Question
In: Accounting
Homework – Problem #2 2. Ethics: Manipulating Data to Establish a Budget. Healthy Bar, Inc., produces...
Homework – Problem #2
2. Ethics: Manipulating Data to Establish a Budget.
Healthy Bar, Inc., produces energy bars for sports enthusiasts. The company’s fiscal year ends on December 31. The production manager, Jim Wallace, is establishing a cost budget for the production department for each month of this coming quarter (January through March). At the end of March, Jim will be evaluated based on his ability to meet the budget for the three months ending March 31. In fact, Jim will receive a significant bonus if actual costs are below budgeted costs for the quarter. The production budget is typically established based on data from the last 18 months. These data are as follows:
|
Reporting Period (Month) |
Total Overhead Costs |
Total Machine Hours |
|
July |
$686,000 |
3,390 |
|
August |
700,000 |
3,441 |
|
September |
652,000 |
2,443 |
|
October |
715,000 |
3,730 |
|
November |
645,000 |
2,433 |
|
December |
665,700 |
2,680 |
|
January |
676,500 |
2,935 |
|
February |
701,000 |
3,641 |
|
March |
614,000 |
2,202 |
|
April |
627,000 |
2,231 |
|
May |
642,000 |
2,242 |
|
June |
692,000 |
3,498 |
|
July |
711,000 |
3,585 |
|
August |
725,000 |
2,541 |
|
September |
691,200 |
3,893 |
|
October |
757,600 |
2,893 |
|
November |
670,900 |
2,522 |
|
December |
701,100 |
2,699 |
You are the accountant who assists Jim in preparing an estimate of production costs for the next three months. You intend to use regression analysis to estimate costs, as was done in the past. Jim expects that 3,100 machine hours will be used in January, 3,650 machine hours in February, and 2,850 machine hours in March.
Jim approaches you and asks that you add $100,000 to production costs for each of the past 18 months before running the regression analysis. As he puts it, “After all, management always takes my proposed budgets and reduces them by about 10 percent. This is my way of leveling the playing field!”
Required:
A. Use Excel to perform regression analysis using the historical data provided.
- Submit a printout of the results. Explain.
- Use the regression output to develop the cost equation Y = f + vX by filling in the dollar amounts for f and v. Explain procedure and results in detail.
- Calculate estimated production costs for January, February, and March. Also provide a total for three months. Explain procedure and results in detail.
B. Use Excel to perform regression analysis after adding $100,000 to production costs for each of the past 18 months, as Jim requested.
- Submit a printout of the results. Explain procedure and results in detail and compare with #
- Use the regression output to develop the cost equation Y = f + vX by filling in the dollar amounts for f and v. Explain procedure and results in detail and compare with #1
- Calculate estimated production costs for January, February, and March. Also provide a total for the three months. Explain procedure and results in detail and Compare with #1
C. Why did Jim ask you to add $100,000 to production costs for each of the past 18 months? Explain
D. How should you handle Jim’s request? Explain
Solutions
Expert Solution
A)
| Reporting Period (Month) | Total Overhead Costs (y) | Total Machine Hours (x) | xy($) | x^2 | y^2 |
| July | $686,000 | 3,390 | 2,325,540,000.00 | 11,492,100 | $470,596,000,000 |
| August | 700,000 | 3,441 | 2,408,700,000.00 | 11,840,481 | $490,000,000,000 |
| September | 652,000 | 2,443 | 1,592,836,000.00 | 5,968,249 | $425,104,000,000 |
| October | 715,000 | 3,730 | 2,666,950,000.00 | 13,912,900 | $511,225,000,000 |
| November | 645,000 | 2,433 | 1,569,285,000.00 | 5,919,489 | $416,025,000,000 |
| December | 665,700 | 2,680 | 1,784,076,000.00 | 7,182,400 | $443,156,490,000 |
| January | 676,500 | 2,935 | 1,985,527,500.00 | 8,614,225 | $457,652,250,000 |
| February | 701,000 | 3,641 | 2,552,341,000.00 | 13,256,881 | $491,401,000,000 |
| March | 614,000 | 2,202 | 1,352,028,000.00 | 4,848,804 | $376,996,000,000 |
| April | 627,000 | 2,231 | 1,398,837,000.00 | 4,977,361 | $393,129,000,000 |
