Log in
HomeStudy Guides420,000CA160,000

[ACCT 2230] - Final Exam Guide - Ultimate 43 pages long Study Guide!

712 views43 pages
whitepanda307
29 Nov 2016
School
University of Guelph
Department
Accounting
Course
ACCT 2230
Professor
Alireza Talebi

For unlimited access to Study Guides, a Grade+ subscription is required.

Document Summary

Variable costs: total dollar amount changes in proportion to activity level, per unit bases remains constant. Activity base: a measure of whatever causes a variable cost to be incurred: for example, the total cost of direct materials in a bicycle manufacturing company will increase as the number of bicycles produced increases. Manager"s job: to plan and control variable costs, a manger must be well acquainted with he various activity bases within the rm. True variable costs: direct materials, diagonal line upwards. Curvilinear costs: costs that show a curve relationship between cost and activity rather than a straight-line relationship. Relevant range: that range of activity within which the assumptions made about cost behaviour are valid: within the linear portion of the curvilinear costs, we make a straight line approximation from the curvilinear cost line. Fixed costs: total xed costs remains constant within relevant range of activity, the per unit xed constant becomes progressively smaller as the level of activity increases.

Get access

Grade+
$40 USD/m
Billed monthly
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
10 Verified Answers

Related Documents

ACCT 2230 Chapter Notes - Chapter 3: Fixed Cost, Income Statement, Root Mean Square
whitepanda307
ACCT 2230 Chapter Notes - Chapter 3: Variable Cost, Dependent And Independent Variables, Lincoln Near-Earth Asteroid Research
lilacseal80
ACCT 2230 Lecture Notes - Lecture 2: Behaviorism, Variable Cost, Unit
sangriaeel172

Related Questions

King City Specialty Bikes (KCSB) produces high-end bicycles. The unit costs to manufacture and market the bicycles at last year's volume level of 1,850 bicycles per month are shown in the following table:

Unit manufacturing costs
Variable $238
Fixed 109
Total unit manufacturing costs $347
Unit nonmanufacturing costs
Variable 59
Fixed 140
Total unit nonmanufacturing costs 199
Total unit costs $546

KCSB expects to produce and sell 2,250 bicycles per month in the coming year. The bicycles sell for $580 each.

KCSB receives a proposal from an outside contractor who, for $165 per bicycle, will assemble 850 bicycles per month and ship them directly to KCSB's customers as orders are received from KCSB's sales force. KCSB would provide the materials for each bicycle, but the outside contractor would assemble, box, and ship the bicycles. The variable manufacturing costs would be reduced by 35% for the 850 bicycles assembled by the outside contractor, and variable nonmanufacturing costs for the 850 bicycles would be cut by 55%.

KCSB's marketing manager thinks that it could sell 75 specialty racing bicycles per month for $6,000 each, and its production manager thinks that it could use the idle resources to produce each of these bicycles for variable manufacturing costs of $4,800 per bicycle and variable nonmanufacturing costs of $400 per bicycle.

If KCSB accepts the proposal, it would be able to save 10% of fixed manufacturing costs; fixed nonmanufacturing costs would be unchanged.

REQUIRED [Note: Round unit cost computations to the nearest cent]

What is the difference in KCSB's monthly costs between accepting the proposal and rejecting the proposal? ______________ (Note: If the costs of accepting the proposal are less than the costs of rejecting it, enter the difference as a positive number; if the accept costs are more than the reject costs, enter the difference as a negative number.)

PROBLEM 2-17 High-Low Method; Predicting Cost [LO2-4, LO2-5] Sawaya Co., Ltd., of Japan is a manufacturing company whose total factory overhead costs fluctu- ate considerably from year to year according to increases and decreases in the number of direct labor-hours worked in the factory. Total factory overhead costs at high and low levels of activity for recent years are given below: Level of Activity High Direct labor-hours ................. Total factory overhead costs ........ Low 50,000 $14,250,000 75,000 $17,625,000 The factory overhead costs above consist of indirect materials, rent, and maintenance. The com- pany has analyzed these costs at the 50,000-hour level of activity as follows: Indirect materials (variable) ...... Rent (fixed) .... Maintenance (mixed) ...... Total factory overhead costs ..... $ 5,000,000 6,000,000 3,250,000 $14,250,000 To have data available for planning, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $17,625,000 factory overhead cost at the high level of activity con- sists of maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $17,625,000 consists of indirect materials and rent. Think about the behavior of variable and fixed costs!) 2. Using the high-low method, estimate a cost formula for maintenance. 3. What total factory overhead costs would you expect the company to incur at an operating level of 70,000 direct labor-hours?