Nation's Capital Fitness, Incorporated, operates a chain of fitness centers in the Washington, D.C., area. The firm's controller is accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior pattern of the firm's equipment maintenance costs must be determined. The accounting staff has suggested the use of an equation, in the form of Y = a + bX, for maintenance costs. Data regarding the maintenance hours and costs for last year are as follows: Month January February March April May June July August September October November December Total Average Hours of Maintenance Service Variable maintenance cost 520 470 250 490 340 470 330 410 480 380 390 340 4,870 406 Maintenance Costs $ 5,305 4,170 2,740 4,280 3,050 4,160 3,040 3,570 3,990 3,230 3,170 3,120 $ 43,825 $ 3,652 2. Using your answer to requirement 1, what is the variable component of the maintenance cost? Note: Round your answer to 2 decimal places. per hour

Nation's Capital Fitness, Incorporated, operates a chain of fitness centers in the Washington, D.C., area. The firm's controller is accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior pattern of the firm's equipment maintenance costs must be determined. The accounting staff has suggested the use of an equation, in the form of Y = a + bX, for maintenance costs. Data regarding the maintenance hours and costs for last year are as follows: Month January February March April May June July August September October November December Total Average Hours of Maintenance Service Variable maintenance cost 520 470 250 490 340 470 330 410 480 380 390 340 4,870 406 Maintenance Costs $ 5,305 4,170 2,740 4,280 3,050 4,160 3,040 3,570 3,990 3,230 3,170 3,120 $ 43,825 $ 3,652 2. Using your answer to requirement 1, what is the variable component of the maintenance cost? Note: Round your answer to 2 decimal places. per hour

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Martini Hotel & Casino is situated on beautiful Lake Tahoe in Nevada. The complex includes a 300-room hotel, a casino, and a restaurant. As Martini's new controller, your manager asks you to recommend the basis the hotel should use for allocating fixed overhead costs to the three divisions in 2020. You are presented with the following income statement information for 2019: (Click the icon to view the data.) Requirement 1. Calculate division margins in percentage terms prior to allocating fixed overhead costs. (Round your answers to two decimal places, X.XX.) Restaurant Casino Hotel 42.69 % Allocated fixed overhead costs Operating margin Operating margin % Data table Revenues Direct costs Segment margin Division margin Requirement 2. Allocate indirect costs to the three divisions using each of the three allocation bases suggested. For each allocation base, calculate division operating margins after allocations, in dollars and as a percentage of revenues Allocate the indirect costs, then…
Barfield Corporation prepares business plans and marketing analyses for start-up companies in the Cleveland area. Barfield has been very successful in recent years in providing effective service to a growing number of clients. The company provides its service from a single office building in Cleveland and is organized into two main client-service groups: one for market research and the other for financial analysis. The two groups have budgeted annual costs of $440,000 and $810,000, respectively. In addition, Barfield has a support staff that is organized into two main functions: one for clerical, facilities, and logistical support (called the CFL group) and another for computer-related support. The CFL group has budgeted annual costs of $216,000, while the annual costs of the computer group are $654,000. Tom Brady, CFO of Barfield, plans to prepare a departmental cost allocation for his four groups, and he assembles the following information: Percentage of estimated dollars of work and…
The Long Haul Trucking Company is developing metrics for its drivers. The company computes variable costs of each load based upon miles driven and allocates fixed costs based upon time consumed. Load costing standards consider safe driving speeds and Department of Transportation regulations on hours of service (the amount of time the driver can be on duty or drive). The most effective metric for driver performance would likely be:a. Contribution per mile driven.b. Gross margin per mile driven.c. Achievement of delivered loads in allowed times.d. Percentage increase in delivered loads below standard.
Phoenix Partners provides management consulting services to government and corporate clients. Phoenix has two support departments administrative services (AS) and information systems (IS) and two operating departments-government consulting (GOVT) and corporate consulting (CORP). For the first quarter of 2020, Phoenix's cost records indicate the following: (Click the icon to view the cost records.) Read the requirements. Requirement 1c. Allocate the two support departments' costs to the two operating departments using the step-down method (Allocate IS first). (Do not round intermediary calculations and round your final answers to the nearest whole dollar. Use parentheses or a minus sign when decreasing departments by allocating costs. Enter a "0" for any zero balances.) Support Departments AS Operating Departments CORP Step-down Method IS GOVT Total Budgeted overhead costs 690,000 $2,100,000 $8,675,000 $12,490,000 $23,955,000 before interdepartment cost allocations Allocation of IS…
A. If overhead for the year was $205,000, what were the profits of the residential and commercial services using labor-hours as the allocation base? B. Overhead consists of costs of traveling to the site, using equipment (including vehicle rental), and using supplies, which can be traced as follows.