| May | 642,000 | 2,242 | 1,439,364,000.00 | 5,026,564 | $412,164,000,000 |
| June | 692,000 | 3,498 | 2,420,616,000.00 | 12,236,004 | $478,864,000,000 |
| July | 711,000 | 3,585 | 2,548,935,000.00 | 12,852,225 | $505,521,000,000 |
| August | 725,000 | 2,541 | 1,842,225,000.00 | 6,456,681 | $525,625,000,000 |
| September | 691,200 | 3,893 | 2,690,841,600.00 | 15,155,449 | $477,757,440,000 |
| October | 757,600 | 2,893 | 2,191,736,800.00 | 8,369,449 | $573,957,760,000 |
| November | 670,900 | 2,522 | 1,692,009,800.00 | 6,360,484 | $450,106,810,000 |
| December | 701,100 | 2,699 | 1,892,268,900.00 | 7,284,601 | $491,541,210,000 |
| SUM(Ʃ) | 12,273,000 | 52,999 | 36,354,117,600 | 161,754,347 | 8,390,821,960,000 |
| y | x | xy($) | x^2 | y^2 | |
| 569,505.30 | |||||
| 38.15 | |||||
| Linear equation | y=f+vx | Unit Variable Cost (v) = | (Σy)(Σx2) − (Σxy) | 569,505.30 | |
| y | Total overhead cost | nΣx2 − (Σx)2 | |||
| f | Fixed cost' | Total Fixed Cost (f) = | Σxy − (Σx)(Σy) | ||
| v | variable cost | nΣx2 − (Σx)2 | 38.15 | ||
| x | hours | ||||
| y= | 569505.3+38.15x | ||||
| Using the above equation- | |||||
| Reporting Period (Month) | Total Overhead Costs (y) | Total Machine Hours (x) | |||
| Jan | 687770.30 | 3,100.00 | 569595.30+38.15(3100) | ||
| Feb' | 708752.80 | 3,650.00 | 569595.30+38.15(3650) | ||
| Mar' | 678232.80 | 2,850.00 | 569595.30+38.15(2850) |
B) Similarly if $100000 is added
| Reporting Period (Month) | Total Overhead Costs (y) | Total Machine Hours (x) | xy($) | x^2 | y^2 |
| July | $786,000 | 3,390 | 2,664,540,000.00 | 11,492,100 | $617,796,000,000 |
| August | 800,000 | 3,441 | 2,752,800,000.00 | 11,840,481 | $640,000,000,000 |
| September | 752,000 | 2,443 | 1,837,136,000.00 | 5,968,249 | $565,504,000,000 |
| October | 815,000 | 3,730 | 3,039,950,000.00 | 13,912,900 | $664,225,000,000 |
| November | 745,000 | 2,433 | 1,812,585,000.00 | 5,919,489 | $555,025,000,000 |
| December | 765,700 | 2,680 | 2,052,076,000.00 | 7,182,400 | $586,296,490,000 |
| January | 776,500 | 2,935 | 2,279,027,500.00 | 8,614,225 | $602,952,250,000 |
| February | 801,000 | 3,641 | 2,916,441,000.00 | 13,256,881 | $641,601,000,000 |
| March | 714,000 | 2,202 | 1,572,228,000.00 | 4,848,804 | $509,796,000,000 |
| April | 727,000 | 2,231 | 1,621,937,000.00 | 4,977,361 | $528,529,000,000 |
| May | 742,000 | 2,242 | 1,663,564,000.00 | 5,026,564 | $550,564,000,000 |
| June | 792,000 | 3,498 | 2,770,416,000.00 | 12,236,004 | $627,264,000,000 |
| July | 811,000 | 3,585 | 2,907,435,000.00 | 12,852,225 | $657,721,000,000 |
| August | 825,000 | 2,541 | 2,096,325,000.00 | 6,456,681 | $680,625,000,000 |
| September | 791,200 | 3,893 | 3,080,141,600.00 | 15,155,449 | $625,997,440,000 |
| October | 857,600 | 2,893 | 2,481,036,800.00 | 8,369,449 | $735,477,760,000 |
| November | 770,900 |
 ekkarill92 answered 2 years agoRelated SolutionsComprehensive Case Ethics: Manipulating Data to Establish a Budget (Appendix). Healthy Bar, Inc., produces energy bars...Comprehensive
Case
Ethics: Manipulating Data to Establish a Budget
(Appendix). Healthy Bar, Inc., produces energy bars for
sports enthusiasts. The company’s fiscal year ends on December 31.
The production manager, Jim Wallace, is establishing a cost budget
for the production department for each month of this coming quarter
(January through March). At the end of March, Jim will be evaluated
based on his ability to meet the budget for the three months ending
March 31. In fact, Jim will receive...
Homework: Economics 2 - Problem A-Design Inc., a federally incorporated company in Canada, specializing in the...
Homework: Economics 2 - Problem A-Design Inc., a federally
incorporated company in Canada, specializing in the design and
manufacturing of armrests for the wheelchair industry plans to
produce and sell 15,000 armrests at $50 per unit in its third year
of operation and has also planned $20,000 for marketing campaigns,
$100,000 for electricity, $240,000 for salaries, $300,000 for
production materials, $20,000 for overhead, $24,000 for rent and
$10,000 for depreciation. A-Design has a debt of $100,000 at an
annual simple...
