EBK HORNGREN'S COST ACCOUNTING
16th Edition
ISBN: 9780134475998
Author: Rajan
Publisher: YUZU
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Chapter 10, Problem 10.35E
High-low method. Wayne Mueller financial analyst at CELL Corporation, is examining the behavior of quarterly utility costs for budgeting purposes. Mueller collects the following data on machine-hours worked and utility costs for the past 8 quarters:
| Quarter | Machine-Hours | Utility Costs |
| 1 | 120,000 | $215,000 |
| 2 | 75,000 | 150,000 |
| 3 | 110,000 | 200,000 |
| 4 | 150,000 | 270,000 |
| 5 | 90,000 | 170,000 |
| 6 | 140,000 | 250,000 |
| 7 | 130,000 | 225,000 |
| 8 | 100,000 | 195,000 |
- 1. Estimate the cost function for the quarterly data using the high-low method.
- 2. Plot and comment on the estimated cost function.
- 3. Mueller anticipates that CELL will operate machines for 125,000 hours in quarter 9. Calculate the predicted utility costs in quarter 9 using the cost function estimated in requirement 1.
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Required information
[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:
Revenue
Employee salaries and wages
Travel expenses
Other expenses
Fixed Element
per Month
$ 57,000
$ 36,000
Employee salaries and wages
Travel expenses
Other expenses
Variable Element
per Customer
Served
$ 5,800
$ 1,800
$ 950
When preparing its planning budget the company estimated that it would serve 35 customers per month; however, during
May the company actually served 40 customers.
Actual Total for
May
$ 217,000
$ 128,100
$ 35,300
$ 34,400
15. What activity variances would Adger report with respect to each of its expenses for May? (Indicate the effect of each variance by
selecting "F" for favorable, "U" for unfavorable, and "None" for no…
Required Information
[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.
Revenue
Employee salaries and wages
Travel expenses
Other expenses
Fixed Element per
Month
Amount of other expenses
$50,000
$36.000
$ 35,000
Variable Element
per Customer
Served
$5,000
$1,100
$ 600
Actual Total for
May
$ 160,000
$ 88,000
When preparing its planning budget the company estimated that it would serve 30 customers per
month; however, during May the company actually served 35 customers.
4. What amount of other expenses would be included in Aager's flexible budget for May?
$ 19,000
$ 34,500
28
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Chapter 10 Solutions
EBK HORNGREN'S COST ACCOUNTING
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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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