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14) Put the following steps in order for using the high-low method of estimating a cost function: A = Identify the cost function B = Calculate the constant C = Calculate the slope coefficient D = Identify the highest and lowest observed values A) D C A B B) C D A B C) A D C B D) D C B A 15) Regression analysis: A) is simple to compute B) measures the change in a dependent variable associated with one or more independent variables C) is mathematical so it does not require an understanding of operations D) uses […]

4) It can be inferred that when there is a high correlation between two variables, one is the cause of the other. 5) An example of a physical cause-and-effect relationship is when additional units of production increase total direct material costs. 6) Managers should use past data to create a cost function and then use the exact information provided by that cost function to create the budgetary forecast for the next year. 7) What are the two assumptions behind a simple linear cost function? Briefly explain the three ways that a linear cost function may behave? 1) The conference method […]

23) At the end of the fiscal year, the fixed overhead spending variance is always prorated among work-in-process control, finished goods control, and cost of goods sold on the basis of the fixed overhead allocated to these accounts. 24) Lungren has budgeted construction overhead for August of $260,000 for variable costs and $435,000 for fixed costs. Actual costs for the month totaled $275,000 for variable and $445,000 for fixed. Allocated fixed overhead totaled $440,000. The company tracks each item in an overhead control account before allocations are made to individual jobs. Spending variances for August were $10,000 unfavorable for variable […]

31) Everjoice Company makes clocks. The fixed overhead costs for 20X5 total $720,000. The company uses direct labor-hours for fixed overhead allocation and anticipates 240,000 hours during the year for 480,000 units. An equal number of units are budgeted for each month. During June, 42,000 clocks were produced and $63,000 were spent on fixed overhead. Required: a.Determine the fixed overhead rate for 20X5 based on units of input. b.Determine the fixed overhead static-budget variance for June. c.Determine the production-volume overhead variance for June. 32) Brown Company makes watches. The fixed overhead costs for 2011 total $324,000. The company uses direct […]

3) Fixed overhead costs must be unitized for: A) financial reporting purposes B) planning purposes C) calculating the production-volume variance D) Both A and C are correct. 4) Generally Accepted Accounting Principles require that unitized fixed manufacturing costs be used for: A) pricing decisions B) costing decisions C) external reporting D) All of these answers are correct. 5) A nonfinancial measure of performance evaluation is: A) increased sales B) reducing distribution costs C) energy used per machine-hour D) All of these answers are correct. 6) Variance information regarding nonmanufacturing costs can be used to: A) plan capacity in the service […]