亨格瑞管理会计英文第15版练习答案03

CHAPTER 3 COVERAGE OF LEARNING OBJECTIVES

CHAPTER 3

Measurement of Cost Behavior

3-A1 (20-25 min.) Some of these answers are controversial, and reasonable cases can be built for alternative classifications. Class discussion of these answers should lead to worthwhile disagreements about anticipated cost behavior with regard to alternative cost drivers.

1. (b) Discretionary fixed cost.

2. (e) Step cost.

3. (a) Purely variable cost with respect to revenue.

4. (a) Purely variable cost with respect to miles flown.

5. (d) Mixed cost with respect to miles driven.

6. (c) Committed fixed cost.

7. (b) Discretionary fixed cost.

8. (c) Committed fixed cost.

9. (a) Purely variable cost with respect to cases of 7-Up.

10. (b) Discretionary fixed cost.

11. (b) Discretionary fixed cost.

3-A2 (25-30 min.)

1. Support costs based on 60% of the cost of materials:

Sign A Sign

B

Direct materials cost $400 $200

Support cost (60% of materials cost) $240 $120

Support costs based on $50 per power tool operation:

Sign A Sign

B

Power tool operations 3 6

Support cost $150 $300

2. If the activity analysis is reliable, by using the current method,

Evergreen Signs is predicting too much cost for signs that use few

power tool operations and is predicting too little cost for signs that

use many power tool operations. As a result the company could be

losing jobs that require few power tool operations because its bids are too high -- it could afford to bid less on these jobs. Conversely, the

company could be getting too many jobs that require many power

tool operations, because its bids are too low -- given what the "true"

costs will be, the company cannot afford these jobs at those prices.

Either way, the sign business could be more profitable if the owner

better understood and used activity analysis. Evergreen Signs would

be advised to adopt the activity-analysis recommendation, but also to

closely monitor costs to see if the activity-analysis predictions of

support costs are accurate.

3-A3 (25-30 min.)

1. High-Low Method:

Support Cost Machine Hours

High month = September $13,500 1,750

Low month = May 9,000 850

Difference $ 4,500 900

Variable cost per machine hour = Change in cost ÷ Change in cost

driver

= $4,500 ÷ 900 = $5.00

Fixed support cost per month = Total support cost - Variable support

cost

At the high point: = $13,500 - $5.00 × 1,750

= $13,500 - $8,750

= $ 4,750

or at the low point: = $ 9,000 - $5.00 × 850

= $ 9,000 - $4,250

= $ 4,750

2. The high-low method uses the high and low activity levels to

determine the cost function. Since the new October data for machine

hours does not change either the high or low level there would be no change in the analysis.

3. The regression analysis results differ from the results of the high-low

method. As a result, estimates of total support cost may differ

considerably depending on the expected machine hour usage. For