managerial accounting

PROJECT 1 (60 MARKS) Project is due at the end of Week 3. It is out of 60 marks Question 1(14 marks) Irish Linens Inc manufactures two products, a finely woven tea towel and a table runner. As the accountant for the company, you have been analyzing the accounts to determine the behaviour of the manufacturing overhead. The previous accountant used direct labour hours, as she believed it was the most appropriate driver. However, the company has gone through significant automation, and you believe that machine hours may be the better driver. The following information has been gathered: Labour Manufacturing Month hours overhead January 4.590 $1,067,869 February 4,503 1,074,792 4.365 1.068,344 April 4,134 1.044.164 May 3.927 1,022,968 3,804 1,037,620 July 3,957 1,042,840 August 4,158 1,032.056 September 4,029 1,051 244 October 4.245 1,054,024 November 4,469 1,063,254 December 4,692 1,072 484 Using 20 observations including the above, you have run a regression analysis with the following summary outputs: March June So WWW 50 LINI 1 User 2413 12 AL erhead using the high- rhead using account thead using or machine hours the most reliable? KS) anitoba. The lakes er in the company on. The company is also ensures rent products from red carbonated all products start undergoes a process. For still trgoes from this centage of the In the Fruit marks) ble P1 de Management Account In addition, a similar analysis has been done on machine hours: Machine Manufacturing Month hours overhead January 7802 $1,067,869 February 8,509 1,074,792 March 7,195 1,058.344 April 6,502 1,044,164 May 5,885 1.022.968 June 5,512 1,037,620 July 6,081 1,042,840 August 6.578 1,032,056 September 6,198 1,051,244 October 6.894 1,054,024 November 7.517 1,063 254 December 7.976 1,072,484 Using 20 observations including the above information, the regression analysis on machine hours produced a summary output as follows: GRUP C. TEM 20 AN . A- Users TER NIS 4 5 high- unt $ An analysis of the nature of the various accounts that make up the manufacturing overhead was undertaken for December Item Amount Cost classification Factory property tax $ 349.865 Ford Factory janitorial services 61,387 Machine depreciation 250 375 Supervisor salaries 200.000 Foxed Indirect supplies 10 855 Variable Wages for supply personnel 102.000 Variable Hydro-variable component 73.002 Variable Hydro-faced component 25.000 Fored $ 1.072.484 Required: a) Develop an estimate of the cost function for manufacturing overhead using the high low method for both ) labour hours and machine hours. (6 marks) b) Develop an estimate of the cost function for manufacturing overhead using accoun analysis and direct labour hours. (3 marks) c) Develop an estimate of the cost function for manufacturing overhead using regression analysis. Choose the best cost driver-labour hours or machine hour - to develop the cost function, and explain your choice. (3 marks) d) Which one of the estimates you developed -- (a) (b), or () -- is the most reliabi Why? (2 marks) Question 2 (26 marks) . October July December November August May June April September March February January Month following summary output Using 20 observations incl may be the better driver company has gone thro direct labour hours, as determine the behaviou runner. As the account 4,692 4,469 4,245 4.158 3,804 3,927 4.134 4,365 4,503 4,580 hours Labou KO'P SOC Accounting PROJECT 1 (60 MARKS) Project is due at the end of Week 3. It is out of 60 marks Question 1 (4 marks) Irish Linens Inc. manufactures two products, a finely woven tea towel and a table runner. As the accountant for the company, you have been analyzing the accounts to determine the behaviour of the manufacturing overhead. The previous accountant used direct labour hours, as she believed it was the most appropriate driver. However, the company has gone through significant automation, and you believe that machine hours may be the better driver. The following information has been gathered: Labour Manufacturing Month hours overhead January 4.580 $1,067,869 February 4,503 1,074.792 March 4.365 1,068,344 April 4,134 1,044 164 May 3.927 1,022,968 June 3,804 1,037,620 3,957 1,042,640 August 4.158 1,032 056 September 4,029 1,051,244 October 4.245 1,054,024 November 4,469 1,063,254 December 4,692 1,072,484 Using 20 observations including the above, you have run a regression analysis with the following summary outputs: S. M Project 1 dile Management In addition, a similar analysis has been done on machine hours: Machine Manufacturing Month hours overhead January 7.802 $1,067,869 February 6,509 1,074,792 March 7,195 1.068,344 April 6,502 1,044,164 May 5,885 1,022,968 June 1,037,620 July 6,081 1,042,640 August 6,578 1.032,056 September 6.199 1,051,244 October 6,894 1,054,024 November 7,517 1,063 254 December 7.976 1,072,484 5,512 Using 20 observations including the above information, the regression analysis on machine hours produced a summary output as follows: w ANA MS Fixed An analysis of the nature of the various accounts that make up the manufacturing overhead was undertaken for December: Item Amount Cost classification Factory property tax $ 349,865 Factory janitorial services 61.387 Variable Machine depreciation 250 375 Fixed Supervisory salaries 200,000 Fixed Indirect supplies 10,855 Variable Wages for supply personnel 102,000 Variable Hydro-- variable component 73,002 Variable Hydro-fed component 25.000 Fixed $ 1,072,484 Required: a) Develop an estimate of the cost function for manufacturing overhead using the high- low method for both (i) labour hours and cl) machine hours. (6 marks) b) Develop an estimate of the cost function for manufacturing overhead using account analysis and direct labour hours. (3 marks) c) Develop an estimate of the cost function for manufacturing overhead using regression analysis. Choose the best cost driver-labour hours or machine hours - to develop the cost function, and explain your choice (3 marks) d) Which one of the estimates you developed -- (a), (b) or (c)- is the most reliable? Why? (2 