Marshall Co. produced a pilot run of fifty units of a recently developed piston used in one of its products. Marshall expected to produce and sell 1,950 units annually. The pilot run required an average of .55 direct labor hours per piston for 50 pistons. Marshall experienced an eighty percent learning curve on the direct labor hours needed to produce new pistons. Past experience indicated that learning tends to cease by the time 800 pistons are produced. Marshall's manufacturing costs for pistons are presented below. $\begin{array}{lc} \text { Direct labor } & \$ 14.00 \text { per direct labor hour } \\ \text { Variable overhead } & 12.00 \text { per direct labor hour } \\ \text { Fixed overhead } & 20.00 \text { per direct labor hour } \\ \text { Materials } & 5.00 \text { per unit } \end{array}$Marshall received a quote of $9 per unit from Kytel Machine Co. for the additional 1,900 needed pistons. Marshall frequently subcontracts this type of work and has always been satisfied with the quality of the units produced by Kytel. If the pistons are manufactured by Marshall Co., the average direct labor hours per unit for the first 800 pistons (including the pilot run) produced is calculated to be (use five decimal places in calculating the average time):

A) 0.20926. B) 0.21408. C) 0.22528. D) 0.23056. E) 0.24797. A) 0.20926. B) 0.21408. C) 0.22528. D) 0.23056. E) 0.24797.

Maintenance expenses of a company are to be analyzed for purposes of constructing a flexible budget. Examination of past records disclosed the following costs and volume measures:$\begin{array}{lrr} & \text { Highest } & \text { Lowest } \\ \text { Cost per month } & \$ 86,000 & \$ 74,000 \\ \text { Machine hours } & 96,000 & 66,000 \end{array}$Using the high-low-point method of analysis, the estimated variable cost per machine hour is:

A) $0.40 B) $0.20 C) $0.90 D) $0.10 E) $0.70 A) $0.40 B) $0.20 C) $0.90 D) $0.10 E) $0.70

Maintenance expenses of a company are to be analyzed for purposes of constructing a flexible budget. Examination of past records disclosed the following costs and volume measures:$\begin{array}{lrr} & \text { Highest } & \text { Lowest } \\ \text { Cost per month } & \$ 42,000 & \$ 34,000 \\ \text { Machine hours } & 46,000 & 30,000 \end{array}$Using the high-low technique, estimate the annual fixed cost for maintenance expenditures:

A) $447,000. B) $240,000. C) $230,000. D) $384,000. E) $228,000. A) $447,000. B) $240,000. C) $230,000. D) $384,000. E) $228,000.

Exam 8: Cost Estimation

Place the six cost estimation steps into the correct order: 1. Determine the cost drivers 2. Graph the data 3. Select and employ the appropriate estimation method 4. Define the cost object for which the related costs are to be estimated 5. Evaluate the accuracy of the cost estimate 6. Collect consistent and accurate data on the cost object and the cost drivers

(Multiple Choice)

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Question 21

Andrews & Henderson Inc.is a manufacturer of mining equipment in Colorado.Eric Andrews, the founder of the corporation, has just won a new contract from Shakley Inc.to build seven new tunneling machines for a price of $500,000 each.The machines are to be delivered in the next seven months.The costs associated with the production of the first machine are listed below.Eric estimates that an 85% cumulative average learning rate exists for these types of projects. Following is the cost information for the first tunneling machine: Required: (1) Prepare an estimate of the total hours for producing the second through eighth machines. (2) Determine the expected profit from this project.

(Essay)

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Question 22

Which of the following is the percentage by which average time (or total time) falls from previous levels as output doubles?

(Multiple Choice)

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Question 23

Marshall Co. produced a pilot run of fifty units of a recently developed piston used in one of its products. Marshall expected to produce and sell 1,950 units annually. The pilot run required an average of .55 direct labor hours per piston for 50 pistons. Marshall experienced an eighty percent learning curve on the direct labor hours needed to produce new pistons. Past experience indicated that learning tends to cease by the time 800 pistons are produced. Marshall's manufacturing costs for pistons are presented below. Direct labor \ 14.00 per direct labor hour Variable overhead 12.00 per direct labor hour Fixed overhead 20.00 per direct labor hour Materials 5.00 per unit Marshall received a quote of $9 per unit from Kytel Machine Co. for the additional 1,900 needed pistons. Marshall frequently subcontracts this type of work and has always been satisfied with the quality of the units produced by Kytel. If the pistons are manufactured by Marshall Co., the average direct labor hours per unit for the first 800 pistons (including the pilot run) produced is calculated to be (use five decimal places in calculating the average time):

(Multiple Choice)

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Question 24

Midgett Co. has accumulated data to use in preparing its annual profit plan for the upcoming year. The cost behavior pattern of the maintenance costs must be determined. The accounting staff suggested that linear regression be employed to derive an equation for maintenance hours and costs. Data regarding the maintenance hours and costs for the last year and the results of the regression analysis are as follows:Average cost per hour ($51,840/6,270) = $8.27 (rounded to the nearest cent) r = 0.99821 r² = 0.99780 The percent of the total variance that can be explained by the regression equation is:

(Multiple Choice)

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Question 25

Moss Point Manufacturing recently completed and sold an order of 50 units that had the following costs: ^* Applied on the basis of direct labor hours The company has now been requested to prepare a bid for 150 units of the same product. Required: If an 80 percent learning curve is applicable, estimate Moss Point's total cost on this order.

