Consider the data in the table which applies to the provision of psychological testing services. Calculate the full absorption cost per unit (one unit = one test) if the number of tests is 400 per month. Sales per unit $320 Fixed costs (per month) Selling and administration 16,000 Production overhead 16,000 Variable costs (per test) Labor for oversight and feedback 140 Outsourced test analysis 22 Materials used in testing 7 Production overhead 15 Selling and administration 12

Consider the data in the table which applies to the provision of psychological testing services. Calculate the full absorption cost per unit (one unit = one test) if the number of tests is 400 per month. Sales per unit $320 Fixed costs (per month) Selling and administration 16,000 Production overhead 16,000 Variable costs (per test) Labor for oversight and feedback 140 Outsourced test analysis 22 Materials used in testing 7 Production overhead 15 Selling and administration 12

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 6PA: Product costing and decision analysis for a service company Pleasant Stay Medical Inc. wishes to...

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The following data apply to the provision of psychological testing services: Sales price per unit (1 unit = 1 test plus feedback to client) Fixed costs (per month): Selling and administration Production overhead (e.g., rent of testing facilities) Variable costs (per test): Labor for oversight and feedback Selling and administration (e.g., scheduling and billing) Number of tests per month Outsourced test analysis Materials used in testing. Production overhead a. Variable production cost per unit. b. Variable cost per unit. c. Full cost per unit. d. Full absorption cost per unit. Prime cost per unit. Conversion cost per unit. Contribution margin per unit. Gross margin per unit. e. 1. 9 h. 320 16,000 15,000 Required: Calculate the amount for each of the following (one unit one test) if the number of tests is 2,000 per month. Also calculate if the number of tests decreases to 1,250 per month. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.)…
Product costing and decision analysis for a service company Pleasant Stay Medical Inc. wishes to determine its product costs. Pleasant Stay offers a variety of medical procedures (operations) that are considered its products. The overhead has been separated into three major activities. The annual estimated activity costs and activity bases follow: Total patient days are determined by multiplying the number of patients by the average length of stay in the hospital. A weighted care unit (wcu) is a measure of nursing effort used to care for patients. There were 192,000 weighted care units estimated for the year. In addition, Pleasant Stay estimated 6,000 patients and 27,000 patient days for the year. (The average patient is expected to have a a little more than a four-day stay in the hospital.) During a portion of the year, Pleasant Stay collected patient information for three selected procedures, as follows: Private insurance reimburses the hospital for these activities at a fixed daily rate of 406 per patient day for all three procedures. Instructions Determine the activity rates. Determine the activity cost for each procedure. Determine the excess or deficiency of reimbursements to activity cost. Interpret your results.
The Bienestar Cardiology Clinic has two major activities: diagnostic and treatment. The two activities use four resources: nursing, medical technicians, cardiologists, and equipment. Detailed interviews have provided the work distribution matrix shown below. The total time estimated corresponds to practical capacity (interviewers adjusted the total time to about 80 percent of the available time). The equipment time is measured in machine hours. Thus, the total time (at practical capacity) in the system is 20,000 hours. In considering the implementation of a TDABC model, the following unit times and transaction information are also provided: Required: 1. Calculate the cost of each activity using the indicated values of the resource drivers. 2. Calculate the capacity cost rate for TDABC. Using the capacity cost rate, calculate the cost of each activity under TDABC. Compare these values with those obtained in Requirement 1 and discuss possible reasons for any differences. 3. Suppose that the actual activity driver quantities are 3,500 and 9,000. Calculate the cost of unused capacity. 4. Suppose that the clinic acquires new equipment that reduces the total time required for the two activities from 6,000 to 4,000 hours. The equipment cost remains the same. Explain how the ABC system would be updated and then describe how TDABC would provide updates. 5. Suppose that diagnosing patients without any cardiac disease takes two hours while diagnosing patients with mildly diseased hearts takes an additional 1.5 hours and those with more severe problems takes an additional two hours. Prepare a time equation and, using the capacity cost rate from Requirement 2, calculate the activity rate for each of the three types of patients.
Tempe Office Services and Supplies (TOSS) provides various products and services in the Tempe Research Park, home to numerous high-tech and bio-tech companies. Making color copies is one of its most popular and profitable services. The controller performed a regression analysis of data from the Color Copy Department with the following results: Intercept R-squared Number of observations X coefficient Month July August September October November December The regression output was based on the following data: Color Copy Department Costs Number of Color Copies 25,900 23,000 Reg 1 19,550 18,150 22,150 20,400 Regression High-Low Req 2 $ 30.874686 0.970922 Required: 1. What is the variable cost per color copy for TOSS? 2. What is the fixed cost for the Color Copy Department? 3. Based on the regression output obtained by the controller, what cost formula should be used to estimate future total costs for the Color Copy Department? Enter answer as an equation in the form of y= a + bx. 5-a. Use…
