An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing volume. Consider the following sample of production volumes and total cost data for a manufacturing operation.
| Production Volume (units) | Total Cost ($) |
| 400 | 4,400 |
| 450 | 5,400 |
| 550 | 5,800 |
| 600 | 6,300 |
| 700 | 6,800 |
| 750 | 7,400 |
Compute b1 and b0 (to 1 decimal).
Complete the estimated regression equation (to 1 decimal).
y = + x
b. What is the variable cost per unit produced (to
1 decimal)?
c. Compute the coefficient of determination (to 3
decimals). Note: report r2 between 1 and 0 .
What percentage of the variation in total cost can be explained by
the production volume (to 1 decimal)?
%
d. The company's production schedule shows 500
units must be produced next month. What is the estimated total cost
for this operation (to the nearest whole number)?
In: Statistics and Probability
Statement of Cost of Goods Manufactured for a Manufacturing Company
A payment of cash (or a commitment to pay cash in the future) for the purpose of generating revenues.Cost data for Sandusky Manufacturing Company for the month ended January 31 are as follows:
| Inventories | January 1 | January 31 | ||
| Materials | $175,500 | $154,440 | ||
| Work in process | 121,100 | 106,560 | ||
| Finished goods | 91,260 | 103,470 | ||
| Direct labor | $315,900 | |
| Materials purchased during January | 336,960 | |
| Factory overhead incurred during January: | ||
| Indirect labor | 33,700 | |
| Machinery depreciation | 20,360 | |
| Heat, light, and power | 7,020 | |
| Supplies | 5,620 | |
| Property taxes | 4,910 | |
| Miscellaneous costs | 9,130 | |
a. Prepare a cost of goods manufactured statement for January.
| Sandusky Manufacturing Company | |||
| Statement of Cost of Goods Manufactured | |||
| For the Month Ended January 31 | |||
| Indirect laborMachinery depreciationSuppliesWork in process inventory, January 1 | $ | ||
| Direct materials: | |||
| Machinery depreciationMaterials inventory, January 1SuppliesWork in process inventory, January 31 | $ | ||
| Indirect laborProperty taxesPurchasesWork in process inventory, January 31 | |||
| Cost of materials available for useLess work in process inventory, January 31SuppliesWork in process inventory, January 31 | $ | ||
| Indirect laborMaterials inventory, January 31Miscellaneous costWork in process inventory, January 31 | |||
| Cost of direct materials used in productionLess work in process inventory, January 31Materials inventory, January 1Total manufacturing costs | $ | ||
| Direct laborIndirect laborMachinery depreciationSupplies | |||
| Factory overhead: | |||
| Indirect laborMaterials inventory, January 1Materials inventory, January 31Purchases | $ | ||
| Direct laborMachinery depreciationPurchasesWork in process inventory, January 31 | |||
| Direct laborHeat, light, and powerMaterials inventory, January 1Work in process inventory, January 31 | |||
| Direct laborMaterials inventory, January 1PurchasesSupplies | |||
| Materials inventory, January 31Property taxesPurchasesWork in process inventory, January 31 | |||
| Direct materialsMiscellaneous costsPurchasesWork in process inventory, January 31 | |||
| Total factory overhead | |||
| Total manufacturing costs incurred during January | |||
| Total manufacturing costs | $ | ||
| Cost of materials available for useDirect materialsMaterials inventory, January 31Work in process inventory, January 31 | |||
| Cost of goods manufactured | $ | ||
Feedback
b. Determine the The cost of finished goods available for sale minus the ending finished goods inventory.cost of goods sold for January.
In: Accounting
An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing volume. Consider the following sample of production volumes and total cost data for a manufacturing operation.
| Production
Volume (units) |
Total Cost ($) |
|---|---|
| 400 | 4,000 |
| 450 | 4,900 |
| 550 | 5,400 |
| 600 | 6,000 |
| 700 | 6,300 |
| 750 | 6,900 |
(a)
Use these data to develop an estimated regression equation that could be used to predict the total cost for a given production volume. (Round your numerical values to two decimal places.)
