Principles of Accounting Volume 2
19th Edition
ISBN: 9781947172609
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 2, Problem 6PA
Carolina Yachts builds custom yachts in its production factory in South Carolina. Once complete, these yachts must be shipped to the dealership. They have collected this shipping cost data:
- Prepare a scatter graph of the shipping data. Plot cost on the vertical axis and yachts shipped on the horizontal axis. Is the relationship between shipping costs and unit shipped approximately linear? Draw a straight line through the scatter graph.
- Using the high-low method, create the cost formula for Carolina Yachts’ shipping costs.
- The least-squares regression method was used and the analysis resulted in this cost equation: Y= 4,000+ 1,275x. Comment on the accuracy of your high-low method estimation.
- What would you estimate shipping costs to be if Carolina Yachts shipped 10 yachts in a single month? Use the cost formula you obtained in part B. Comment on how accurately this is reflected by the scatter graph you constructed.
- What factors other than number of yachts shipped do you think could affect Carolina Yachts’ shipping expense? Explain.
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Ethan Manufacturing Incorporated produces floor mats for automobiles. The owner, Joseph Ethan, has asked you to assist in estimating maintenance costs. Together, you and Joseph determine that the single best cost driver for maintenance costs is machine hours. These data are from the previous fiscal year for maintenance costs and machine hours:
1. What is the cost equation for maintenance costs using the high-low method?
2. Calculate the mean absolute percentage error (MAPE) for the cost equation you developed in requirement 1.
Month
Maintenance Costs
Machine Hours
1
$ 2,660
1,750
2
2,820
1,830
3
2,970
1,910
4
3,080
1,930
5
3,160
1,960
6
3,130
1,940
7
3,070
1,920
8
2,910
1,900
9
2,680
1,760
10
2,280
1,160
11
2,290
1,360
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2,510
1,650
Chapter 2 Solutions
Principles of Accounting Volume 2
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Ch. 2 - Total costs for ABC Distributing are $250,000 when...Ch. 2 - Which of the following would not be classified as...Ch. 2 - Which of the following are prime costs? A....Ch. 2 - Which of the following statements is true...Ch. 2 - The high-low method and least-squares regression...Ch. 2 - Which of the following methods of cost estimation...Ch. 2 - In the cost equation Y=a+bx, Y represents which of...Ch. 2 - A scatter graph is used to test the assumption...Ch. 2 - Identify the three primary classifications of...Ch. 2 - Explain how the income statement of a...Ch. 2 - Walsh & Coggins, a professional accounting firm,...Ch. 2 - Lizzys is a retail clothing store, specializing in...Ch. 2 - Identify and describe the three types of product...Ch. 2 - Explain the difference between a period cost and a...Ch. 2 - Explain the concept of relevant range and how it...Ch. 2 - Explain the differences among fixed costs,...Ch. 2 - Explain the difference between prime costs and...Ch. 2 - Explain how a scatter graph is used to identify...Ch. 2 - Explain the components of the total cost equation...Ch. 2 - Explain how the high-low method is used for cost...Ch. 2 - Magio Company manufactures kitchen equipment used...Ch. 2 - Park and West, LLC, provides consulting services...Ch. 2 - Canine Couture is a specialty dog clothing...Ch. 2 - Hicks Contracting collects and analyzes cost data...Ch. 2 - Rose Company has a relevant range of production...Ch. 2 - Carr Company provides human resource consulting...Ch. 2 - Western Trucking operates a fleet of delivery...Ch. 2 - Suppose that a company has fixed costs of $18 per...Ch. 2 - The cost data for Evencoat Paint for the year 2019...Ch. 2 - This cost data from Hickory Furniture is for the...Ch. 2 - Markson and Sons leases a copy machine with terms...Ch. 2 - Markson and Sons leases a copy machine with terms...Ch. 2 - Winterfell Products manufactures electrical...Ch. 2 - CPK ** Associates is a mid-size legal firm,...Ch. 2 - Flip or Flop is a retail shop selling a wide...Ch. 2 - Roper Furniture manufactures office furniture and...Ch. 2 - Baxter Company has a relevant range of production...Ch. 2 - Sanchez & Vukmin, LLP, is a full-service...Ch. 2 - Case Airlines provides charter airline services....Ch. 2 - Suppose that a company has fixed costs of $11 per...Ch. 2 - The cost data for BC Billing Solutions for the...Ch. 2 - This cost data from Hickory Furniture is for the...Ch. 2 - Able Transport operates a tour bus that they lease...Ch. 2 - Able Transport operates a tour bus that they lease...Ch. 2 - Ballentine Manufacturing produces and sells...Ch. 2 - Tom West is a land surveyor who operates a small...Ch. 2 - Just Beachy is a retail business located on the...Ch. 2 - Listed as follows are various costs found in...Ch. 2 - Wachowski Company reported these cost data for the...Ch. 2 - Carolina Yachts builds custom yachts in its...Ch. 2 - Hicks Products produces and sells patio furniture...Ch. 2 - Conner ** Scheer, Attorneys at Law, provide a wide...Ch. 2 - Puzzles, Pranks ** Games is a retail business...Ch. 2 - Pocket Umbrella, Inc. is considering producing a...Ch. 2 - Using the costs listed in the previous problem,...Ch. 2 - Gadell Farms produces venison sausage that is...Ch. 2 - In a team of two or three students, interview the...Ch. 2 - This list contains costs that various...
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