Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

HydroHappy management wants to examine the company's largest non-value- added cost, selling expenses, to see if it can identify a better cost driver, and subsequently

image text in transcribed
image text in transcribed
HydroHappy management wants to examine the company's largest non-value- added cost, selling expenses, to see if it can identify a better cost driver, and subsequently reduce the selling activity to reduce the total selling cost. The company currently uses the number of sales calls as its cost driver. The cost accountant gathered the following information concerning possible cost drivers over the next 12 months for its $350,400 of expected selling costs. 5 5 7 3 2 Monthly selling costs and activity data Number of Estimated Number of Number of Hours Selling Sales Calls Miles Driven Worked Costs January 1,920 15,173 1,946 $ 30,824 February 1,843 13,720 1,716 27,635 March 1,931 15,371 1,962 31,447 April 1,702 13,547 1,710 27,536 May 1,881 14,462 1,802 28,907 June 1,899 15,520 1,925 30,960 July 1,788 14,205 1,781 28,588 August 1,706 13,768 1,743 27,304 September 1,911 15,273 1,914 30,848 October 1,708 14,014 1,791 28,565 November 1,897 13,803 1,921 30,482 December 1,714 14,212 1,692 27,304 Totals 21,900 173,068 21,903 $ 350,400 1 2 3 4 5 6 7 8 Use Excel or the visualization software of your or your instructor's choice to perform the following. There are four parts to this problem. a. For each cost driver, use Excel's SLOPE and INTERCEPT functions to calculate the unit variable cost and total fixed costs. b. For each cost driver, create a scatter chart using Excel or the visualization software of you or your instructor's choice. Include a descriptive chart title, axes labels, and a linear forecast trend line of the predicted selling costs for each driver. C. Examine the three scatter charts. The trend lines indicate the expected cost at each activity level. Are the data points a 'good fit' to the trend line of any of the three drivers ? Recommend to HydroHappy's managers the 'best' cost driver for selling costs. Support your recommendation. d. Why might Hydro Happy's management think Excel's SLOPE and INTERCEPT functions are a better option than using the high-low method? Support your response

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Ray Garrison, Eric Noreen, Peter Brewer

11th Edition

0072834943, 9780072834949

More Books

Students also viewed these Accounting questions

Question

Are the investments going to be supported by the stakeholders?

Answered: 1 week ago