amou Company makes filing cabinets of two varieties, applying overhead at the rate of $85 per machine hour. Total actual overhead for the year is $1,500,000. Production data are as follows: Unit A Unit B Direct Material Cost $40 $50 Direct Labor Cost $25 $40 Budgeted Units Produced 4,000 7,500 Mamou is considering changing its overhead application method to an activity based system. A study uncovers three overhead activities budgeted as follows: Manufacturing set ups (total cost $320,000); Machine costs (total cost $936,000); and Engineering costs (total cost $264,000). Data on appropriate budgeted drivers are shown below:

UnitA UnitB

Number of Setups

100 60

Machine Hours

8,000 10,000

Engineering Shifts (8 hrs)

120 100

a. Calculate the total cost to make one of each type of filing cabinet, including material, labor, and overhead, applying overhead using the single overhead cost driver of $85 per machine hour: UnitA ___________ UnitB ____________

b. Will overhead be over- or underapplied, and by how much, using this approach? Overapplied _____ Underapplied _____ Amount ___________

c. What will you do with the amount of overapplied or underapplied overhead? (Choose one of the following actions)

1. Do nothing-leave it in the cost of the goods in inventory. _________

2. Adjust the cost of goods sold or related inventory accounts. ________

3. Report it as a separate item on the income statement. __________

d. Calculate the total cost to make one of each type of filing cabinet, including material, labor, and overhead, applying overhead using activity based costing and the drivers indicated in the problem: UnitA ____________ UnitB ____________

CASE STUDY

ANNUAL WORTH ANALYSIS—THEN AND NOW

Background and Information

Harry, owner of an automobile battery distributorship in Atlanta, Georgia, performed an economic analysis 3 years ago when he decided to place surge protectors in-line for all his major pieces of testing equipment. The estimates used and the annual worth analysis at MARR = 15% are summarized below. Two different manufacturers’ protectors were compared.

The spreadsheet in below sheet is the one Harry used to make the decision. Lloyd’s was the clear choice due to its substantially larger AW value. The Lloyd’s protectors were installed.

During a quick review this last year (year 3 of operation), it was obvious that the maintenance costs and repair savings have not followed (and will not follow) the estimates made 3 years ago. In fact, the maintenance contract cost (which includes quarterly inspection) is going from $300 to $1200 per year next year and will then increase 11% per year for the next 10 years. Also, the repair savings for the last 3 years were $32,901, $24,869, and $35,255, as best as Harry can determine. He believes savings will decrease by $2,577 per year hereafter. Finally, these 3-year-old protectors are worth nothing on the market now, so the salvage in 7 years is zero, not $3000.

Case Study Exercises

• Q1- Plot a graph of the newly estimated maintenance costs and repair savings projections, assuming the protectors last for seven more years.
• Q2- With these new estimates, what is the recalculated AW for the Lloyd’s protectors? Use the old first cost and maintenance cost estimates for the first 3 years. type your answer in the answer box
• Q3- If these estimates had been made 3 years ago, would Lloyd’s still have been the economic choice
• Q4- How has the capital recovery amount changed for the Lloyd’s protectors with these new estimates?

Carter Company manufactures two products, Deluxe and Regular, and uses a traditional two-stage cost allocation system. The first stage assigns all factory overhead costs to two production departments, A and B, based on machine hours. The second stage uses direct labor hours to allocate overhead to individual products.

For the current year, the firm budgeted $1,350,000 total factory overhead cost. The $1,350,000 was for the planned levels of machine and direct labor hours shown in the following table.

The following information relates to the firm’s operations for the month of January:

Carter Company is considering implementing an activity-based costing system. Its management accountant has collected the following information for activity cost analysis for the current year:

Required:

1. Calculate the unit cost for each of the two products under the existing volume-based costing system. (Round "Regular unit cost" to 2 decimal places.)

2. Calculate the overhead per unit of the cost driver under the proposed ABC system.

3. Calculate the unit cost for each of the two products if the proposed ABC system is adopted. (Round your intermediate calculations to 1 decimal place and final answers to 2 decimal places.)

Assume that the price of Socates Motors stock will either rise to $50 or fall to $35 in one month and that the risk free rate for one month is 1.5%. How much is an option with a strike price of $40 worth if the current stock price if the current stock price is $45 instead of $40?

A researcher wanted to learn whether the urge to smoke cigarettes was associated with the number of times a person exercised in the last week. So the researcher gathered 10 who smoke for the study. Participants were asked to rate their urge to smoke on a scale of 0 (no urge) to 10 (extreme urge), and to give the number of times each had worked out in the last week. Using the data below, an alpha of .05 (two-tailed), use a Pearson correlation to determine the outcome.

n the box below, provide the following information:

Null Hypothesis in sentence form (1 point):

Alternative Hypothesis in sentence form (1 point):
Critical Value(s) (2 points):

Calculations (4 points): Note: the more detail you provide, the more partial credit that I can give you if you make a mistake.

Outcome (determination of significance or not, and what this reflects in everyday language, 2 points)

A company wants to study the relationship between an employee's length of employment  (x) and their number of workdays absent (y). The company collected the following information on a random sample of seven employees.

a. Calculate the correlation coefficient r between y and x and determine if the relationship is positive or negative.

b. Find the equation of the least squares regression line.

c. Predict the number of workdays absent for an employee who has been employed for 10 years.

Need Linear Regression Analysis done for the following data:

The data show the chest size and weight of several bears. Find the regression​ equation, letting chest size be the independent​ (x) variable. Then find the best predicted weight of a bear with a chest size of

3939

inches. Is the result close to the actual weight of

126126

​pounds? Use a significance level of 0.05.

PrintDone

What is the regression equation?