COST ACCOUNTING
16th Edition
ISBN: 9781323169261
Author: Horngren
Publisher: PEARSON C
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Chapter 10, Problem 10.33E
Learning curve, cumulative average-time learning model. Northern Defense manufactures radar systems. It has just completed the manufacture of its first newly designed system, RS-32. Manufacturing data for the RS-32 follow:
Calculate the total variable costs of producing 2, 4, and 8 units.
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Northern Defense manufactures radar systems. It has just completed the manufacture of its first newly designed system, RS-32. Manufacturing data for the RS-32 follow:
(Click icon to view data)
Requirement
Calculate the total variable costs of producing 2, 4, and 8 units.
Begin by calculating the cumulative total time in labor-hours using the cumulative average-time learning model. (Round the cumulative average time per unit to the nearest whole number.)
Cumulative number of Cumulative average time
Cumulative total time:
per unit: Labor-hours
Labor-hours
3700
units
2
4
8
3700
←
Data table
Direct material cost
Direct manufacturing labor time for first unit
Learning curve for manufacturing labor time per radar system
Direct manufacturing labor cost
Variable manufacturing overhead cost
Using the formula for an 85% learning curve, b =
In 0.85
In 2
Print
=
$
$
$
-0.162519
0.693147
81,000 per unit of RS-32
3,700 direct manufacturing labor-hours
85% cumulative average timeª
Done
28 per direct…
Simplifying the ABC System: Approximately Relevant ABC Systems
Patterson Company produces wafers for integrated circuits. Data for the most recent year are provided:
Activity
Inserting and sorting process activities:
Expected Consumption
Ratios
Driver
Wafer A
Wafer B
1
Developing test
programs
$ 50,000
Engineering hours
0.25
0.75
Making probe
2.
60,000
Development hours
0.10
0.90
cards
Testing products
600,000
Test hours
0.60
0.40
Setting up
4.
135,000
Number of batches
0.55
0.45
batches
Engineering
Number of change
5.
90,000
0.15
0.85
design
orders
Handling wafer
6.
300,000
Number of moves
0.45
0.55
lots
7.
Inserting dies
700,000
Number of dies
0.70
0.30
Procurement process activities:
Purchasing
Number of
8.
400,000
0.20
0.80
materials
purchase orders
Unloading
9.
60,000
materials
Number of
receiving orders
0.35
0.65
Inspecting
10.
75,000
Inspection hours
0.65
0.35
materials
11.
Moving materials
500,000
Distance moved
0.50
0.50
12.
Paying suppliers
30,000
Number of invoices
0.30
0.70…
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.)
Q. Calculate the total variable costs of producing 2, 3, and 4 units.
Chapter 10 Solutions
COST ACCOUNTING
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. 10.13QCh. 10 - All the independent variables in a cost function...Ch. 10 - Multicollinearity exists when the dependent...Ch. 10 - HL Co. uses the high-low method to derive a total...Ch. 10 - A firm uses simple linear regression to forecast...Ch. 10 - In regression analysis, the coefficient of...Ch. 10 - A regression equation is set up, where the...Ch. 10 - What would be the approximate value of the...Ch. 10 - Estimating a cost function. The controller of the...Ch. 10 - Identifying variable-, fixed-, and mixed-cost...Ch. 10 - Various cost-behavior patterns. (CPA, adapted)....Ch. 10 - Matching graphs with descriptions of cost and...Ch. 10 - Account analysis, high-low. Stein Corporation...Ch. 10 - Account analysis method. Gower, Inc., a...Ch. 10 - Prob. 10.27ECh. 10 - Estimating a cost function, high-low method. Lacy...Ch. 10 - Linear cost approximation. Dr. Young, of Young and...Ch. 10 - Cost-volume-profit and regression analysis....Ch. 10 - Regression analysis, service company. (CMA,...Ch. 10 - High-low, regression. May Blackwell is the new...Ch. 10 - Learning curve, cumulative average-time learning...Ch. 10 - Learning curve, incremental unit-time learning...Ch. 10 - High-low method. Wayne Mueller financial analyst...Ch. 10 - High-low method and regression analysis. Market...Ch. 10 - High-low method; regression analysis. (CIMA,...Ch. 10 - Regression, activity-based costing, choosing cost...Ch. 10 - Interpreting regression results. Spirit...Ch. 10 - Cost estimation, cumulative average-time learning...Ch. 10 - Cost estimation, incremental unit-time learning...Ch. 10 - Regression; choosing among models. Apollo Hospital...Ch. 10 - Multiple regression (continuation of 10-42). After...Ch. 10 - Cost estimation. Hankuk Electronics started...Ch. 10 - Prob. 10.45PCh. 10 - Interpreting regression results, matching time...Ch. 10 - Purchasing department cost drivers, activity-based...Ch. 10 - Purchasing department cost drivers, multiple...
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