Midterm Examination Of The Statistics For Engineers

Midterm Examination I. IDENTIFICATION 1. A segment is a part or activity of an organization about which managers would like cost, revenue, or profit data. 2. Managerial accounting is concerned with providing information to managers for use within the organization. 3. Planning involves establishing goals and specifying how to achieve them. 4. A budget is a detailed plan for the future that is usually expressed in formal quantitative terms. 5. Strategy. A company’s “game plan” for attracting customers by distinguishing itself from competitors. 6. Direct materials are those materials that become an integral part of the finished product and whose costs can be conveniently traced to the finished product. 7. Manufacturing overhead cost that includes all manufacturing costs except direct materials and direct labor. 8. Nonmanufacturing costs are also often called selling, general, and administrative (SG&A) costs or just selling and administrative costs. 9. Period costs. Cost that are expensed on the income statement in the period in which they are incurred using the usual rules of accrual accounting. 10.Prime cost is the sum of direct materials cost and direct labor. 11.Cost behavior refers to how a cost reacts to changes in the level of activity. 12.A fixed cost is a cost that remains constant, in total, regardless of changes in the level of activity. 13.The contribution margin is the amount remaining from sales revenues after variable expenses have been deducted 14.A common cost is a cost that is incurred to support a number of cost objects but cannot be traced to them individually 15.A difference in revenues between any two alternatives is known as differential revenue. 16.conversion cost is used to describe direct labor and manufacturing overhead 17. Controlling. The process of gathering feedback to ensure that a plan is being properly executed or modified as circumstances change. 18. Enterprise risk management. A process used by a company to identify its risks and develop responses to them that enable it to be reasonably assured of meeting its goals. 19. Constraint. Anything that prevents you from getting more of what you want 20. Indirect cost. A cost that cannot be easily and conveniently traced to a specified cost object II. TRUE OR FALSE 1. A performance report compares budgeted data to actual data in an effort to identify and learn from excellent performance and to identify and eliminate sources of unsatisfactory performance. TRUE 2. The relevant range is the range of activity within which the assumption that cost behavior is strictly linear is reasonably valid. TRUE 3. Differential costs can be either fixed or variable. TRUE 4. Mixed costs are also known as semivariable costs. TRUE 5. Cost behavior is considered linear whenever a straight line is a reasonable approximation for the relation between cost and activity. TRUE 6. The high-low method is based on the rise-over-run formula for the slope of a straight line. TRUE 7. A regression line of the form Y = a + bX is fitted to the data, where a represents the total fixed cost and b represents the variable cost per unit of activity. TRUE 8. A common cost is a type of indirect cost. TRUE 9. Differential cost. Opportunity Cost is a broader term, encompassing both cost increases (incremental costs) and cost decreases (decremental costs) between alternatives. FALSE 10.A sunk cost is a cost that has already been incurred and that cannot be changed by any decision made now or in the future. TRUE 11. Conversion cost is the Direct labor cost plus manufacturing overhead cost.TRUE 12. Mixed cost Prime cost is a cost that contains both variable and fixed cost elements. FALSE 13. Activity base is A measure of whatever causes the incurrence of a variable cost TRUE 14. Selling costs is the costs that are incurred to secure customer orders and get the finished product or service into the hands of the customer. TRUE 15. Variable cost. Product Cost is a cost that varies, in total, in direct proportion to changes in the level of activity. FALSE III. Enumeration 1-3. Three Vital Activities performed by managers Planning Controlling Decision Making 4-6. Cost Classifications used in Making Decisions Differential Cost Opportunity Cost Sunk Cost 7-9. Three basic Manufacturing Costs Categories Direct Materials Direct Material Manufacturing Cost Direct Labor Manufacturing Costs 10-12. Give the various names used for Manufacturing Overhead Indirect Manufacturing cost Indirect Manufacturing costs Factoring Overhead Factory Burden 13-15. Costs Classification for Predicting Cost Behavior Variable Costs Variable Cost Fixed Cost Mixed Cost Fixed Costs Mixed Costs IV. Problem Solving 1. High-Low Method: Recently, there is an increase of COVID case in the Cebu City. Between the 8 months period (April-October), Cebu Doctor Hospital analyze that there is a difference of Php 1,500,000 on the cost between the highest and the lowest Covid Case in 8 months period. Cebu Doctors Hospital tallied 10 Covid cases on March which is the lowest in the 8 months period. They found out that they will spend Php125, 000 per Covid patient-days. a. Determine the Highest Covid Case in a month they tallied in that time frame. b. If they spend Php 600,000 at the low activity level, determine the fixed cost element. 2. Logan Products computes its predetermined overhead rate annually on the basis of direct labor hours. At the beginning of the year, it estimated that 20,000 direct labor-hours would be required for the estimated level of production, quarterly. In a year, the company also estimated $466,000 of fixed manufacturing overhead expenses and variable manufacturing overhead of $3.00 per direct labor-hour. Logan’s actual manufacturing overhead for the year was $713,400 and its actual total direct labor was 81,000 hours. a. Compute the estimated total manufacturing overhead cost. b. Compute the company’s predetermined overhead rate for the year.