34. An activity analysis has shown that the number of components added to Produc

Question

34. An activity analysis has shown that the number of components added to Product A and Product B is the cost driver for support costs. Support costs are $10 per component. Product A has 5 components and Product B has 10 components. What amounts of support costs should be assigned to Product A and Product B?
Product A Product B
A) $50 $100
B) $75 $150
C) $100 $50
D) $150 $75

35. To estimate the monthly maintenance cost for the maintenance department in a hospital, the following monthly costs are available:

Monthly Expense Costs
Supervisor Salary Expense $4,000
Depreciation Expense—Maintenance Equipment $6,000
Repairs Expense—Maintenance Equipment $6,000
Supplies Expense $7,000
Wages Expense—Maintenance Workers $10,000

The Supervisor Salary Expense and the Depreciation Expense are fixed costs. The remaining expenses are variable costs. There are 1,000 patient days in a month, which is the cost driver for maintenance costs. Estimate the cost function where Y is the monthly maintenance cost and X is the variable cost per patient day.
A) Y = $8 + $22X
B) Y = $8,000 + $22,000X
C) Y = $10,000 + $23X
D) Y = $10,000 + $23,000X

36. When examining the output from regression analysis, the goodness of fit measure is labeled ________ by most computer programs.
A) X coefficient
B) R2
C) constant
D) standard error of estimate

37, Presented below is the production data for six months showing the mixed costs incurred by Northeastern Company.

Month Cost Units
July $5,890 4,100
August $4,012 3,200
September $7,480 6,300
October $9,000 7,500
November $5,800 5,800
December $7,336 6,600

Northeastern Company uses the high-low method to analyze mixed costs. The cost function is ________ where Y= Total Cost and X= Number of units.
A) Y = $440 + $1.12X
B) Y = $440 + $1.20X
C) Y = $300 + $1.16X
D) Y = $7,850 + $0.132X

Explanation / Answer

34 Product A Product B Cost driver 10 10 Components 5 10 Support cost 50 100 Correct answer is A 35 Variable cost Fixed cost Supervisor salary 4000 Depreciation expense 6000 Repair expense 6000 Supplies expense 7000 Wages expense 10000 Total 23000 10000 Number of patient 1000 Variable cost per patient 23 So correct answer is C 10000+23X Cost Units 37 October 9000 7500 Highest August 4012 3200 Lowest Difference 4988 4300 Cost per unit 1.16 Total cost for 3200 units 4012 Variable cost for 3200 units @1.16 3712 Fixed cost 300 So correct answer is C 300+1.16X

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