marks) PROJECT 1 (60 MARKS) Project is due at the end of Week 3. It is out of 60 marks Question 1(14 marks) Irish Linens Inc manufactures two products, a finely woven tea towel and a table runner. As the accountant for the company, you have been analyzing the accounts to determine the behaviour of the manufacturing overhead. The previous accountant used direct labour hours, as she believed it was the most appropriate driver. However, the company has gone through significant automation, and you believe that machine hours may be the better driver. The following information has been gathered: Labour Manufacturing Month hours overhead January 4.590 $1,067,869 February 4,503 1,074,792 4.365 1.068,344 April 4,134 1.044.164 May 3.927 1,022,968 3,804 1,037,620 July 3,957 1,042,840 August 4,158 1,032.056 September 4,029 1,051 244 October 4.245 1,054,024 November 4,469 1,063,254 December 4,692 1,072 484 Using 20 observations including the above, you have run a regression analysis with the following summary outputs: March June So WWW 50 LINI 1 User 2413 12 AL erhead using the high- rhead using account thead using or machine hours the most reliable? KS) anitoba. The lakes er in the company on. The company is also ensures rent products from red carbonated all products start undergoes a process. For still trgoes from this centage of the In the Fruit marks) ble P1 de Management Account In addition, a similar analysis has been done on machine hours: Machine Manufacturing Month hours overhead January 7802 $1,067,869 February 8,509 1,074,792 March 7,195 1,058.344 April 6,502 1,044,164 May 5,885 1.022.968 June 5,512 1,037,620 July 6,081 1,042,840 August 6.578 1,032,056 September 6,198 1,051,244 October 6.894 1,054,024 November 7.517 1,063 254 December 7.976 1,072,484 Using 20 observations including the above information, the regression analysis on machine hours produced a summary output as follows: GRUP C. TEM 20 AN . A- Users TER NIS 4 5 high- unt $ An analysis of the nature of the various accounts that make up the manufacturing overhead was undertaken for December Item Amount Cost classification Factory property tax $ 349.865 Ford Factory janitorial services 61,387 Machine depreciation 250 375 Supervisor salaries 200.000 Foxed Indirect supplies 10 855 Variable Wages for supply personnel 102.000 Variable Hydro-variable component 73.002 Variable Hydro-faced component 25.000 Fored $ 1.072.484 Required: a) Develop an estimate of the cost function for manufacturing overhead using the high low method for both ) labour hours and machine hours. (6 marks) b) Develop an estimate of the cost function for manufacturing overhead using accoun analysis and direct labour hours. (3 marks) c) Develop an estimate of the cost function for manufacturing overhead using regression analysis. Choose the best cost driver-labour hours or machine hour - to develop the cost function, and explain your choice. (3 marks) d) Which one of the estimates you developed -- (a) (b), or () -- is the most reliabi Why? (2 marks) Question 2 (26 marks) . October July December November August May June April September March February January Month following summary output Using 20 observations incl may be the better driver company has gone thro direct labour hours, as determine the behaviou runner. As the account 4,692 4,469 4,245 4.158 3,804 3,927 4.134 4,365 4,503 4,580 hours Labou KO'P SOC Accounting PROJECT 1 (60 MARKS) Project is due at the end of Week 3. It is out of 60 marks Question 1 (4 marks) Irish Linens Inc. manufactures two products, a finely woven tea towel and a table runner. As the accountant for the company, you have been analyzing the accounts to determine the behaviour of the manufacturing overhead. The previous accountant used direct labour hours, as she believed it was the most appropriate driver. However, the company has gone through significant automation, and you believe that machine hours may be the better driver. The following information has been gathered: Labour Manufacturing Month hours overhead January 4.580 $1,067,869 February 4,503 1,074.792 March 4.365 1,068,344 April 4,134 1,044 164 May 3.927 1,022,968 June 3,804 1,037,620 3,957 1,042,640 August 4.158 1,032 056 September 4,029 1,051,244 October 4.245 1,054,024 November 4,469 1,063,254 December 4,692 1,072,484 Using 20 observations including the above, you have run a regression analysis with the following summary outputs: S. M Project 1 dile Management In addition, a similar analysis has been done on machine hours: Machine Manufacturing Month hours overhead January 7.802 $1,067,869 February 6,509 1,074,792 March 7,195 1.068,344 April 6,502 1,044,164 May 5,885 1,022,968 June 1,037,620 July 6,081 1,042,640 August 6,578 1.032,056 September 6.199 1,051,244 October 6,894 1,054,024 November 7,517 1,063 254 December 7.976 1,072,484 5,512 Using 20 observations including the above information, the regression analysis on machine hours produced a summary output as follows: w ANA MS Fixed An analysis of the nature of the various accounts that make up the manufacturing overhead was undertaken for December: Item Amount Cost classification Factory property tax $ 349,865 Factory janitorial services 61.387 Variable Machine depreciation 250 375 Fixed Supervisory salaries 200,000 Fixed Indirect supplies 10,855 Variable Wages for supply personnel 102,000 Variable Hydro-- variable component 73,002 Variable Hydro-fed component 25.000 Fixed $ 1,072,484 Required: a) Develop an estimate of the cost function for manufacturing overhead using the high- low method for both (i) labour hours and cl) machine hours. (6 marks) b) Develop an estimate of the cost function for manufacturing overhead using account analysis and direct labour hours. (3 marks) c) Develop an estimate of the cost function for manufacturing overhead using regression analysis. Choose the best cost driver-labour hours or machine hours - to develop the cost function, and explain your choice (3 marks) d) Which one of the estimates you developed -- (a), (b) or (c)- is the most reliable? Why? (2 marks)