Managerial Accounting
7th Edition
ISBN: 9781337116008
Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher: South Western Educational Publishing
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Chapter 3, Problem 7MCQ
To determine
Identify “Total Cost” in the given cost formula.
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Students have asked these similar questions
A Community health clinic's costs are shown below. What is total average cost per patient?
4,824
Patients
Total variable costs
$6,375
Total fixed costs
?
Variable cost per
?
patient
Fixed cost per patient
$2.40
Total average cost per
patient
?
Round your answer to two decimal places. Do not round any intermediate calculations.
Falls Creek Community Health Clinic uses the high-low method to analyze cost behavior and has determined that
number of patients treated predict the clinic's total treatment costs. Determine the cost function (formula) for
total treatment costs. What will the estimated treatment cost be if Falls Creek treats 1,402 patients in a month?
Total
Number
Treatment of
Patients
Costs
January $3,410
February $3,790
$3,574
$3,730
$4,500
1060
1180
March
1030
April
1260
May
1310
$4,294
June
1430
(Round your final answer to two decimal places)
How to solve 4.5 parts a through d?
Chapter 3 Solutions
Managerial Accounting
Ch. 3 - Prob. 1DQCh. 3 - What is a driver? Give an example of a cost and...Ch. 3 - Suppose a company finds that shipping cost is...Ch. 3 - Some firms assign mixed costs to either the fixed...Ch. 3 - Explain the difference between committed and...Ch. 3 - Explain why the concept of relevant range is...Ch. 3 - Why do mixed costs pose a problem when it comes to...Ch. 3 - Describe the cost formula for a strictly fixed...Ch. 3 - Describe the cost formula for a strictly variable...Ch. 3 - What is the scattergraph method, and why is it...
Ch. 3 - Describe how the scattergraph method breaks out...Ch. 3 - What are the advantages of the scattergraph method...Ch. 3 - Prob. 13DQCh. 3 - What is meant by the best-fitting line?Ch. 3 - What is the difference between the unit cost of a...Ch. 3 - Prob. 16DQCh. 3 - (Appendix 3A) Explain the meaning of the...Ch. 3 - A factor that causes or leads to a change in a...Ch. 3 - Which of the following would probably be a...Ch. 3 - Prob. 3MCQCh. 3 - In the cost formula, the term 128,000,000 a. is...Ch. 3 - In the cost formula, the term 12,000 a. is the...Ch. 3 - Prob. 6MCQCh. 3 - Prob. 7MCQCh. 3 - The following cost formula for total purchasing...Ch. 3 - An advantage of the high-low method is that it a....Ch. 3 - Prob. 10MCQCh. 3 - Prob. 11MCQCh. 3 - Prob. 12MCQCh. 3 - The total cost for monthly supervisory cost in a...Ch. 3 - Yates Company shows the following unit costs for...Ch. 3 - (Appendix 3A) In the method of least squares, the...Ch. 3 - Creating and Using a Cost Formula Big Thumbs...Ch. 3 - Using High-Low to Calculate Fixed Cost, Calculate...Ch. 3 - Using High-Low to Calculate Predicted Total...Ch. 3 - Using High-Low to Calculate Predicted Total...Ch. 3 - Using Regression to Calculate Fixed Cost,...Ch. 3 - Inventory Valuation under Absorption Costing Refer...Ch. 3 - Inventory Valuation under Variable Costing Refer...Ch. 3 - Absorption-Costing Income Statement Refer to the...Ch. 3 - Variable-Costing Income Statement Refer to the...Ch. 3 - Creating and Using a Cost Formula Kleenaire Motors...Ch. 3 - Using High-Low to Calculate Fixed Cost, Calculate...Ch. 3 - Using High-Low to Calculate Predicted Total...Ch. 3 - Brief Exercise 3-28 Using High-Low to Calculate...Ch. 3 - Using Regression to Calculate Fixed Cost,...Ch. 3 - Inventory Valuation under Absorption Costing Refer...Ch. 3 - Inventory Valuation under Variable Costing Refer...Ch. 3 - Brief Exercise 3-32 Absorption-Costing Income...Ch. 3 - Brief Exercise 3-33 Variable-Costing Income...Ch. 3 - Variable and Fixed Costs What follows are a number...Ch. 3 - Cost Behavior, Classification Smith Concrete...Ch. 3 - Prob. 36ECh. 3 - Prob. 37ECh. 3 - Prob. 38ECh. 3 - Step Costs, Relevant Range