Talon Services offers standardized job counseling services. The company is planning a new service line targeted to active seniors whoare retiring and looking forward to a new career. The service will sell for a flat $971 per client and will consist of a standardizedoffering. The service will consist of a total of 9 hours with a counseling specialist and a battery of tests to assess interests andaptitudes. Counseling specialists, who are contract employees, are paid $34 per hour. The testing is estimated to cost $131 per client.Administrative costs for the new service have not been estimated, but the company has collected Information on counseling hours andadministrative costs for other services over the past 15 months. The following is a summary of a simple regression of administrativecosts on counseling hours:Simple Regression Analysis ResultsDependent variable-Administrative costa (monthly)Independent variable-Counseling hours (monthly)Computed valuesInterceptCoefficient on independent variableCoefficient of correlation$ 76,100$10.400.8900.752Required:a. What percentage of the variation in administrative costs is explained by the independent variable?89.0%75.2%97.6%54.1%Some other amount

Administrative Cost-Administrative Costs also referred to as administrative costs, are a company's…

Answered: Required: a. What percentage of the…

Required: a. What percentage of the variation in administrative costs is explained by the independent variable? 89.0% 75.2% 97.6% 54.1% Some other amount

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter5: Product And Service Costing: Job-order System

Section: Chapter Questions

Problem 10E: Reggie Wilmore has just started a new businessbuilding and installing custom garage organization...

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Variety Artisans has a bottleneck in their production that occurs within the engraving department. Arjun Naipul, the COO, is considering hiring an extra worker, whose salary will be $45,000 per year, to solve the problem. With this extra worker, the company could produce and sell 3,500 more units per year. Currently, the selling price per unit is $18 and the cost per unit is $5.85. Using the information provided, calculate the annual financial impact of hiring the extra worker.
Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 15,000 for the Sleepeze, 12,000 for the Plushette, and 5,000 for the Ultima. Gene Dixon, vice president of sales, has provided the following information: a. Salaries for his office (including himself at 65,000, a marketing research assistant at 40,000, and an administrative assistant at 25,000) are budgeted for 130,000 next year. b. Depreciation on the offices and equipment is 20,000 per year. c. Office supplies and other expenses total 21,000 per year. d. Advertising has been steady at 20,000 per year. However, the Ultima is a new product and will require extensive advertising to educate consumers on the unique features of this high-end mattress. Gene believes the company should spend 15 percent of first-year Ultima sales for a print and television campaign. e. Commissions on the Sleepeze and Plushette lines are 5 percent of sales. These commissions are paid to independent jobbers who sell the mattresses to retail stores. f. Last year, shipping for the Sleepeze and Plushette lines averaged 50 per unit sold. Gene expects the Ultima line to ship for 75 per unit sold since this model features a larger mattress. Required: 1. Suppose that Gene is considering three sales scenarios as follows: Prepare a revenue budget for the Sales Division for the coming year for each scenario. 2. Prepare a flexible expense budget for the Sales Division for the three scenarios above.
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Reggie Wilmore has just started a new businessbuilding and installing custom garage organization systems. Reggie builds the cabinets and work benches in his workshop, then installs them in clients garages. Reggie figures his overhead for the coming year will be 12,000. Since his business is labor intensive, he plans to use direct labor hours as his overhead driver. For the coming year, he expects to complete 100 jobs, averaging 25 direct labor hours each. However, he has the capacity to complete 125 jobs averaging 25 direct labor hours each. Required: 1. Four measures of activity level were mentioned in the text. Which two measures is Reggie considering in computing a predetermined overhead rate? 2. Compute the predetermined overhead rates using each of the measures in your answer to Requirement 1. 3. Which one would you recommend that Reggie use? Why?
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Laurie Vaden is a physician with her own practice. She has developed contracts with several large employers to perform routine exams, fitness-for-duty exams and initial screening of on-the-job injuries. She provides 100 exams per month, charging $100 per exam. Under this contract, she estimates her avoidable fixed costs attributable to the exams is $1,000 per month, and she pays a lab an average of $15 per exam. She has decided she needs to increase profit, so she is considering raising her fee to $125, even though there may be a 10% loss in the number of exams she does per month. Determine the current and predicted: revenues, variable costs, total contribution margin and product margin. What do you recommend she do? Current Revenue Current Variable costs Current total contribution margin Current product margin Predicted Revenue Predicted variable costs Predicted total contribution margin Predicted product margin Recommendation? Enter RAISE or NO CHANGE as your answer.
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Ezy Fixit Ltd has been asked to quote a price for a special job that must be completed within one week. The job requires a total of 90 skilled labor hours and 80 unskilled labor hours. The current employees are paid a guaranteed minimum wage of $525 for skilled workers and $280 for unskilled workers for a 35-hour week. Currently, skilled labor has spare capacity amounting to 70 labor hours each week and unskilled labor has spare capacity amounting to 100 labor hours each week. Additional skilled workers and unskilled workers can be employed and paid by the hour at rates based on the wages paid to the current workers. The materials required for the job are currently held in inventory at a book value of $5,000. The materials are regularly used by Ezy Fixit Ltd and the current replacement cost for the materials is $4,500. The total scrap value of the materials is $1,000. Required: a) What is the total relevant cost to Ezy Fixit Ltd of using skilled and unskilled labor on this job? b)…
Fusion Metals Company needs a new manager for its Cutting Department. It is considering closing its Packaging Department, and if it does the Packaging Department manager will be appointed manager of the Cutting Department. The Packaging Department manager makes $45,000 per year. To hire a newCutting Department manager from outside the company will cost Fusion $60,000 per year. Required: Discuss the relevance of each of these salary figures to the department-closing decision.