Question

In: Accounting

Which of the following is true of variable costing? It expenses administrative costs as costs of...

Which of the following is true of variable costing?

It expenses administrative costs as costs of goods sold
It is required for external reporting to shareholders
It treats direct manufacturing costs as a product cost
It includes fixed manufacturing overhead as an inventoriable cost

Tauton Company uses the high low to estimates its cost function. The information for 2017 is provided below:

Machine hour’s costs

Highest observation of cost driver 4000 332000

Lowest observation of cost driver 3000 312000

What is the estimated total cost when 1900 machine hours are used?

509600
290000
157700
489700

Quantum Company uses the high low method to estimate the cost function the information for 2017 is provided below:

Machine hour’s costs

Highest observation of cost driver 1000 32000

Lowest observation of cost driver 200 16000

What is the constant for the estimated cost equation?

12000
32000
16000
20000

Which cost estimating method uses time and motion studies to reveal that to make a high quality men’s suit jacket it takes of 3 hours of direct labor effort per jacket and 5 minutes of a salaried manager to perform quality control?

A. the accrual accounting method

B .the industrial engineering method

C .the cash accounting method

D .the high low method

Solutions

Expert Solution

Solution 1:

Variable costing treats direct manufacturing costs as a product cost. This statement is true.

Hence option "C" is correct.

Solution 2:

Variable cost per unit = (Cost at high point - Costs at low point) / (Machine hours at high point - Machine hours at low point)

= ($332000 - $312000)/ (4000- 3000) = $20000 / 1000 = $20 per unit

Fixed Cost = $332000 - (4000*$20) = $332000 - $80000 = $252,000

Total cost when 1900 machine hours are used = $252000 + ($20*1900) = $290,000

Hence option "b" is correct.

Solution 3:

Variable cost per unit = (Cost at high point - Costs at low point) / (Machine hours at high point - Machine hours at low point)

= ($32000 - $16000)/ (1000- 200) = $16000 / 800 = $20 per unit

Fixed Cost = $32000 - (1000*$20) = $32000 - $20000 = $12,000

constant for the estimated cost equation = $12000

Hence option "a" is correct.

Solution 4:

"The industrial engineering method" uses time and motion studies to reveal that to make a high quality men’s suit jacket it takes of 3 hours of direct labor effort per jacket and 5 minutes of a salaried manager to perform quality control.

Hence option "B" is correct.

ekkarill92 answered 2 hours ago

Next > < Previous

Related Solutions

1. Which of the following is true if a firm has only variable expenses? a) A...

1. Which of the following is true if a firm has only variable expenses? a) A 10% increase in sales will lead to no change in expenses and no change in profits b) A 10% increase in sales will lead to no change in expenses and 10% increase in profits c) A 10% increase in sales will lead to 10% increase in expenses and 10% change in profits d) A 10% increase in sales will lead to 10 % change...

1, Which of the following statements is true? A) Under variable costing, direct materials and direct...

1, Which of the following statements is true? A) Under variable costing, direct materials and direct labor are expensed as period expenses B) Under variable costing, fixed manufacturing overhead is expensed as period expenses. C) Fixed manufacturing overhead costs are treated the same under both absorption costing and variable costing. D) Reported income under absorption costing is not affected by production level changes. E) Under absorption costing, fixed manufacturing overhead is expensed as period expenses 2. Mentor Corp. has provided the...

How do you find variable cost of goods sold and variable selling and administrative expenses for...

How do you find variable cost of goods sold and variable selling and administrative expenses for both months in the income statement in Required 2? Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 4 Direct labor 11 Variable manufacturing overhead 4 Variable selling and administrative 2 Total variable cost per unit $ 21 Fixed costs per month: Fixed manufacturing overhead $ 120,000 Fixed selling and administrative...

Which of the following statements are true regarding activity-based costing? A) Costs are allocated based on...

Which of the following statements are true regarding activity-based costing? A) Costs are allocated based on a pre-determined overhead rate for each cost pool B) Transitioning from traditional costing methods to Activity-Based Costing is a relatively simple process that most companies complete quickly. C) Activity-Based Costing results in a different amount of total overhead applied than under traditional costing methods. D) Activity-Based costingoriginated in the early 1900's Using traditional costing rather than Activity-Based Costing might lead to which of the...

Elbert Company classifies its selling and administrative expense budget into variable and fixed components. Variable expenses...

Elbert Company classifies its selling and administrative expense budget into variable and fixed components. Variable expenses are expected to be $25,830 in the first quarter, and $5,100 increments are expected in the remaining quarters of 2017. Fixed expenses are expected to be $42,100 in each quarter. Prepare the selling and administrative expense budget by quarters and in total for 2017. Quarter 1 2 3 4 Year Variable expenses $ $ $ $ $ Fixed expenses Total selling and administrative expenses...

Allocating Selling and Administrative Expenses using Activity-Based Costing Shrute Inc. manufactures office copiers, which are sold...

Allocating Selling and Administrative Expenses using Activity-Based Costing Shrute Inc. manufactures office copiers, which are sold to retailers. The price and cost of goods sold for each copier are as follows: Price $730 per unit Cost of goods sold 440 Gross profit $290 per unit In addition, the company incurs selling and administrative expenses of $232,160. The company wishes to assign these costs to its three major retail customers, The Warehouse, Kosmo Co., and Supply Universe. These expenses are related...

Allocating Selling and Administrative Expenses using Activity-Based Costing Shrute Inc. manufactures office copiers, which are sold...

Allocating Selling and Administrative Expenses using Activity-Based Costing Shrute Inc. manufactures office copiers, which are sold to retailers. The price and cost of goods sold for each copier are as follows: Price$690 per unit Cost of goods sold(410) Gross profit$280 per unit In addition, the company incurs selling and administrative expenses of $263,410. The company wishes to assign these costs to its three major retail customers, The Warehouse, Kosmo Co., and Supply Universe. These expenses are related to its three...

Allocating Selling and Administrative Expenses using Activity-Based Costing Shrute Inc. manufactures office copiers, which are sold...

Allocating Selling and Administrative Expenses using Activity-Based Costing Shrute Inc. manufactures office copiers, which are sold to retailers. The price and cost of goods sold for each copier are as follows: Price $650 per unit Cost of goods sold 390 Gross profit $260 per unit In addition, the company incurs selling and administrative expenses of $276,980. The company wishes to assign these costs to its three major retail customers, The Warehouse, Kosmo Co., and Supply Universe. These expenses are related...

Allocating Selling and Administrative Expenses using Activity-Based Costing Shrute Inc. manufactures office copiers, which are sold...

Allocating Selling and Administrative Expenses using Activity-Based Costing Shrute Inc. manufactures office copiers, which are sold to retailers. The price and cost of goods sold for each copier are as follows: Price $720 per unit Cost of goods sold (430) Gross profit $290 per unit In addition, the company incurs selling and administrative expenses of $226,570. The company wishes to assign these costs to its three major retail customers, The Warehouse, Kosmo Co., and Supply Universe. These expenses are related...

Allocating Selling and Administrative Expenses using Activity-Based Costing Shrute Inc. manufactures office copiers, which are sold...

Allocating Selling and Administrative Expenses using Activity-Based Costing Shrute Inc. manufactures office copiers, which are sold to retailers. The price and cost of goods sold for each copier are as follows: Price $700 per unit Cost of goods sold 420 Gross profit $280 per unit In addition, the company incurs selling and administrative expenses of $270,510. The company wishes to assign these costs to its three major retail customers, The Warehouse, Kosmo Co., and Supply Universe. These expenses are related...

Subjects