Maintenance Machine Health Number of Shipping Costs Units Month Costs Hours Insurance Employees Shipped January February $4,500 $4,452 $8,600 $8,600 $25,776 $29,664 165 68 7,160 8,240 120 75 March $4,600 $8,600 $8,600 $28,674 7,965 230 92 April May $4,850 318 105 $23,058 6,405 $5,166 $8,600 $21,294 460 89 5,915 June $4,760 $8,600 $8,600 $33,282 280 87 9,245 July August September $4,910 340 $31,428 8,730 93 $4,960 360 $8,600 $30,294 88 8,415 $5,070 420 $8,600 $25,110 95 6,975 October $5,250 $8,600 $25,866 495 102 7,185 $20,124 November $5,271 $8,600 510 97 5,590 December $4,760 $8,600 $34,596 275 94 9,610 Required 1. Which of the preceding costs is variable? Fixed? Mixed? Explain. 2. Using the high-low method, determine the cost function for each cost. 3. Combine the preceding information to get a monthly operating cost function for the Stein Corporation. 4. Next month, Stein expects to use 400 machine hours, have 80 employees, and ship 9,000 units. Estimate the total operating cost for the month.

Maintenance Machine Health Number of Shipping Costs Units Month Costs Hours Insurance Employees Shipped January February $4,500 $4,452 $8,600 $8,600 $25,776 $29,664 165 68 7,160 8,240 120 75 March $4,600 $8,600 $8,600 $28,674 7,965 230 92 April May $4,850 318 105 $23,058 6,405 $5,166 $8,600 $21,294 460 89 5,915 June $4,760 $8,600 $8,600 $33,282 280 87 9,245 July August September $4,910 340 $31,428 8,730 93 $4,960 360 $8,600 $30,294 88 8,415 $5,070 420 $8,600 $25,110 95 6,975 October $5,250 $8,600 $25,866 495 102 7,185 $20,124 November $5,271 $8,600 510 97 5,590 December $4,760 $8,600 $34,596 275 94 9,610 Required 1. Which of the preceding costs is variable? Fixed? Mixed? Explain. 2. Using the high-low method, determine the cost function for each cost. 3. Combine the preceding information to get a monthly operating cost function for the Stein Corporation. 4. Next month, Stein expects to use 400 machine hours, have 80 employees, and ship 9,000 units. Estimate the total operating cost for the month.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

Account analysis, high-low. Stein Corporation wants to find an equation to estimate some of their monthly operating costs for the operating budget for 2018. The following cost and other data were gathered for 2017:

Maintenance
Machine
Health
Number of
Shipping
Costs
Units
Month
Costs
Hours
Insurance
Employees
Shipped
January
February
$4,500
$4,452
$8,600
$8,600
$25,776
$29,664
165
68
7,160
8,240
120
75
March
$4,600
$8,600
$8,600
$28,674
7,965
230
92
April
May
$4,850
318
105
$23,058
6,405
$5,166
$8,600
$21,294
460
89
5,915
June
$4,760
$8,600
$8,600
$33,282
280
87
9,245
July
August
September
$4,910
340
$31,428
8,730
93
$4,960
360
$8,600
$30,294
88
8,415
$5,070
420
$8,600
$25,110
95
6,975
October
$5,250
$8,600
$25,866
495
102
7,185
$20,124
November
$5,271
$8,600
510
97
5,590
December
$4,760
$8,600
$34,596
275
94
9,610
Required
1. Which of the preceding costs is variable? Fixed? Mixed? Explain.
2. Using the high-low method, determine the cost function for each cost.
3. Combine the preceding information to get a monthly operating cost function for the Stein Corporation.
4. Next month, Stein expects to use 400 machine hours, have 80 employees, and ship 9,000 units. Estimate
the total operating cost for the month.

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The following information applies to the questions displayed below.] Adger Corporation is a service company that measures its output based on the number of customers served. The company provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results for May as shown below: Fixed Elementper Month Variable Element per Customer Served Actual Totalfor May Revenue $ 5,400 $ 226,000 Employee salaries and wages $ 61,000 $ 2,200 $ 158,700 Travel expenses $ 530 $ 20,700 Other expenses $ 40,000 $ 38,000 When preparing its planning budget the company estimated that it would serve 40 customers per month; however, during May the company actually served 45 customers. 13. What amount of other expenses would be included in Adger’s planning budget for May? - What activity variance would Adger report in May with respect to its revenue? (Indicate the effect of each variance by selecting "F" for favorable, "U"…
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