Calculations: Cost function

John Smith

4 years ago

ACC 320

TEST 1

2021 SPRING

RULES FOR TEST 1

1. Submit on time [as indicated on your system]

2. Do not copy because when identified your marks will be very low.

3. Read the questions with care before answering

4. All questions must be hand written [ typed answer gets very low marks]

5. The graph question should be done on graph paper and it should be constructed not sketched

6. Cleanliness or neatness will be rewarded.

7. in theory questions you should provide your own examples not just copy from PPT.

IMPORTANT

ATTENDANCE FOR TEST 1 WILL HAPPEN AT 2.00 PM. IF YOU ARE ABSENT YOUR TEST WILL BE MARKED ON 80% NOT 100%

Question 1

The following information pertains to the Satyam Company for the year ending December 31, 2019.

Hours

Revenue

140,000

Interest expense

2300

Purchases of direct materials

10,000

Indirect Labour

8,000

Beginning direct material

1850

Indirect Materials

5,000

Supplies expense [factory]

3,500

Supplies [factory]

9540

Depreciation of factory machines

2,000

Depreciation of factory Plant

2300

Depreciation of shop

4,000

Unearned revenue

5620

Selling commission

1200

Marketing costs

4200

Wages [Store]

6,000

Insurance expense [shop]

2300

Prepaid insurance Expense [store]

1450

Supplies expense [store]

5,000

Utilities [store]

2,500

Direct Labor Hours

2500

Hourly Rate for direct labour

Direct materials inventory Dec 31 2019

7,000

Work in process Jan 1 2019

3,000

Sales Return/ allowances

2100

Rent revenue

8,000

Work in process Dec 31 2019

5,000

Sales Discounts

3,000

Finished Goods Inventory Jan 1 2019

6,000

Finished Goods Inventory Dec 31 2019

2500

REQUIRED

1. Prepare a COGM statement for year end

2. Calculate cost of goods sold

3. Prepare an income statement [ assume income tax rate to be 15%] for year end

Question 2

Lotus company incurred the following maintenance costs during the past 9 months :

Table 1

Months

Room occupancy

Cost $

120

4560

210

9780

2920

160

8280

430

20320

3920

325

17140

143

5500

570

22400

REQUIRED

Part 1

A. Use the data on Table 1 , estimate the variable and fixed cost of the company using the high and low method

B. Develop a cost function for the company.

C. Estimate the maintenance cost if 630 rooms are occupied in October

Part 2

1. Use a scatter graph and the two points that seem to best represent the relationship between cost and activity levels of 80 and 325 machine hours. Use these two points , estimate the variable cost and the fixed cost [ components of maintenance costs]

2. Develop a cost function that the company can use to estimate maintenance cost at different volume levels of occupancy

3. Estimate maintenance costs for December if the company expects 600 rooms to be occupied

SHOULD CONSTRUCT THE GRAPH USING GRAPH PAPER [available free on internet]. Very little mark will be given if you make a sketch,

Part 3

1. Using the least square formula find Fixed cost and Unit variable cost

2. State the cost function

3. If X = 800 what is Y

Question 3

XYZ company provides the following information processed by its analyst department :

Statistics

Covariance

72640

Correlation

0.82

Standard Deviation x

79.1

Standard Deviation y

21.35

Variance x

6254

Variance y

456

Mean ( x)

842

Mean (y)

17250

Using the information given on the table above

4. Find the variable cost per unit

5. Calculate the fixed cost

6. State the cost function

7. If X= 180 find Y

Question 4

Answer these questions briefly

1. Using examples differentiate between prime cost and conversion cost

2. How does committed cost differ from variable cost? Illustrate your answer by sketch graph.

4. What are the main features of information provided to the management accounting department?

5. Compare and contrast variable cost and fixed cost.

6. State a cost function and why do we have to use it in management accounting?

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Home>Business & Finance homework help>Accounting homework help>ACC T1
ACC 320

TEST 1

2021 SPRING

RULES FOR TEST 1

1. Submit on time [as indicated on your system]

2. Do not copy because when identified your marks will be very low.

3. Read the questions with care before answering

4. All questions must be hand written [ typed answer gets very low marks]

5. The graph question should be done on graph paper and it should be constructed not sketched

6. Cleanliness or neatness will be rewarded.

7. in theory questions you should provide your own examples not just copy from PPT.

IMPORTANT

ATTENDANCE FOR TEST 1 WILL HAPPEN AT 2.00 PM. IF YOU ARE ABSENT YOUR TEST WILL BE MARKED ON 80% NOT 100%

Question 1

The following information pertains to the Satyam Company for the year ending December 31, 2019.

Hours

Revenue

140,000

Interest expense

2300

Purchases of direct materials

10,000

Indirect Labour

8,000

Beginning direct material

1850

Indirect Materials

5,000

Supplies expense [factory]

3,500

Supplies [factory]

9540

Depreciation of factory machines

2,000

Depreciation of factory Plant

2300

Depreciation of shop

4,000

Unearned revenue

5620

Selling commission

1200

Marketing costs

4200

Wages [Store]

6,000

Insurance expense [shop]

2300

Prepaid insurance Expense [store]

1450

Supplies expense [store]

5,000

Utilities [store]

2,500

Direct Labor Hours

2500

Hourly Rate for direct labour

Direct materials inventory Dec 31 2019

7,000

Work in process Jan 1 2019

3,000

Sales Return/ allowances

2100

Rent revenue

8,000

Work in process Dec 31 2019

5,000

Sales Discounts

3,000

Finished Goods Inventory Jan 1 2019

6,000

Finished Goods Inventory Dec 31 2019

2500

REQUIRED

1. Prepare a COGM statement for year end

2. Calculate cost of goods sold

3. Prepare an income statement [ assume income tax rate to be 15%] for year end

Question 2

Lotus company incurred the following maintenance costs during the past 9 months :

Table 1

Months

Room occupancy

Cost $

120

4560

210

9780

2920

160

8280

430

20320

3920

325

17140

143

5500

570

22400

REQUIRED

Part 1

A. Use the data on Table 1 , estimate the variable and fixed cost of the company using the high and low method

B. Develop a cost function for the company.

C. Estimate the maintenance cost if 630 rooms are occupied in October

Part 2

2. Develop a cost function that the company can use to estimate maintenance cost at different volume levels of occupancy

3. Estimate maintenance costs for December if the company expects 600 rooms to be occupied

SHOULD CONSTRUCT THE GRAPH USING GRAPH PAPER [available free on internet]. Very little mark will be given if you make a sketch,

Part 3

1. Using the least square formula find Fixed cost and Unit variable cost

2. State the cost function

3. If X = 800 what is Y

Question 3

XYZ company provides the following information processed by its analyst department :

Statistics

Covariance

72640

Correlation

0.82

Standard Deviation x

79.1

Standard Deviation y

21.35

Variance x

6254

Variance y

456

Mean ( x)

842

Mean (y)

17250

Using the information given on the table above

4. Find the variable cost per unit

5. Calculate the fixed cost

6. State the cost function

7. If X= 180 find Y

Question 4

Answer these questions briefly

1. Using examples differentiate between prime cost and conversion cost

2. How does committed cost differ from variable cost? Illustrate your answer by sketch graph.

4. What are the main features of information provided to the management accounting department?

5. Compare and contrast variable cost and fixed cost.

6. State a cost function and why do we have to use it in management accounting?