Cost Accounting, Student Value Edition (15th Edition)

15th Edition

ISBN: 9780133428858

Author: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan

Publisher: PEARSON

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Textbook Question

Chapter 10, Problem 10.29E

Learning curve, incremental unit-time learning model. Assume the same information for Northern Defense as in Exercise 10-33, except that Northern Defense uses an 85% incremental unit-time learning model as a basis for predicting direct manufacturing labor-hours.

(An 85 % learning curve means b = −0.234465.)

1. Calculate the total variable costs of producing 2, 3, and 4 units.

Required

2. If you solved Exercise 10-33, compare your cost predictions in the two exercises for 2 and 4 units. Why are the predictions different? How should Northern Defense decide which model it should use?

Expert Solution & Answer

Chapter 10 Solutions

Cost Accounting, Student Value Edition (15th Edition)

Ch. 10 - What two assumptions are frequently made when...Ch. 10 - Describe three alternative linear cost functions.Ch. 10 - What is the difference between a linear and a...Ch. 10 - High correlation between two variables means that...Ch. 10 - Name four approaches to estimating a cost...Ch. 10 - Describe the conference method for estimating a...Ch. 10 - Describe the account analysis method for...Ch. 10 - List the six steps in estimating a cost function...Ch. 10 - When using the high-low method, should you base...Ch. 10 - Describe three criteria for evaluating cost...

Ch. 10 - Define learning curve. Outline two models that can...Ch. 10 - Discuss four frequently encountered problems when...Ch. 10 - Prob. 10.13Q Ch. 10 - All the independent variables in a cost function...Ch. 10 - Multicollinearity exists when the dependent...Ch. 10 - Prob. 10.16E Ch. 10 - Prob. 10.17E Ch. 10 - Various cost-behavior patterns. (CPA, adapted)....Ch. 10 - Matching graphs with descriptions of cost and...Ch. 10 - Prob. 10.20E Ch. 10 - Prob. 10.21E Ch. 10 - Prob. 10.22E Ch. 10 - Prob. 10.23E Ch. 10 - Prob. 10.24E Ch. 10 - Prob. 10.25E Ch. 10 - Prob. 10.26E Ch. 10 - Prob. 10.27E Ch. 10 - Learning curve, cumulative average-time learning...Ch. 10 - Learning curve, incremental unit-time learning...Ch. 10 - Prob. 10.30E Ch. 10 - Prob. 10.31P Ch. 10 - Prob. 10.32P Ch. 10 - Prob. 10.33P Ch. 10 - Interpreting regression results. Spirit...Ch. 10 - Prob. 10.35P Ch. 10 - Prob. 10.36P Ch. 10 - Regression; choosing among models. Apollo Hospital...Ch. 10 - Multiple regression (continuation of 10-42). After...Ch. 10 - Prob. 10.39P Ch. 10 - Prob. 10.40P Ch. 10 - Interpreting regression results, matching time...Ch. 10 - Prob. 10.42P Ch. 10 - Prob. 10.43P

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Solution Summary: The author explains that variable cost is that cost which varies with increase or decrease in the level of production, but fixed cost per unit changes with change in production.

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Chapter 10 Solutions