ŷ = _____
(b)
What is the variable cost (in dollars) per unit produced?
$ _____
(c)
Compute the coefficient of determination. (Round your answer to three decimal places.)
What percentage of the variation in total cost can be explained by production volume? (Round your answer to one decimal place.)
________%
(d)
The company's production schedule shows 650 units must be produced next month. Predict the total cost (in dollars) for this operation. (Round your answer to the nearest cent.)
$ _______
In: Statistics and Probability
You plan to buy a house in 24 months. The cost of the house at that time will be $300,000 . How much do you have to invest each month, starting next month, for 12 months to exactly pay for the house if you r investments earn 4.50% APR (compounded monthly)?
In: Finance
19A. Which of the following is not a benefit of Managerial Accounting?
A. Provides the cost of manufacturing a product
B. Produces financial statements for external parties
C. Analyzes potential efficiencies from automation
D. Analyzes how many units need to be sold to cover expenses
19B
The type of Managerial Accounting that focuses on social and environmental impacts is known as:
A. Profitability
B. Sustainability
C. Solvency
D. Liquidity
In: Accounting
- Which of the following is an implicit cost of production?
a) the interest you pay your mother for the money she loaned you to start your business
b) the loss in the value of capital equipment due to wear and tear
c) the utility bill paid to water, electricity, and natural gas companies
d) the salary you pay yourself for running your business
- The minimum efficient scale is
a) the plant size that yields the most profit.
b) the smallest output level where the firm finally reaches productive efficiency.
c) the level of output where diminishing returns have not set in yet.
d) the smallest level of operation where long-run average costs are lowest.
- Which of the following statements is true?
a) Total cost = fixed cost + variable cost.
b) Total cost = fixed cost + implicit cost.
c) Variable cost = wages + salaries + benefits.
d) Opportunity cost = explicit cost - implicit cost.
In: Economics
(Individual or component costs of capital) Compute the cost of capital for the firm for the following:
a. A bond that has a$1,000par value (face value) and a contract or coupon interest rate of11.8percent. Interest payments are$59.00and are paid semiannually. The bonds have a current market value of$1124,and will mature in10years. The firm's marginal tax rate is34percet.b. A new common stock issue that paid a$1.79 dividend last year. The firm's dividends are expected to continue to grow at7.3 percent per year, forever. The price of the firm's common stock is now$27.97 c. A preferred stock that sells for$132 pays a dividend of 9.2 percent, and has a $100 par value. d. A bond selling to yield11.4percent where the firm's tax rate is34percent.
a. The after-tax cost of debt isnothing%.(Round to two decimal places.)
In: Finance
Bill Gates is analyzing a proposed expansion of a division in Switzerland. The cost of the expansion would be SF 16 million. The cash flows associated with the project would be SF 4.2 million per year for the next 5 years. The dollar required return is 12 percent per year, and the current exchange rate is SF 1.07. The interest rate in the U.S. is 5 percent per year. The interest rate in Switzerland is 2 percent per year. Use the approximate form of interest rate parity in calculating the expected spot rates. a. Convert the projected franc flows into dollar flows and calculate the NPV. (Do not round intermediate calculations and enter your answer in dollars, not in millions, rounded to two decimal places, e.g., 1,234,567.89) b-1. What is the required return on franc flows? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b-2. What is the NPV of the project in Swiss francs? (Do not round intermediate calculations and enter your answer in francs, not in millions, rounded to two decimal places, e.g., 1,234,567.89) b-3. What is the NPV in dollars if you convert the franc NPV to dollars? (Do not round intermediate calculations and enter your answer in dollars, not in millions, rounded to two decimal places, e.g., 1,234,567.89)
In: Finance
how do you find the lower cost market value
In: Accounting
Describe the impact of corporate taxes on the weighted average cost of capital.
In: Finance