Assignment: Cost Behavior and Cost Estimation
As a professional you need to be able to understand the unit Assignments to provide you with some valuable experience computing and evaluating metrics used in decision-making based on business data. To the extent that you can master these necessary skills you can become a more effective manager.
Problem 1-
How can managerial accounting information be useful for interstate or global expansion?
What decisions might be useful for interstate or global expansion?
What specific managerial accounting information might be in determining strategy for decision-making for interstate or global business growth?
Problem 2-
John Dough's bakery in Waxahachie, Texas, specializes in chocolate chip cookies. While John's business does not yet have a national presence, like Mrs. Fields, he does have a strong statewide reputation. Recently, John has been receiving some out-of-state orders through the company's website. He is beginning to think about the potential for growing his out-of-state business.
1. How can managerial accounting information be useful to John as he thinks about growing his out-of-state business?
2. What decisions might John need to make if he decides to grow his out-of-state business?
3. What managerial accounting information might John find useful as he decides how to grow his out-of-state business?
Problem 3-
Assess decision-making approaches to forecasting results using different techniques. Compare results.
Problem 4-
Bob Jones owns a catering company that stages banquets and parties for both individuals and companies. The business is seasonal, with heavy demand during the summer months and year-end holidays and light demand at other times. Bob has gathered the following cost information from the past year:
|
Month
|
Labor Hours
|
Overhead Costs
|
|
January
|
2,500
|
$55,000
|
|
February
|
2,800
|
59,000
|
|
March
|
3,000
|
60,000
|
|
April
|
4,200
|
64,000
|
|
May
|
4,500
|
67,000
|
|
June
|
5,500
|
71,000
|
|
July
|
6,500
|
74,000
|
|
August
|
7,500
|
77,000
|
|
September
|
7,000
|
75,000
|
|
October
|
4,500
|
68,000
|
|
November
|
3,100
|
62,000
|
|
December
|
6,500
|
73,000
|
|
Total
|
57,600
|
$805,000
|
Bob recently attended a meeting of the local Chamber of Commerce, at which he heard an accounting professor discuss regression analysis and its business applications. After the meeting, Bob enlisted the professor's assistance in preparing a regression analysis of the overhead data he collected. This analysis yielded an estimated fixed cost of $48,000 per month and a variable cost of $4 per labor hour. Why do these estimates differ from estimates using the high-low method?