(Essay)

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Question 26

Cost estimation includes all of the following steps except:

(Multiple Choice)

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Question 27

Midgett Co. has accumulated data to use in preparing its annual profit plan for the upcoming year. The cost behavior pattern of the maintenance costs must be determined. The accounting staff suggested that linear regression be employed to derive an equation for maintenance hours and costs. Data regarding the maintenance hours and costs for the last year and the results of the regression analysis are as follows:Average cost per hour ($51,840/6,270) = $8.27 (rounded to the nearest cent) r = 0.99743 r² = 0.99487 Using the high-low method, unit variable cost is calculated to be (round to the nearest cent):

(Multiple Choice)

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Question 28

Armer Company is accumulating data to use in preparing its annual profit plan for the coming year. The cost behavior pattern of the maintenance costs must be determined. The accounting staff has suggested the use of linear regression to derive an equation for maintenance hours and costs. Data regarding the maintenance hours and costs for the last year and the results of the regression analysis follow: If Armer Company uses the high-low method of analysis, the equation for the relationship between hours of activity and maintenance cost follows:

(Multiple Choice)

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Question 29

Burmer Co. has accumulated data to use in preparing its annual profit plan for the upcoming year. The cost behavior pattern of the maintenance costs must be determined. Data regarding the machine hours and maintenance costs for the last year and the results of the regression analysis are as follows:A staff assistant has run regression analyses on the data and obtained the following output using Excel: REGRESSION ANALYSIS Y (Dependent) Variable: Maintenance Cost X (Independent) Variable: Maintenance Hours The p-value is a measure of:

(Multiple Choice)

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Question 30

Burmer Co. has accumulated data to use in preparing its annual profit plan for the upcoming year. The cost behavior pattern of the maintenance costs must be determined. Data regarding the machine hours and maintenance costs for the last year and the results of the regression analysis are as follows:A staff assistant has run regression analyses on the data and obtained the following output using Excel: REGRESSION ANALYSIS Y (Dependent) Variable: Maintenance Cost X (Independent) Variable: Maintenance HoursThe 95% confidence range for a prediction of monthly manufacturing cost using the model is:

(Multiple Choice)

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Question 31

Green Mountain College is a 5,000 student state-supported, four-year institution located in the mid-South. Physical facilities can accommodate another 1,000 students, and the college administration is attempting to estimate the added yearly cost of educating the additional students. The Business Manager of Green Mountain College has asked you to evaluate two linear regressions given below, and recommend the better one to her.Where: SC = Student cost CH = Cost per credit hour IS = Incremental cost per student Required: (1) Explain your choice of cost function (regression 1 or regression 2) for predicting added student educational costs per year. (2) What information value does the standard error of estimate (SE) have in this situation?

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Question 32

A p-value of less than ________ is typically considered statistically significant.

(Multiple Choice)

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Question 33

Maintenance expenses of a company are to be analyzed for purposes of constructing a flexible budget. Examination of past records disclosed the following costs and volume measures: Highest Lowest Cost per month \ 86,000 \ 74,000 Machine hours 96,000 66,000 Using the high-low-point method of analysis, the estimated variable cost per machine hour is:

(Multiple Choice)

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Question 34

Midgett Co. has accumulated data to use in preparing its annual profit plan for the upcoming year. The cost behavior pattern of the maintenance costs must be determined. The accounting staff suggested that linear regression be employed to derive an equation for maintenance hours and costs. Data regarding the maintenance hours and costs for the last year and the results of the regression analysis are as follows:Average cost per hour ($51,840/6,270) = $8.27 (rounded to the nearest cent) r = 0.99821 r²= 0.99780 Using the high-low method, total maintenance cost for 600 hours is calculated to be (round to the nearest dollar):

(Multiple Choice)

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Question 35

Which of the following is not usually influenced by learning curve analysis?

(Multiple Choice)

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Question 36

Which of the following means that two or more independent variables are highly correlated with each other?

(Multiple Choice)

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Question 37

Audio Zone Co. needs to prepare pro forma financial statements for the next fiscal year. To do so, the company must forecast its total overhead cost. The actual machine hours and total overhead cost are presented below for the past six months.Using the high-low method, unit variable overhead cost is calculated to be:

(Multiple Choice)

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Question 38

Maintenance expenses of a company are to be analyzed for purposes of constructing a flexible budget. Examination of past records disclosed the following costs and volume measures: Highest Lowest Cost per month \ 42,000 \ 34,000 Machine hours 46,000 30,000 Using the high-low technique, estimate the annual fixed cost for maintenance expenditures:

(Multiple Choice)

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Question 39

An R-squared value that approaches one (1.0) would indicate:

(Multiple Choice)

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Question 40

Showing 21 - 40 of 120

Which of the following is the percentage by which average time (or total time) falls from previous levels as output doubles?

Cost estimation includes all of the following steps except:

A p-value of less than ________ is typically considered statistically significant.

Which of the following is not usually influenced by learning curve analysis?

Which of the following means that two or more independent variables are highly correlated with each other?

An R-squared value that approaches one (1.0) would indicate:

Cost Management and Strategy

Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Job Costing

Activity-Based Costing and Customer Profitability Analysis

Process Costing

Cost Allocation: Departments, Joint Products, and By-Products

Short-Term Profit Planning: Cost-Volume-Profit CVP Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

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