Bellati Inc. produces...Ch. 3 - Matching Cost Behavior Descriptions to Cost...Ch. 3 - Examine the graphs in Exercise 3-40. Required: As...Ch. 3 - Prob. 42ECh. 3 - Prob. 43ECh. 3 - High-Low Method Refer to the information for Luisa...Ch. 3 - Scattergraph Method Refer to the information for...Ch. 3 - Method of Least Squares Refer to the information...Ch. 3 - Use the following information for Exercises 3-47...Ch. 3 - Use the following information for Exercises 3-47...Ch. 3 - Method of Least Squares, Developing and Using the...Ch. 3 - The method of least squares was used to develop a...Ch. 3 - Identifying the Parts of the Cost Formula;...Ch. 3 - Inventory Valuation under Absorption Costing...Ch. 3 - Inventory Valuation under Variable Costing Lane...Ch. 3 - Income Statements under Absorption and Variable...Ch. 3 - (Appendix 3A) Method of Least Squares Using...Ch. 3 - (Appendix 3A) Method of Least Squares Using...Ch. 3 - Identifying Fixed, Variable, Mixed, and Step Costs...Ch. 3 - Identifying Use of the High-Low, Scattergraph, and...Ch. 3 - Identifying Variable Costs, Committed Fixed Costs,...Ch. 3 - Scattergraph, High-Low Method, and Predicting Cost...Ch. 3 - Method of Least Squares, Predicting Cost for...Ch. 3 - Cost Behavior, High-Low Method, Pricing Decision...Ch. 3 - Prob. 63PCh. 3 - Variable and Fixed Costs, Cost Formula, High-Low...Ch. 3 - Cost Separation About 8 years ago, Kicker faced...Ch. 3 - Variable-Costing and Absorption-Costing Income...Ch. 3 - Refer to the information for Farnsworth Company...Ch. 3 - (Appendix 3A) Scattergraph, High-Low Method,...Ch. 3 - (Appendix 3A) Separating Fixed and Variable Costs,...Ch. 3 - (Appendix 3A) Cost Formulas, Single and Multiple...Ch. 3 - Suspicious Acquisition of Data, Ethical Issues...
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- In the cost formula, the term 12,000 a. is the variable rate. b. is the dependent variable. c. is the independent variable. d. is the intercept. e. cannot be determined from the above formula. Use the following information for Multiple-Choice Questions 3-4 through 3-7: The following cost formula was developed by using monthly data for a hospital. Total Cost = 128,000,000 + (12,000 Number of Patient Days)arrow_forwardIn the cost formula, the term 128,000,000 a. is the total variable cost. b. is the dependent variable. c. is the variable rate. d. is the total fixed cost. e. cannot be determined from the above formula. Use the following information for Multiple-Choice Questions 3-4 through 3-7: The following cost formula was developed by using monthly data for a hospital. Total Cost = 128,000,000 + (12,000 Number of Patient Days)arrow_forwardWeber Valley Regional Hospital has collected data on all of its activities for the past 16 months. Data for cardiac nursing care follow: Required: 1. Using the high-low method, calculate the variable rate per hour and the fixed cost for the nursing care activity. 2. Run a regression on the data, using hours of nursing care as the independent variable. Predict cost for the cardiac nursing care for September Year 2 if 1,400 hours of nursing care are forecast. Evaluate the regression equation. How comfortable are you with the predicted cost for September Year 2? 3. Upon looking into the events that happened at the end of Year 1, you find that the cardiology ward bought a cardiac-monitoring machine for the nursing station. Administrators also decided to add a new supervisory position for the evening shift. Monthly depreciation on the monitor and the salary of the new supervisor together total 10,000. Now, run two regression equations, one for the observations from Year 1 and the second using only the observations for the eight months in Year 2. Discuss your findings. What is your predicted cost of the cardiac nursing care activity for September Year 2?arrow_forward
