Active Learning Lab #3 Group Assignment Fall 2021 "Oceanworld" Penguins PLEASE TURN THIS PAPER IN ALONG WITH YOUR GROUP WORK SHEET AT THE END OF CLASS "Oceanworld maintains an elbora te penguin habitat called "Kingdom of the Penguin". The summary cost report for the Kingdom for the last four months is provided. You have been asked to analyze the costs to prepare cost functions, so a budget can be prepared for September. Some recent cost observations include: 1. The costs that are listed are either fixed, variable, mixed or step. If they are variable or mixed, you will find a possible cost driver for them at the top of the data table given. One cost may have a few variable components. 2. The supervisory staff received a raise in July, and they are all paid on salary(not hourly). 3. Two regression analysis reports have been prepared using historical data for veterinary costs. They are on the back of this sheet. NOTE: Forveterinary costs, the Kingdom's accountant is confused. He can't decide between two cost drivers - number of penguins, or number of penguins past their natural expiration date. He ran two regression analysis reports in order to decide which cost driver to choose. Excerpts are provided for your interpretation. Based on the reports, choose the most appropriate cost driver and use the data from the report to state the cost function for veterinary costs. TURN OVER THIS PAGE TO SEE REGRESSION REPORTS 4. Penguins eat a combination of Pacific Krill and Lake Smelts. McRoberts Sales Company in Ruskin Florida sells fish for 200 animals but the price varies in the course of a year depending on where they have to get their fish from and allowable fishing seasons that are limited in duration to sustain fish supplies over time. Penguins also vary the amount they eat during the year depending on their breeding patterns and egglaying. 5. The Kingdom has caretakers that do all the work to care for the penguins 6. The Kingdom does Incur signficiant maintenance costs to maintain the water and electrical systems. These costs are carried at the corporate level for Oceanworld, because park management wants to direct and control all maintenence of environmental systems that might impact the health and welfare of animals in the park. If something goes wrong it can be disatrous. Therefore, building and equipment maintenance is not included in the the Kingdom's budget. However building and equipment de preciation expense is included in the budget 7. River rock is brought in just as breeding season starts so the penguins can make nests. The supplier ships by the truckload - each truck holds 5000 pounds of rock. Rock requirements for the two months before breeding season are as follows below. Breeding season starts in October. Therefore rock is brought in during August and September. Rock costs $.20 per pound 1-50 Penguins 2,500 pounds 51-100 Penguins. 5,000 pounds 101-150 Penguins 7,500 pounds 151-200 Penguins 10,000 pounds 201-250 Penguins. 12,500 pounds 251-300 Penguins 15,000 pounds 301-350 Penguins 17,500 pounds Financial Results for Kingdom of the Penguins Given Data: May June July August 31 30 31 31 Days in the month 298 280 275 # Penguins 270 2 2 3 Average Consumption of Fish Per Day Per Penguin in pounds 22670 25000 # Kilowatt hours 26670 26650 54000 60000 58000 49000 # Gallons Water Used 1.75$ $ 1.75$ 2.00 1.75$ Average Seafood Cost per pound (Krill & Smelt) 61 56 53 51 # of Penguins Past Their Natural Expiration Date 2976 2880 2976 297 # labor hours for caretakers 0 0 0 0 15000 River Rock (in pounds) May July June August Total 2 Expenses: Salaries for Habitat Managers $ $ 70,234 $ 70,234 $ 73,045$ 73,045$ 286,558 Supplies $ 18,900 $ 18,000 $ 17,750 $ 17,500 $ 72,150 Veterinary Expenses $ 6,500 $ 6,450 $ 6,375$ 6,350 $ 25,675 Krill/Smelt Costs $ 32,333$ 29,400$ 29.838$ 50,220$ 141,791 Labor Costs for caretakers $ 101,1845 97,920 $ 101,184$ 101,184 $ 401,472 Building & Equipment Depreciation $ 10,000 $ Anon 10,000 $ 10,000 $ 10,000 $ 40,000 Rock Costs $ $ $ $ 3,000 $ 3,000 Electricity $ 3,400 $ 3,264 $ 3,412 $ 3,501 $ 13,577 Water $ 540 $ 600 $ 580 $ 490$ 2,210 Total Expenses $ 243,091 $ 235,868 $ 242,184 $ 265,290 $ 986,433 Question #1A through #11: 1. Analyze each cost and determine if they are fixed, variable, mixed or step. Determine an appropriate cost driver for any variable or mixed cost. If you think acost has a cost driver, pick from something given in the problem. If calculations are required to determine if the cost is variable or mixed, show your work to justify how you classify the cost in the first answer box provided for each cost. If you determine the cost is a fixed cost, state your reason why you have made that determination in the first answer box. 2. Indicateif the cost is variable, mixed, fixed or step. 3. Write the cost function for the cost that the company would be able to use for a basis of budgeting future costs. 