Question

34. An activity analysis has shown that the number of components added to Product X and Product Y is the cost driver for support costs. Support costs are $15 per component. Product X has 5 components and Product Y has 7 components. What amounts of support costs should be assigned to Product X and Product Y?

               Product X                Product Y

A)                 $6.67                      $13.33

B)                  $40                         $40

C)                 $90                         $150

D)                 $75                         $105

35. To estimate the monthly maintenance cost for the maintenance department in a hospital, the following monthly costs are available:

Monthly Expense                                                                                   Costs

Supervisor Salary Expense                                                               $4,000

Depreciation Expense—Maintenance Equipment                    $6,000

Repairs Expense—Maintenance Equipment                              $4,000

Supplies Expense                                                                                 $8,000

Wages Expense—Maintenance Workers                                   $12,000

The Supervisor Salary Expense and the Depreciation Expense are fixed costs. The remaining expenses are variable costs. There are 2,000 patient days in a month, which is the cost driver for maintenance costs. Estimate the cost function where Y is the monthly maintenance cost and X is the variable cost per patient day.

A) Y = $10 + $12X

B) Y = $10,000 + $12X

C) Y = $8,000 + $24X

D) Y = $20,000 + $12,000X

36. When examining the output from regression analysis, the goodness of fit measure is labeled ________ by most computer programs.

A) X coefficient

B) constant

C) standard error of estimate

D) R2

37. Presented below is the production data for six months showing the mixed costs incurred by Curry Company.

Month                          Cost                     Units

July                            $5,890                     4,100

August                     $4,500                     3,125

September               $7,480                     6,300

October                    $9,000                     6,750

November               $9,750                     7,500

December                $7,336                     6,600

Curry Company uses the high-low method to analyze mixed costs. The cost function is ________ where Y= Total Cost and X= Number of units.

A) Y = $440 + $1.12X

B) Y = $300 + $1.16X

C) Y = $440 + $1.20X

D) Y = $750 + $1.20X

Answer 1

PART 1

An activity analysis has shown that the number of components added to Product X and Product Y is the cost driver for support costs. Support costs are $15 per component. Product X has 5 components and Product Y has 7 components. What amounts of support costs should be assigned to Product X and Product Y?

Cost Assigned to X =5 * $15=$75

Cost Assigned to Y =7 * $15=$105

X Y

Answer D)                 $75                         $105

Part 2

estimate the monthly maintenance cost for the maintenance department in a hospital, the following monthly costs are available:

Fixed Cost
Supervisor Salary Expense	4000
Depreciation Expense—Maintenance Equipment	6000
Fixed Cost	10000
Variable Cost
Repairs Expense—Maintenance Equipment	4000
Supplies Expense	8000
Wages Expense—Maintenance Workers	12000
Total Variable Expense	24000
Variable Cost Per Unit 24000/2000 =12 per Patient	12

Answer

B) Y = $10,000 + $12X

When examining the output from regression analysis, the goodness of fit measure is labeled ________ by most computer programs.

C) standard error of estimate

37. Presented below is the production data for six months showing the mixed costs incurred by Curry Company.

	High	Low	Change
Cost	9750	4500	$ 5,250.00
Units	7500	3125	4375

Variable Cost =5250/4375 =$1.2

9750 =7500*1.2 +Fixed Cost

Fixed Cost =750

D) Y = $750 + $1.20X