The hospital ran a regression analysis using nursing hours as the cost driver to predict total hospital overhead costs. The regression analysis produced the following data:

Intercept: 346245

Slope: 12.81796

RSQ: 0.909311

A.) Round the variable portion of the regression equation formula to two decimal places. Based on the regression equation formula, what will the predicted total hospital overhead costs be if 54,000 nursing hours are expended during a month?

The hospital then ran a regression analysis using number of patient days as cost driver. The regression analysis produced the following data:

Intercept: 559764

Slope: 47.970926

RSQ: 0.563496482

B.) Again, round the variable portion of the regression equation to two decimal places. If 9,500 patient days are predicted for a month, what is the total predicted hospital overhead costs using the regression equation?

C.) Which regression equation, the one using nursing hours as the cost driver or the one using patient days as the cost driver, produces the most accurate correlation (best explanation of) the predicted hospital overhead costs. How do you know that your answer is correct? In other words, justify your answer.

Problem 3 (Textbook Reference: P4-4) – Activity-based costing versus traditional costing C&W Corporation manufactures travel clocks and watches. Overhead costs are currently allocated using direct- labor hours, but the controller has recommended using an activity-based costing system based on the following data:

Activity =Production setup, Material handling and requisition, Packaging and shipping ,Total overhead

Cost Driver= Setups, Parts, Units shipped

Cost $ 100,000 $ 30,000 $ 60,000 $ 190,000

Activity Level= Travel Clocks20,24,80,000 Watches 30, 36, 120,000 Required (Traditional Method):

1. Using the traditional cost assignment method, calculate the plant-wide overhead rate using labor-hours as the allocation base. Assume labor-hours required to assemble each unit are 0.5 hours per travel clock and 1.0 hour per watch, and that 80,000 travel clocks and 120,000 watches were produced. Plant-wide overhead rate: $___________________per direct labor hour

2. Under the traditional cost assignment method using the plant-wide overhead rate, how much total overhead cost is allocated to the: Travel clocks: $________________ Watches: $________________ *** Problem 3 is continued on the next page *** Required (ABC Method):

3. Using the Activity-based Costing (ABC) assignment method, calculate the activity cost rates for the following activities: (a) Setup costs: $___________________per production run (b) Materials handling costs: $___________________per part (c) Packaging and shipping costs: $___________________per shipment

4. Using the Activity-based Costing (ABC) assignment method how much total overhead cost is allocated to the: Travel clocks: $________________ Watches: $________________

Garfield Company manufactures a popular brand of dog repellant known as DogGone It, which it sells in gallon-size bottles with a spray attachment. The majority of Garfield’s business comes from orders placed by homeowners who are trying to keep neighborhood dogs out of their yards. Garfield’s operating information for the first six months of the year follows:

Required:
3. Using the high-low method, calculate Garfield’s total fixed operating costs and variable operating cost per bottle. (Do not round your intermediate calculations. Round your variable cost per unit answer to 2 decimal places and fixed cost answer to the nearest whole number.)



4. Perform a least-squares regression analysis on Garfield’s data. (Use Microsoft Excel or a statistical package to find the coefficients using least-squares regression. Round your answers to 3 decimal places.)

5. Determine how well this regression analysis explains the data. (Round you regression statistics to three decimal places and your percentage answer to the nearest whole number.)

6. Using the regression output, create a linear cost equation (y = a + bx) for estimating Garfield’s operating costs. (Round your answers to 3 decimal places.)

QUESTION 1

A firm is currently producing 80 units of output. At this level of output produced:

its average total cost is 100 (ATC = 100

) The market price per unit of output is 120

MR = 40 MC = 20

i. Is this firm making profits or losses? How much?

ii. Are they maximum profits? Why?

iii. If your answer to part ii was no, what does this firm have to do with maximize its profits?

A firm's total cost and marginal cost functions are

TC = 15Q^2+3Q - 25

MC = 30Q+3

Assuming that the market price is 183 and that the marginal revenue (MR) is also 183 ( it is constant at all output levels); how much output will this firm sell (produce) to maximize profits? What will be maximum profits for this firm?

(a) Luis Mahla purchases a Porsche Boxster for $49,700 and finances the entire amount at an annual interest rate of 6.3% for 8 years. Find the monthly payment. Assume the sales tax is 6% of the purchase price and the license fee is 1% of the purchase price. (Round your answer to the nearest cent.)

(b) After becoming a commercial pilot, Lorna Kao decides to purchase a Cessna 182 for $64,975. Assuming the sales tax is 4.9% of the purchase price, find each of the following.

(1) What is the total cost, including sales tax?
(2) If Lorna makes a down payment of 18% of the total cost, find the down payment.
(3) Assuming Lorna finances the remaining cost at an annual interest rate of 7.15% for 10 years, find the monthly payment.