4. If the cost has a variable component, please identify the cost driver(s). ROUNDING: When determining the unit variable cost component of any MIXED COST using the high/low method round it to THREE decimal ploces before using it in the calculation to solve for fixed costs. For example $12.567841 should be $12.568 Question 2: Take all your cost functions and enter them on the page for use in doing question #3. For fish costs, use August numbers to write out the cost function, Active Learning Lab #3 Group Assignment Fall 2021 "Oceanworld" Penguins PLEASE TURN THIS PAPER IN ALONG WITH YOUR GROUP WORK SHEET AT THE END OF CLASS "Oceanworld maintains an elbora te penguin habitat called "Kingdom of the Penguin". The summary cost report for the Kingdom for the last four months is provided. You have been asked to analyze the costs to prepare cost functions, so a budget can be prepared for September. Some recent cost observations include: 1. The costs that are listed are either fixed, variable, mixed or step. If they are variable or mixed, you will find a possible cost driver for them at the top of the data table given. One cost may have a few variable components. 2. The supervisory staff received a raise in July, and they are all paid on salary(not hourly). 3. Two regression analysis reports have been prepared using historical data for veterinary costs. They are on the back of this sheet. NOTE: Forveterinary costs, the Kingdom's accountant is confused. He can't decide between two cost drivers - number of penguins, or number of penguins past their natural expiration date. He ran two regression analysis reports in order to decide which cost driver to choose. Excerpts are provided for your interpretation. Based on the reports, choose the most appropriate cost driver and use the data from the report to state the cost function for veterinary costs. TURN OVER THIS PAGE TO SEE REGRESSION REPORTS 4. Penguins eat a combination of Pacific Krill and Lake Smelts. McRoberts Sales Company in Ruskin Florida sells fish for 200 animals but the price varies in the course of a year depending on where they have to get their fish from and allowable fishing seasons that are limited in duration to sustain fish supplies over time. Penguins also vary the amount they eat during the year depending on their breeding patterns and egglaying. 5. The Kingdom has caretakers that do all the work to care for the penguins 6. The Kingdom does Incur signficiant maintenance costs to maintain the water and electrical systems. These costs are carried at the corporate level for Oceanworld, because park management wants to direct and control all maintenence of environmental systems that might impact the health and welfare of animals in the park. If something goes wrong it can be disatrous. Therefore, building and equipment maintenance is not included in the the Kingdom's budget. However building and equipment de preciation expense is included in the budget 7. River rock is brought in just as breeding season starts so the penguins can make nests. The supplier ships by the truckload - each truck holds 5000 pounds of rock. Rock requirements for the two months before breeding season are as follows below. Breeding season starts in October. Therefore rock is brought in during August and September. Rock costs $.20 per pound 1-50 Penguins 2,500 pounds 51-100 Penguins. 5,000 pounds 101-150 Penguins 7,500 pounds 151-200 Penguins 10,000 pounds 201-250 Penguins. 12,500 pounds 251-300 Penguins 15,000 pounds 301-350 Penguins 17,500 pounds Financial Results for Kingdom of the Penguins Given Data: May June July August 31 30 31 31 Days in the month 298 280 275 # Penguins 270 2 2 3 Average Consumption of Fish Per Day Per Penguin in pounds 22670 25000 # Kilowatt hours 26670 26650 54000 60000 58000 49000 # Gallons Water Used 1.75$ $ 1.75$ 2.00 1.75$ Average Seafood Cost per pound (Krill & Smelt) 61 56 53 51 # of Penguins Past Their Natural Expiration Date 2976 2880 2976 297 # labor hours for caretakers 0 0 0 0 15000 River Rock (in pounds) May July June August Total 2 Expenses: Salaries for Habitat Managers $ $ 70,234 $ 70,234 $ 73,045$ 73,045$ 286,558 Supplies $ 18,900 $ 18,000 $ 17,750 $ 17,500 $ 72,150 Veterinary Expenses $ 6,500 $ 6,450 $ 6,375$ 6,350 $ 25,675 Krill/Smelt Costs $ 32,333$ 29,400$ 29.838$ 50,220$ 141,791 Labor Costs for caretakers $ 101,1845 97,920 $ 101,184$ 101,184 $ 401,472 Building & Equipment Depreciation $ 10,000 $ Anon 10,000 $ 10,000 $ 10,000 $ 40,000 Rock Costs $ $ $ $ 3,000 $ 3,000 Electricity $ 3,400 $ 3,264 $ 3,412 $ 3,501 $ 13,577 Water $ 540 $ 600 $ 580 $ 490$ 2,210 Total Expenses $ 243,091 $ 235,868 $ 242,184 $ 265,290 $ 986,433 Question #1A through #11: 1. Analyze each cost and determine if they are fixed, variable, mixed or step. Determine an appropriate cost driver for any variable or mixed cost. If you think acost has a cost driver, pick from something given in the problem. If calculations are required to determine if the cost is variable or mixed, show your work to justify how you classify the cost in the first answer box provided for each cost. If you determine the cost is a fixed cost, state your reason why you have made that determination in the first answer box. 2. Indicateif the cost is variable, mixed, fixed or step. 3. Write the cost function for the cost that the company would be able to use for a basis of budgeting future costs. 4. If the cost has a variable component, please identify the cost driver(s). ROUNDING: When determining the unit variable cost component of any MIXED COST using the high/low method round it to THREE decimal ploces before using it in the calculation to solve for fixed costs. For example $12.567841 should be $12.568 Question 2: Take all your cost functions and enter them on the page for use in doing question #3. For fish costs, use August numbers to write out the cost function