# Managerial Accounting Case Study

7597 Words 31 Pages
Register to read the introduction… An R2 of 95% means that 95% of the data points fall on the equation line. c. A negative R2 means that as activity increases, costs will decrease. d. R2 measures the percentage of the total variability of the costs that is explained by the equation line. e. None of the above are true.

12. Why is managerial judgment so critical in determining cost behavior? a. All statistical methods are notoriously unreliable. b. Statistical methods are highly accurate in depicting the past, but they cannot foresee the future. c. The fixed and variable cost breakdowns are recorded in the accounting records; management just needs to know the appropriate accounts to search. d. The managers can use their experience to refine the statistical estimates. e. Managerial judgment is not critical; statistical methods can capture all of the manager’s expertise without any bias.

13. XYZ Corporation has reported activity costs. When 10,000 units are produced, the average cost is \$23 per unit. When the activity is only 6,000 units, the average cost is \$30 per unit. What are the fixed and variable costs? Fixed Variable a. \$105,000.00 \$ 12.50 b. 12.50
a Variable = (\$23 × 10,000 – \$30 × 6,000) / (10,000 – 6,000) = \$50,000 / 4,000 = \$12.50 Fixed = \$230,000 – (\$12.50 × 10,000) = \$105,000 14. c Variable = (\$310,000 – \$265,000) / (3,500 – 2,750) = \$45,000 / 750 = \$60.00 Fixed = \$310,000 – (\$60 × 3,500) = \$100,000 15. a Variable = (\$190,000 – \$150,000) / (17,500 – 12,500) = \$40,000 / 5,000 = \$8.00 16. d Y = 347.86 + (3.731 × 150) = 907.51 Y = 2.086 × 53.51 = 111.62

practice test
EXERCISE 1 (RESOURCES AND ACTIVITIES) 1. ENGINEERS: SHORT-TERM RESOURCES SUPPLIED IN ADVANCE Facility: long-term resources supplied in advance Leased Equipment: long-term resources supplied in advance Supplies: resources supplied as needed

2. Activity rate: Fixed: [4 × \$40,000 + (\$450,000 / 20) + \$6,000] / (4 × 3,200) = \$188,500 / 12,800 = \$14.7266 per test Variable: \$175,000 / 12,800 = \$13.6719

3. Activity available = Activity usage + Unused Activity 12,800 = 11,000 + 1,800

Exercise 2 (High-Low Method and Scatterplot Method) 1. VARIABLE: (\$4,400 – \$2,650) / (325 – 150) = \$1,750 / 175 = \$10.00 PER SHIPMENT Fixed: \$4,400 – (\$10 × 325) = \$4,400 – \$3,250 = \$1,150 Storeroom Cost = \$1,150 + \$10 × number of

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