Tempe Office Services and Supplies (TOSS) provides various products and services in the Tempe Research Park, home to numerous high-tech and bio-tech companies. Making color copies is one of its most popular and profitable services. The controller performed a regression analysis of data from the Color Copy Department with the following results: Intercept R-squared Number of observations X coefficient Month July August September October November December The regression output was based on the following data: Color Copy Department Costs Number of Color Copies 25,900 23,000 19,550 18, 150 30.874686 0.970922 22,150 20,400 6 0.081144 $ 2,095 1,955 1,600 1,475 1,815 1,725 Required: 1. What is the variable cost per color copy for TOSS? 2. What is the fixed cost for the Color Copy Department? 3. Based on the regression output obtained by the controller, what cost formula should be used to estimate future total costs for the Color Copy Department? Enter answer as an equation in the form of y= a…
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Elmo Security Consultants (ESC) offer a standardized review of data security for small business owners. The following data apply to the provision of these reviews: Sales price per unit (1 unit = 1 review with recommendations) Fixed costs (per month): Selling and administration Production overhead (e.g., rent of facilities) Variable costs (per review): Labor for oversight and feedback Outsourced security analysis Materials used in reviews Review overhead Selling and administration (e.g., scheduling and billing) Number of reviews per month Required: a. Variable review (production) cost per unit b. Variable total cost per unit c. Full cost per unit d. Full absorption cost per unit e. Prime cost per unit f. Conversion cost per unit Calculate the amount for each of the following (one unit = one review) if the number of reviews is 2,500 per month. Also calculate if the number of reviews decreases to 2,000 per month. g. Contribution margin per unit h. Gross margin per unit 2,500 Reviews $ 500…
Elmo Security Consultants (ESC) offer a standardized review of data security for small business owners. The following data apply to the provision of these reviews: Sales price per unit (1 unit = 1 review with recommendations) Fixed costs (per month): Selling and administration Production overhead (e.g., rent of facilities) Variable costs (per review): Labor for oversight and feedback Outsourced security analysis Materials used in reviews Review overhead Selling and administration (e.g., scheduling and billing) Number of reviews per month Required: d. Full absorption cost per uni! e. Prime cost per unit t Conversion cost per unit 9. Contribution margin per unit h. Gross margin per uni! 2,500 Reviews $ 508 50,000 70,000 Calculate the amount for each of the following (one unit = one review) if the number of reviews is 2.500 per month. Also calculate if the number of reviews decreases to 2,000 per month. 2,000 Reviews 250 43 10 28 38 2,508 reviews
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Elmo Security Consultants (ESC) offer a standardized review of data security for small business owners. The following data apply to the provision of these reviews: Sales price per unit (1 unit 1 review with recommendations) Fixed costs (per month): Selling and administration Production overhead (e.g., rent of facilities) Variable costs (per review): Labor for oversight and feedback Outsourced security analysis Materials used in reviews Review overhead Selling and administration (e.g., scheduling and billing) Number of reviews per month a Variable review (production) cost per unit b. Variable total cost per unit Required: Calculate the amount for each of the following (one unit = one review) if the number of reviews is 2,500 per month. Also calculate if the number of reviews decreases to 2,000 per month. c. Full cost per unit d. Full absorption cost per unit e. Prime cost per unit f. Conversion cost per unit g Contribution margin per unit h. Gross margin per unit 2,500 Reviews $ 500…
Elmo Security Consultants (ESC) offer a standardized review of data security for small business owners. The following data apply to the provision of these reviews: Sales price per unit (1 unit = 1 review with recommendations) Fixed costs (per month): Selling and administration Production overhead (e.g., rent of facilities) Variable costs (per review): Labor for oversight and feedback. Outsourced security analysis Materials used in reviews Review overhead Selling and administration (e.g., scheduling and billing) Number of reviews per month a. Variable review (production) cost per unit b. Variable total cost per unit c. Full cost per unit d. Full absorption cost per unit e. Prime cost per unit Required: Calculate the amount for each of the following (one unit = one review) if the number of reviews is 2,500 per month. Also calculate if the number of reviews decreases to 2,000 per month. Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar. f.…
The management of Hartman Company is trying to determine the amount of each of two products to produce over the coming planning period. The following information concerns labor availability, labor utilization, and product profitability: Labor-Hours Required(hours/unit) Department Product 1 Product 2 Hours Available A 1.00 0.35 95 B 0.30 0.20 36 C 0.20 0.50 50 Profit contribution/unit $30.00 $15.00 (a) Develop a linear programming model of the Hartman Company problem. Solve the model to determine the optimal production quantities of products 1 and 2. If required, round your answer to two decimal places. Product 1 Product 2 Production (b) In computing the profit contribution per unit, management does not deduct labor costs because they are considered fixed for the upcoming planning period. However, suppose that overtime can be scheduled in some of the departments. Which departments would you recommend scheduling for…