Fundamentals Of Cost Accounting (6th Edition)
6th Edition
ISBN: 9781259969478
Author: WILLIAM LANEN, Shannon Anderson, Michael Maher
Publisher: McGraw Hill Education
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Chapter 5, Problem 48E
Interpretation of Regression Results: Simple Regression
The director of surgery at a local hospital is interested in understanding his unit’s costs. An assistant collected data for the past 36 months on unit cost (labor, supplies, and so on) along with the number of procedures performed in the unit. The assistant analyzed the data using a spreadsheet program, and the following output was generated:
The unit is planning to perform an average 1,500 procedures per month for the coming year.
Required
- a. Use the regression output to write the surgical unit cost equation.
- b. Based on the cost equation, compute the estimated costs for the surgical unit per month for the coming year.
- c. The director of surgery has asked you for advice on whether he should rely on the estimate. What will you say?
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Draw a graph of the cost behavior for each of the following costs incurred by the Mountain Summit Hospital. The hospital measures monthly activity in patient days. Label both axes and the cost line in each graph.1. The cost of food varies in proportion to the number of patient days of activity. In January, the hospital provided 3,000 patient days of care, and food costs amounted to $24,000.2. The cost of salaries and fringe benefits for the administrative staff totals $12,000 per month.3. The hospital’s laboratory costs include two components: (a) $40,000 per month for compensation of personnel and depreciation on equipment and (b) $10 per patient day for chemicals and other materials used in performing the tests.4. The cost of utilities depends on how many wards the hospital needs to use during a particular month. During months with activity under 2,000 patient days of care, two wards are used, resulting in utility costs of $10,000. During months with greater than 2,000 patient days…
Outpatient Surgery is developing an RVU and product cost for the following surgical procedures, given the projected volumes and samples direct costs. Projected total costs for the Outpatient Surgery department are $20 million ($12 million in direct costs and $8 million in indirect costs). Use the steps provided in your textbook to Calculate the cost per procedure using job-order costing.
Procedure
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Labor Expense
Supply Expense
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$100
$90
Esophagastroduodeno with Biopsy
4,000
$150
$60
Aspiration/Injection of a Joint
8,000
$75
$30
Colonoscopy
10,400
$110
$20
Next, Outpatient Surgery wants to add a cost driver to better represent the causal relationship of their indirect costs to produce a more accurate cost-per-procedure. Using the steps in your textbook assign costs to each procedure using the following information.
Procedure
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Subcutaneous Tissue Debridement
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Esophagastroduodeno with…
The manager of the main laboratory facility at UrbanFit Center is interested in being able to predict the overhead costs each month for the lab. The manager believes that total overhead varies with the number of lab tests performed I
that some costs remain the same each month regardless of the number of lab tests performed. The lab manager collected the following data for the first seven months of the year.
(Click the icon to view the data.)
Use the high-low method to determine the laboratory's cost equation for total laboratory overhead. Use your results to predict total laboratory overhead if 3,500 lab tests are performed next month.
Let's begin by determining the formula that is used to calculate the variable cost (slope).
Data table
Variable cost (slope)
Number of Lab
Month
Tests Performed
Total Laboratory
Overhead Costs
January
2,800
$21,500
February
2,600
$22,700
March
3,100
$27,900
April....
3,550
$31,400
May
3,700
$28,500
June..
1,200
$19,500
July
1,400
$14,500
Print
Done
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Chapter 5 Solutions
Fundamentals Of Cost Accounting (6th Edition)
Ch. 5 - What are the common methods of cost estimation?Ch. 5 - Prob. 2RQCh. 5 - Under what conditions is the engineering estimates...Ch. 5 - If one wishes simply to prepare a cost estimate...Ch. 5 - When using cost estimation methods based on past...Ch. 5 - Prob. 6RQCh. 5 - What is the difference between R2 and adjusted R2?Ch. 5 - Why are accurate cost estimates important?Ch. 5 - What are three practical implementation problems...Ch. 5 - Why is it important to incorporate learning into...
Ch. 5 - What are some complications that can arise when...Ch. 5 - The following costs are labeled fixed or variable...Ch. 5 - Prob. 13CADQCh. 5 - When preparing cost estimates for account analysis...Ch. 5 - How can one compensate for the effects of price...Ch. 5 - Prob. 16CADQCh. 5 - Prob. 17CADQCh. 5 - A decision maker is interested in obtaining a cost...Ch. 5 - Consider the Business Application item Using...Ch. 5 - A friend comes to you with the following problem....Ch. 5 - After doing an account analysis and giving the...Ch. 5 - In doing cost analysis, you realize that there...Ch. 5 - Prob. 23CADQCh. 5 - Are learning curves likely to affect materials...Ch. 5 - McDonalds, the fast-food restaurant, is known for...Ch. 5 - Prob. 26CADQCh. 5 - A manager asks you for a cost estimate to open a...Ch. 5 - Prob. 28CADQCh. 5 - Methods of Estimating Costs: Engineering Estimates...Ch. 5 - Prob. 30ECh. 5 - Methods of Estimating Costs: Engineering Estimates...Ch. 5 - Prob. 32ECh. 5 - Methods of Estimating Costs: Account Analysis The...Ch. 5 - Methods of Estimating Costs: Account Analysis...Ch. 5 - Methods of Estimating Costs: High-Low, Ethical...Ch. 5 - Methods of Estimating Costs: High-Low Adriana...Ch. 5 - Methods of Estimating Costs: High-Low
Adriana...Ch. 5 - Prob. 38ECh. 5 - Adriana Corporation manufactures football...Ch. 5 - Methods of Estimating Costs: Simple...Ch. 5 - Prob. 41ECh. 5 - Methods of Estimating Costs: High-Low Davis Stores...Ch. 5 - Methods of Estimating Costs: Scattergraph Prepare...Ch. 5 - Prob. 44ECh. 5 - Interpretation of Regression Results: Multiple...Ch. 5 - Interpretation of Regression Results Brodie...Ch. 5 - Prob. 47ECh. 5 - Interpretation of Regression Results: Simple...Ch. 5 - Learning Curves Assume that General Dynamics,...Ch. 5 - Learning Curves Assume that Whee, Cheatham, and...Ch. 5 - Prob. 51ECh. 5 - Learning Curves (Appendix B) Refer to the example...Ch. 5 - Prob. 53PCh. 5 - Prob. 54PCh. 5 - Regressions from Published Data Obtain 13 years of...Ch. 5 - Prob. 56PCh. 5 - High-Low Method, Scattcrgraph Cubicle Solutions...Ch. 5 - High-Low Method, Scattcrgraph Academy Products...Ch. 5 - High-Low, Scattergraph, Issues with Data
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