- The number of blood tests performed and the related costs over the last nine months in Brentline Hospital are given below: Month January February March April May June July August September Blood Tests Blood Test Performed 4,360 5,500 3,450 3,140 3,282 2,400 2,918 3,700 4,080 Costs $35,310 $41,950 $28,626 $26,262 $27,961 $21,800 $24,723 $30,116 $33,250 Required: 1. Using the high-low method, estimate the cost formula for blood tests. (Round cost per unit answer to 2 decimal places.)arrow_forwardThe following table contains selected data concerning the operation of the MHA Medical Center. Use the break-even formula and fill the missing information.arrow_forwardCompute the linear cost function, relating total overhead costs to physician contact hours, using the representative observations of 200 and 300 hours. Plot the linear cost function. Does the constant component of the cost function represent the fixed overhead costs of Young and Associates? Why?arrow_forward
- The Audiology Department at Randall Clinic offers many services to the clinic’s patients. The three most common, along with cost and utilization data, are as follows: Service Variable cost per service Annual Direct fixed Cost Annual number of visits Basic examination $5 $50,000 30,000 Advanced examination 7 30,000 1,500 Therapy section 10 40,000 500 What is the fee schedule for these services, assuming that the goal is to cover only variable and direct fixed costs? Assume that the Audiology Department is allocated $100,000 in total overhead by the clinic, and the department director has allocated $50,000 of this amount to the three services listed above. What is the fee schedule assuming that these overhead costs must be covered? (To answer this question, assume that the allocation of overhead costs to each service is made on the basis of number of visits.) Assume that these services must make a combined profit of $25,000. Now, what is the…arrow_forwardLinear cost approximation. Dr. Young, of Young and Associates, LLP, is examining how overhead costs behave as a function of monthly physician contact hours billed to patients. The historical data are as follows:arrow_forwardLean Mfgarrow_forward
- 7.2. The audiology department at Randall Clinic offers many services to the clinic's patients. The three most common, along with cost and utilization data, are as follows: Service Basic examination Advanced examination Therapy session Variable Cost Annual Direct Annual Number of Visits Fixed Costs 3,000 1,500 500 per Service $5 7 10 $50,000 30,000 40,000 a. What is the fee schedule for these services, assuming that the goal is to cover only variable and direct fixed costs? b. Assume that the audiology department is allocated $100,000 in total overhead by the clinic, and the department director has allocated $50,000 of this amount to the three services listed above. What is the fee schedule assuming that these overhead costs must be covered? (To answer this question, assume that the allocation of the $50,000 in overhead costs to each service is made on the basis of number of visits.) c. Assume that these services must make a combined profit of $25,000. Now what is the fee schedule? (To…arrow_forwardRefer to the information for Luisa Crimini above.Required:1. Which month represents the high point? The low point?2. Using the high-low method, compute the variable rate for tanning. Compute the fixedcost per month.3. Using your answers to Requirement 2, write the cost formula for tanning services.4. Calculate the total predicted cost of tanning services for September for 2,500 appointments using the formula found in Requirement 3. Of that total cost, how much is thetotal fixed cost for September? How much is the total predicted variable cost forSeptember?5. CONCEPTUAL CONNECTION Identify and briefly explain any additional issues thatLuisa might be wise to consider when using the high-low method to estimate the costs ofher tanning salon.arrow_forwardXylon charges $0.55/ page for Direct Materials and Direct Labor. A. What is the total cost for printing services for Money Managers? B. What is the total cost for printing services for Hospital Systems?arrow_forward
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