Order Of Cost Accounting Process

Order Of Cost Accounting Process
Complete the following problem in Chapter 5 of your text:
· Problem 5-49, “Account Analysis,” page 198.
5-49. Account Analysis
( LO 5-3 )
Order Of Cost Accounting Process
The accounting department of a large limousine company is analyzing the costs of its services. The cost data and level of activity for the past 16 months follow:
Month
Special Analyses
Customer Accounts
Paychecks Processed
Accounting Service Costs
1
2
Order Of Cost Accounting Process
325
1,029
$ 63,800
2
4
310
993
68,900
3
Order Of Cost Accounting Process
2
302
1,268
64,000
4
1
213
1,028
61,300
5
2
222
984
Order Of Cost Accounting Process
61,600
6
0
214
712
50,800
7
1
131
762
51,020
8
1
123
739
54,300
9
0
Order Of Cost Accounting Process
115
708
50,500
10
2
296
1,232
64,800
11
2
213
978
58,000
12
1
222
929
57,500
13
2
217
1,059
62,200
14
2
132
942
54,900
15
4
300
1,299
71,530
16
4
315
1,283
64,800
Totals
30
3,650
15,945
$959,950
In addition to the information on the previous page, you learn that the accounting department had the following total costs for the past 16 months for each of the following:
Total cost of paychecks processed
$180,100
Total cost of maintaining customer accounts
109,600
Total cost of performing special analyses
120,000
Total fixed costs (total for 16 months)
550,250
Total costs
$959,950
Required
a. What is the cost per unit for (1) paychecks processed, (2) customer accounts maintained, and (3) special analyses performed?
b. Assuming the following level of cost-driver volumes for a month, what are the accounting department’s estimated costs of doing business using the account analysis approach?
· 1,000 paychecks processed
· 200 customer accounts maintained
· 3 special analyses
Order Of Cost Accounting Process
Complete the following problem in Chapter 5 of your text:
· Problem 5-57, “Interpretation of Regression Results: Simple Regression,” page 204.
5-57. Interpretation of Regression Results: Simple Regression
( LO 5-5 )
Your company provides a variety of delivery services. Management wants to know the volume of a particular delivery that would generate $10,000 per month in operating profits before taxes. The company charges $20 per delivery.
The controller’s office has estimated overhead costs at $9,000 per month for fixed costs and $12 per delivery for variable costs. You believe that the company should use regression analysis. Your analysis shows the results to be:
Monthly overhead=$26,501 $10.70 per delivery
Your estimate was based on the following data:
Month
Overhead Costs
Number of Deliveries
1
Order Of Cost Accounting Process
$142,860
11,430
2
151,890
12,180
3
192,600
15,660
4
141,030
11,250
5
203,490
12,780
6
180,630
14,730
Order Of Cost Accounting Process
7
159,630
12,510
8
183,990
15,060
9
194,430
15,450
10
150,120
11,970
11
154,080
12,630
12
184,800
15,300
13
183,120
14,580
The company controller is somewhat surprised that the cost estimates are so different. You have been asked to recheck your work and see if you can figure out the difference between your results and the controller’s results.
Required
a. Analyze the data and your results and state your reasons for supporting or rejecting your cost equation.
b. Write a report that informs management about the correct volume that will generate $10,000 per month in operating profits before taxes.

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