Unit 3 Cost Accounting

Cost Accounting Unit 3

Complete the following problem in Chapter 5 of your text:

· Problem 5-49, "Account Analysis," page 198.

5-49. Account Analysis

( LO 5-3 )

The accounting department of a large limousine company is analyzing the costs of its services. The cost data and level of activity for the past 16 months follow:

 

Month	Special Analyses	Customer Accounts	Paychecks Processed	Accounting Service Costs
1	2	325	1,029	$ 63,800
2	4	310	993	68,900
3	2	302	1,268	64,000
4	1	213	1,028	61,300
5	2	222	984	61,600
6	0	214	712	50,800
7	1	131	762	51,020
8	1	123	739	54,300
9	0	115	708	50,500
10	2	296	1,232	64,800
11	2	213	978	58,000
12	1	222	929	57,500
13	2	217	1,059	62,200
14	2	132	942	54,900
15	4	300	1,299	71,530
16	4	315	1,283	64,800
Totals	30	3,650	15,945	$959,950

 

In addition to the information on the previous page, you learn that the accounting department had the following total costs for the past 16 months for each of the following:

Total cost of paychecks processed	$180,100
Total cost of maintaining customer accounts	109,600
Total cost of performing special analyses	120,000
Total fixed costs (total for 16 months)	550,250
Total costs	$959,950

Required

a. What is the cost per unit for (1) paychecks processed, (2) customer accounts maintained, and (3) special analyses performed?

b. Assuming the following level of cost-driver volumes for a month, what are the accounting department’s estimated costs of doing business using the account analysis approach?

· 1,000 paychecks processed

· 200 customer accounts maintained

· 3 special analyses

Complete the following problem in Chapter 5 of your text:

· Problem 5-57, "Interpretation of Regression Results: Simple Regression," page 204.

5-57. Interpretation of Regression Results: Simple Regression

( LO 5-5 )

Your company provides a variety of delivery services. Management wants to know the volume of a particular delivery that would generate $10,000 per month in operating profits before taxes. The company charges $20 per delivery.

The controller’s office has estimated overhead costs at $9,000 per month for fixed costs and $12 per delivery for variable costs. You believe that the company should use regression analysis. Your analysis shows the results to be:

Monthly overhead=$26,501+$10.70 per delivery

Your estimate was based on the following data:

Month	Overhead Costs	Number of Deliveries
1	$142,860	11,430
2	151,890	12,180
3	192,600	15,660
4	141,030	11,250
5	203,490	12,780
6	180,630	14,730
7	159,630	12,510
8	183,990	15,060
9	194,430	15,450
10	150,120	11,970
11	154,080	12,630
12	184,800	15,300
13	183,120	14,580

The company controller is somewhat surprised that the cost estimates are so different. You have been asked to recheck your work and see if you can figure out the difference between your results and the controller’s results.

Required

a. Analyze the data and your results and state your reasons for supporting or rejecting your cost equation.

b. Write a report that informs management about the correct volume that will generate $10,000 per month in operating profits before taxes.

 

It is not possible to come up with these figures with the data you have calculated, so where did the work come from???

 

Where is the management report as required in the instructions???