0.40 0.40 0 0 5% 10 0 0 0 0 0 0 $0.20 0.30 0 0 0 0 0 0 $4.20 3.30 0.50 0.15 0.40 0.40 0 0 $336,000 264,000 40,000 12,000 32,000 32,000 0 0 Total $8.45 $0.50 $8.95 $716,000 10-2
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Fixed and total costs in 2010: Account Fixed Costs for 2009 (11) Percentage Increase (12) Dollar Increase in Fixed Costs (13) = (11) × (12) Fixed Costs for 2010 (14) = (11) + (13) Variable Costs for 2010 (15) Total Costs (16) = (14) + (15) Direct materials Direct manufacturing labor Power Supervision labor Materials-handling labor Maintenance labor Depreciation Rent, property taxes, admin. $ 0 0 0 45,000 30,000 45,000 95,000 100,000 0% 0 0 0 0 0 5 7 $ 0 0 0 0 0 0 4,750 7,000 $ 0 0 0 45,000 30,000 45,000 99,750 107,000 $336,000 264,000 40,000 12,000 32,000 32,000 0 0 $ 336,000 264,000 40,000 57,000 62,000 77,000 99,750 107,000 Total $315,000 $11,750 $326,750 $716,000 $1,042,750 Total manufacturing costs for 2010 = $1,042,750 2. Total cost per unit, 2009 = = $12.65 Total cost per unit, 2010 = = $13.03 3. Cost classification into variable and fixed costs is based on qualitative, rather than quantitative, analysis. How good the classifications are depends on the knowledge of individual managers who classify the costs. Gower may want to undertake quantitative analysis of costs, using regression analysis on time-series or cross-sectional data to better estimate the fixed and variable components of costs. Better knowledge of fixed and variable costs will help Gower to
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