Question: Answer question M1-19, M2-13, E2-19 (part a only) and E2-21 from Chapter 2
You must submit your work in Excel for all number problems. Use Word for narrative questions. If you use a Mac program, please save your file in a Windows-compatible form before submission.
ON EXCEL - M1-19 from Chapter 1
M1-19. Classifying Cost Drivers
Classify each of the following as structural, organizational, or activity cost drivers.
a. Apple Inc. reorganizes production facilities from a layout in which all similar types of machines are grouped together to a layout in which a set of machines is designated for the production of a particular product and that set of machines is grouped together.
b. A cable television company decides to start offering telephone service.
c. IBM decides to stop making personal computers.
d. Canon decides to start making high-volume photocopy equipment to compete head-to-head with Xerox.
e. The number of meals a cafeteria serves.
f. The number of miles a taxi is driven.
g. A company eliminates the position of supervisor and has each work group elect a team leader.
h. Tesla empowers employees to halt production if a quality problem is identified.
i. The number of tons of grain a ship loads.
j. Northbrook Mall decides to build space for 80 additional store.
M2-13. Classifying Cost Behavior
For each of the following situations, select the most appropriate cost behavior pattern (as shown in the illustrations following this problem) where the lines represent the cost behavior pattern, the vertical axis represents costs, the horizontal axis represents total volume, and the dots represent actual costs. Each pattern may be used more than once.
a. Variable costs per unit
b. Total fixed costs
c. Total mixed costs
d. Average fixed costs per unit
e. Total current manufacturing costs
f. Average variable costs
g. Total costs when employees are paid $15 per hour for the first 40 hours worked each week and $20 for each additional hour
h. Total costs when employees are paid $15 per hour and guaranteed a minimum weekly wage of $300
i. Total costs per day when a consultant is paid $200 per hour with a maximum daily fee of $1,000.
j. Total variable costs
k. Total costs for salaries of social workers where each social worker can handle a maximum of 25 cases
l. A water bill where a flat fee of $800 is charged for the first 100,000 gallons and additional water costs $0.005 per gallon
m. Total variable costs properly used to estimate step costs
n. Total materials costs
o. Rent on exhibit space at a convention
E2-19. Scatter Diagrams and High-Low Cost Estimation
Assume the local Pearle Vision has the following information on the number of sales orders received and order-processing costs. (Please see attachment e2-19 to answer this)
|
Month
|
|
Sales Orders
|
Order Processing Costs
|
|
1
|
|
3,000
|
$ 82,700
|
|
2
|
|
1,500
|
50,375
|
|
3
|
|
4,400
|
120,700
|
|
4
|
|
2,800
|
81,900
|
|
5
|
|
2,300
|
69,775
|
|
6
|
|
1,200
|
43,100
|
|
7
|
|
2,000
|
62,500
|
Required: a. Use information from the high- and low-volume months to develop a cost-estimating equation for monthly order-processing costs.
E2-21. Cost Behavior Analysis in a Restaurant: High-Low Cost Estimation
Assume a Potbelly's restaurant has the following information available regarding costs at representative levels of monthly sales: (please see attachment e2-21 to answer this)
| |
Monthly sales in units |
| |
5,000 |
8,000 |
10,000 |
|
Cost of food sold
|
$10,000
|
$16,000
|
$20,000
|
|
Wages and fringe benefits
|
4,200
|
4,320
|
4,400
|
|
Fees paid delivery help
|
1,100
|
1,760
|
2,200
|
|
Rent on building
|
1,100
|
1,100
|
1,100
|
|
Depreciation on equipment
|
900
|
900
|
900
|
|
Utilities
|
800
|
920
|
1,000
|
|
Supplies (soap, floor wax, etc.)
|
250
|
340
|
400
|
|
Administrative costs
|
1,700
|
1,700
|
1,700
|
|
Total
|
$20,050
|
$27,040
|
$31,700
|
Required: a. Identify each cost as being variable, fixed, or mixed.
b. Use the high-low method to develop a schedule identifying the amount of each cost that is mixed or variable per unit. Total the amounts under each category to develop an equation for total monthly costs.
c. Predict total costs for a monthly sales volume of 9,800 units.