Smithson Electric provides residential and business electric... [The following information applies to the questions displayed below.] Smithson Electric provides residential and business electric repair services. While direct labor and materials costs are traced to individual customers, administrative labor and transportation costs are considered overhead and applied as a percentage of direct labor costs. At the beginning of the year, Smithson estimates $10,000 of overhead costs and $50,000 of direct labor costs. Actual costs for the year are $12,000 for overhead and $48,000 for direct labor. Ending balances for WIP Inventory, Finished Goods Inventory, and Cost of Goods Sold are $4,000, $15,000, and $141,000 respectively. PR 4-5 (Static) Questions a-c. Answer the following questions based on the details provided. Question a. What is Smithson's predetermined overhead rate as a percentage of direct labor? Note: Round your answer to the nearest percent. b. The Jackson account accumulated…
Required information [The following information applies to the questions displayed below] Nation's Capital Fitness, Inc., operates a chain of fitness centers in the Washington, D.C., area. The firm's controller is accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior pattern of the firm's equipment maintenance costs must be determined. The accounting staff has suggested the use of the high-low method to develop an equation, in the form of Y=a+bX, for maintenance costs. Data regarding the maintenance hours and costs for last year are as follows: Month January February March April May June July August September October November December Total Average "Rounded Hours of Maintenance Service 530 470 260 470 360 450 330 450 470 380 360 360 4,890 408- Maintenance Costs $ 5,068 4,220 2,800 4,330 2,970 4,140 3,100 3,510 4,010 3,200 3,250 3,040 $43,638 $ 3,637 Required: 1. Using the high-low method of cost estimation, estimate the behavior of the…
Prepare a Production Cost Report for the Manufacturing Department for the month of January 2021.
The Write Way manufactures double sided pens- a pen on one side, a highlighteron the other. As the accounting manager, Shade is responsible for presenting three different versions of the company's income statement to the rest of the management team at year-end. Team members are very familiar with absorbtion costing, as they have been evaluating gross margin amounts and percentages for years. They are lesss keen on how fixed-MOH impacts the income statment, so Shade gathers the following current information. The information includes three possible capacity levels for calculating the fixed-MOH rate. Shade also notes there are no price or efficiency variances this period. Any fixed-MOH volume variase is written off to COGS.Theoretical level - 80,000 units Practical level - 60,000 units Normal level - 50,000 units Actual production - 65,000 units Sales Volume - 60,000 units Budgeted fixed-MOH cost - $240,000 Budgeted DM cost - $2.25 per unit Budgeted DL cost -$1.30 per unit Budgeted…
H inc manufactures equipment for metal testing. It also manufactures the electronicchips that go into the manufacture of the testing equipment.The company has a well-established cost and management accounting system. The costaccounting system records the actual manufacturing costs for the electronic chips and thetesting equipment, and also produces standard unit costs for the purposes of budgeting andvariance analysis.The management accountant of H Inc is pleased with themanagement information system that is in place within the company, and is particularlyproud of the budgetary control reporting system that provides monthly control reports tothe board within one week of the end of each month.The market for metal testing equipment is growing at a reasonable rate, but there are threeother competitors in the market. Competition between them is strong and consequentlyprofit margins are fairly low at the moment, although H Inc is operating at a profit.H Inc senior management are not sure…
The manager of the main laboratory facility at UrbanFit Center is interested in being able to predict the overhead costs each month for the lab. The manager believes that total overhead varies with the number of lab tests performed I that some costs remain the same each month regardless of the number of lab tests performed. The lab manager collected the following data for the first seven months of the year. (Click the icon to view the data.) Use the high-low method to determine the laboratory's cost equation for total laboratory overhead. Use your results to predict total laboratory overhead if 3,500 lab tests are performed next month. Let's begin by determining the formula that is used to calculate the variable cost (slope). Data table Variable cost (slope) Number of Lab Month Tests Performed Total Laboratory Overhead Costs January 2,800 $21,500 February 2,600 $22,700 March 3,100 $27,900 April.... 3,550 $31,400 May 3,700 $28,500 June.. 1,200 $19,500 July 1,400 $14,500 Print Done X
Deep Sea manufactures flotation vests in Charleston, South Carolina. Deep Sea's contribution margin income statement for the month ended March 31, 2024, contains the following data: (Click the icon to view the cost information.) Read the requirements. Requirement 1. Identify each cost in the income statement as either relevant or irrelevant to Deep Sea's decision. Variable Manufacturing Costs Variable Selling and Administrative Costs Fixed Manufacturing Costs Fixed Selling and Administrative Costs Requirement 2. Prepare a differential analysis to determine whether Deep Sea should accept this special sales order. (Enter decreases to revenue or increases to costs with a parentheses or minus sign.) Decision: in operating income ▼ Suppose Overboard wishes to buy 4,000 vests from Deep Sea. Deep Sea will not incur any variable selling and administrative expenses on the special order. The Deep Sea plant has enough unused capacity to manufacture the additional vests. Overboard has offered $7…