Question
(CPA) Jackson Inc. is preparing a budget for the coming year and requires the cost of steam used in its plant to be divided into
(CPA) Jackson Inc. is preparing a budget for the coming year and
requires the cost of steam used in its plant to be divided into its fixed and variable elements. The following data on the cost of steam used and direct manufacturing labor-hours (DMLH) used are available for the last six months:
Cost of
Month Steam DMLH
July $ 15,850 3,000
August 13,400 2,050
September 16,370 2,900
October 19,800 3,650
November 17,600 2,670
December 18,500 2,650
Total $101,520 16,920
1.Assuming Jackson uses the high-low method, the estimated variable cost of steam per DMLH is: $___________
2.Using the information in question 1 and assuming Jackson uses the high-low method, the estimated amount of the constant is: $___________
3.In a step cost function where the steps are narrow, the cost behavior
approaches the pattern of a:
__________? cost
.
4.(CPA) Adams Corporation developed the following budget for annual
indirect manufacturing labor cost:
Total Cost = $4,800 + $0.50 (Machine-hours)
The operating budget for the current month is based on 20,000 machine-hours. Indirect manufacturing labor cost included in the monthly budget is:
$_________________.
5.(CMA) Ace Manufacturing Corporation found that the production of a certain product is subject to an 80% learning curve. The product is produced in lots of 100 units and 8 labor-hours are required for the first lot. Assuming Ace uses the cumulative average-time learning model, the total time required to produce 400 units is:
_______________hours
6.Using the information in question 5 and assuming Ace uses the cumulative average-time learning model, the incremental time required to produce the second lot of 100 units is:
________________hours per unit
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