Managerial Accounts

260

E. -Exercisefr25*.

Estimating Cost Behavior;

High-Low Method

(10 t,2,5'

*& Exercise F26 Estimating Cost Behavior;

Visual-Fit Nilethod

{10 1, 2, E}

H Exercise6-27 Cost Behavior; Use of lnternet

{10 2}

ffi Exercise ts28 Visual-Fit IVethod; Veterinary

Laboratory

([0 l! 2, 5]

Boeing

Ford

Floneywell

Levi Strauss

Dell Inc.

General Electric

rvww.boeing.com

lvww. ftrrd.com/us

wrvlr,.honeywell.com

u.w'vr,.levi.com

rwwv.dell.com

r\\\'w.ge.com

Chapter 6 Activity Analysis, Cost Behavlor, and Cost Estimation

Jonathan Macintosh is a highll successful Pennsylvania orchardman who has fbmred his own company to produce and package applesauce. Apples can be stored for severai months in cold storage. so apple- sauce production is relatively unifomr throughout the year. The recently hired controller tbr the firm is about to appl1'the high-lon'method in estimating the company's energy cost behavior. The following costs \.vere incumed during the past l2 nronths:

July ..

1. LIse the highJorv method to estimate the company's energy cost behavior and express it in equation 1brm.

2. Predict the energy cost tilr a rnonth in rvhich 26,000 pints ol applesauce are produced.

Ref-er to the data in the preceding erercise.

Required:

1. Drau, a scatter diagralr and graph the company's energl'cost behavior using the visual'-fit method. 2. Predict the energy cost fbr a month in lr,hich 26,000 pints olapplesauce are producecl. 3. What peculiarity is apparent from the scatter diagram? What should the cost analyst do?

Visit the Website of one of the follou,ing companies. or a difl:renl company of your choosing.

35,000,

2t ,000 .

22,004 .

24,000.

30,000 .

32,000,

40,000 .

30,000.

30,000.

28,000

4t ,000 .

39,000.

Energy Cost

$2s,400

72,10A

22,000

22,454

22,900

23,350

28,000

22,804

23,000

2?,704

24,10A

24,950

AOL

Hertz

Lands'End

McDonald's

PiinaHuL

U-Haul

q,-rwl'.aol.com

url,n'.hertz.com

r.vw'r'r.,. I andsend.com

rvlvrv.mcdonalds. con.r

w\vw.pizzahut.conl

rl,rvw.uhaul.corn

Required: Read about the companl's products and operations. Then list live costs that the conrpanl' rvould incur and explain what type ofcost behavior you believe would be appropriate lor each ol'these cost items.

The Iorva City Veterinary l-aboratory perfonus a varietl'oldiagnostic tests on commercial and domestic animals. The lab has incurred the tbllor.ving costs over the past year.