Rigby Inc. produces surveillance equipment. Selected data is provided below. Problem 2 Selling price 129.00 $/unit...Rigby Inc. produces surveillance equipment. Selected data is
provided below.
Problem 2
Selling price 129.00 $/unit
Variable costs 73.40$/unit
Fixed costs 32.10 $unit
Units produced and sold 3,850
REQUIRED:
Calculate the following:
Contribution margin per unit
Contribution margin ratio
Breakeven point in units
Breakeven point in sales
Sales ($) to reach target profit of $55,000
Very important homework for me ... 2.) A process produces cable for the local telephone company....Very important homework for me ...
2.) A process produces cable for the local telephone company.
When the process is operating correctly, cable diameter follows a
normal distribution with mean 4 inches. A random sample of 48
pieces of cable found diameters with a sample mean of 7 inches and
a sample standard deviation of 0,66 inches.
a) State your hypothesis H0 and H1 claiming that the process is
operating correctly.
b) State the decision rule, sample statistics, table value...
Question 2 – Comprehensive problem: Scoops Ahoy, Inc. is a manufacturer that produces ice cream. Its...Question 2 – Comprehensive problem: Scoops
Ahoy, Inc. is a manufacturer that produces ice cream. Its relevant
range of production for 2019 is 101,000 to 106,000 pints of ice
cream. When it produces and sells 104,000 pints, its average costs
per unit are as follows:
Average cost per pint
Direct materials
$
0.35
Direct labor
$
1.19
Variable manufacturing overhead
$
0.23
Fixed manufacturing overhead
$
0.27
Variable selling and administrative expenses
$
0.09
Fixed selling and administrative expenses
$...
Healthy Measures Inc. produces a Bath and Gym version of its popular electronic scale. The anticipated...Healthy Measures Inc. produces a Bath and Gym version of its
popular electronic scale. The anticipated unit sales for the scales
by sales region are as follows:
Bath Scale
Gym Scale
Northern Region unit sales
25,600
38,100
Southern Region unit sales
27,600
29,000
Total
53,200
67,100
The finished goods inventory estimated for March 1, for the Bath
and Gym scale models is 1,100 and 2,200 units, respectively. The
desired finished goods inventory for March 31 for the Bath and Gym...
1.Identify the main research problem. 2.Analyze the main underlying causes of the existing problem. 3.Establish the...1.Identify the main research
problem.
2.Analyze the main underlying causes
of the existing problem.
3.Establish the cause-and-effect
relations between the various aspects.
4.Formulate the best solutions to
address the problem.
CASE 1: ZAPPOS FACES COMPETITIVE CHALLENGES
Zappos Faces Competitive Challenges
Zappos, based in Las Vegas, is an online retailer with the
initial goal of trying to be the best website for buying shoes by
offering a wide variety of brands, styles, colors, sizes, and
widths. The Zappos.com brand has grown...
Mcdale Inc. produces and sells two ... Mcdale Inc. produces and sells two products. Data concerning...
Mcdale Inc. produces and sells two ...
Mcdale Inc. produces and sells two products. Data concerning
those products for the most recent month appear below:
Product I49V
Product Z50U
Sales
$
42,000
$
47,000
Variable expenses
$
13,000
$
28,830
The fixed expenses of the entire company were $38,960. The
break-even point for the entire company is closest to:
Multiple Choice
Top of Form
$80,790
$73,509
$38,960
$46,080
A cement manufacturer has supplied the following ...
A cement manufacturer has...
Problem 13.4A. Obtain all data that is necessary from the worksheet prepared for Healthy Eating Foods...Problem 13.4A. Obtain all data that is necessary from
the worksheet prepared for Healthy Eating Foods Company in Problem
12.5A at the end of Chapter 12 (SHOWN BELOW). Then follow the
instructions to complete this problem.
Instructions:
Record adjusting entries in the general journal as of
December 31, 2016. Include descriptions.
Record closing entries in the general journal as of
December 31, 2016. Include descriptions.
Record reversing entries in the general journal as of
January 1, 2017. Include descriptions.
Analyze:...
Question 1 a) For the data in Homework 2, Question 1, calculate the ANOVA table. Use...Question 1
a) For the data in Homework
2, Question 1, calculate the ANOVA table. Use the ANOVA Table to
conduct an F-Test to see if the model is significant (use α =
0.05).
Data:
Size (Xi)
12
15
18
21
24
27
Price (Yi)
60
85
75
105
120
110
b) Give a 95% confidence interval for the mean sale
price for 2000 sq. ft. houses.
c) Give a 95%
prediction interval for the sale price of an individual...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
ADVERTISEMENT
|