Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN: 9781337115773
Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher: Cengage Learning
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Question
Chapter 3, Problem 3MCQ
To determine
Identify the fixed cost in an automobile insurance company.
Expert Solution & Answer
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Which of the following is not an example of a fixed cost
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A.Salaries of staff
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b. Direct Materials
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C.Rent of premises
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D.Insurance premium on assets
Select all the items that are not relevant for decision making from the list below:
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Loss in gross margin
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Direct advertising
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General advertising
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D.
Rent
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Depreciation: Store fixtures
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Depreciation: Delivery equipment
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G.
Store management salaries
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General office salaries
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General office - other
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Insurance
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Utilities
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Employment taxes
Process Activity Analysis for a Service Company
Statewide Insurance Company has a process for making payments on insurance claims as follows:
An activity analysis revealed that the cost of these activities was as follows:
Receiving claim
$20,100
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Adjusting claim
140,700
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Paying claim
40,200
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Total
$201,000
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This process includes only the cost of processing the claim payments, not the actual amount of the claim payments. The adjusting activity involves verifying and estimating the amount of the claim and is variable to the number of claims adjusted.
The process received, adjusted, and paid 6,700 claims during the period. All claims were treated identically in this process.
To improve the cost of this process, management has determined that claims should be segregated into two categories. Claims under $1,000 and claims greater than $1,000: claims under $1,000 would not be adjusted but would be accepted upon the insured's evidence of claim. Claims above $1,000 would be…
Chapter 3 Solutions
Managerial Accounting: The Cornerstone of Business Decision-Making
Ch. 3 - Prob. 1DQCh. 3 - What is a driver? Give an example of a cost and...Ch. 3 - Suppose a company finds that shipping cost is...Ch. 3 - Some firms assign mixed costs to either the fixed...Ch. 3 - Explain the difference between committed and...Ch. 3 - Explain why the concept of relevant range is...Ch. 3 - Why do mixed costs pose a problem when it comes to...Ch. 3 - Describe the cost formula for a strictly fixed...Ch. 3 - Describe the cost formula for a strictly variable...Ch. 3 - What is the scattergraph method, and why is it...
Ch. 3 - Describe how the scattergraph method breaks out...Ch. 3 - What are the advantages of the scattergraph method...Ch. 3 - Prob. 13DQCh. 3 - What is meant by the best-fitting line?Ch. 3 - What is the difference between the unit cost of a...Ch. 3 - Prob. 16DQCh. 3 - (Appendix 3A) Explain the meaning of the...Ch. 3 - A factor that causes or leads to a change in a...Ch. 3 - Which of the following would probably be a...Ch. 3 - Prob. 3MCQCh. 3 - In the cost formula, the term 128,000,000 a. is...Ch. 3 - In the cost formula, the term 12,000 a. is the...Ch. 3 - Prob. 6MCQCh. 3 - Prob. 7MCQCh. 3 - The following cost formula for total purchasing...Ch. 3 - An advantage of the high-low method is that it a....Ch. 3 - Prob. 10MCQCh. 3 - Prob. 11MCQCh. 3 - Prob. 12MCQCh. 3 - The total cost for monthly supervisory cost in a...Ch. 3 - Yates Company shows the following unit costs for...Ch. 3 - (Appendix 3A) In the method of least squares, the...Ch. 3 - Creating and Using a Cost Formula Big Thumbs...Ch. 3 - Using High-Low to Calculate Fixed Cost, Calculate...Ch. 3 - Using High-Low to Calculate Predicted Total...Ch. 3 - Using High-Low to Calculate Predicted Total...Ch. 3 - Using Regression to Calculate Fixed Cost,...Ch. 3 - Inventory Valuation under Absorption Costing Refer...Ch. 3 - Inventory Valuation under Variable Costing Refer...Ch. 3 - Absorption-Costing Income Statement Refer to the...Ch. 3 - Variable-Costing Income Statement Refer to the...Ch. 3 - Creating and Using a Cost Formula Kleenaire Motors...Ch. 3 - Using High-Low to Calculate Fixed Cost, Calculate...Ch. 3 - Using High-Low to Calculate Predicted Total...Ch. 3 - Brief Exercise 3-28 Using High-Low to Calculate...Ch. 3 - Using Regression to Calculate Fixed Cost,...Ch. 3 - Inventory Valuation under Absorption Costing Refer...Ch. 3 - Inventory Valuation under Variable Costing Refer...Ch. 3 - Brief Exercise 3-32 Absorption-Costing Income...Ch. 3 - Brief Exercise 3-33 Variable-Costing Income...Ch. 3 - Variable and Fixed Costs What follows are a number...Ch. 3 - Cost Behavior, Classification Smith Concrete...Ch. 3 - Prob. 36ECh. 3 - Prob. 37ECh. 3 - Prob. 38ECh. 3 - Step Costs, Relevant Range Bellati Inc. produces...Ch. 3 - Matching Cost Behavior Descriptions to Cost...Ch. 3 - Examine the graphs in Exercise 3-40. Required: As...Ch. 3 - Prob. 42ECh. 3 - Prob. 43ECh. 3 - High-Low Method Refer to the information for Luisa...Ch. 3 - Scattergraph Method Refer to the information for...Ch. 3 - Method of Least Squares Refer to the information...Ch. 3 - Use the following information for Exercises 3-47...Ch. 3 - Use the following information for Exercises 3-47...Ch. 3 - Method of Least Squares, Developing and Using the...Ch. 3 - The method of least squares was used to develop a...Ch. 3 - Identifying the Parts of the Cost Formula;...Ch. 3 - Inventory Valuation under Absorption Costing...Ch. 3 - Inventory Valuation under Variable Costing Lane...Ch. 3 - Income Statements under Absorption and Variable...Ch. 3 - (Appendix 3A) Method of Least Squares Using...Ch. 3 - (Appendix 3A) Method of Least Squares Using...Ch. 3 - Identifying Fixed, Variable, Mixed, and Step Costs...Ch. 3 - Identifying Use of the High-Low, Scattergraph, and...Ch. 3 - Identifying Variable Costs, Committed Fixed Costs,...Ch. 3 - Scattergraph, High-Low Method, and Predicting Cost...Ch. 3 - Method of Least Squares, Predicting Cost for...Ch. 3 - Cost Behavior, High-Low Method, Pricing Decision...Ch. 3 - Prob. 63PCh. 3 - Variable and Fixed Costs, Cost Formula, High-Low...Ch. 3 - Cost Separation About 8 years ago, Kicker faced...Ch. 3 - Variable-Costing and Absorption-Costing Income...Ch. 3 - Refer to the information for Farnsworth Company...Ch. 3 - (Appendix 3A) Scattergraph, High-Low Method,...Ch. 3 - (Appendix 3A) Separating Fixed and Variable Costs,...Ch. 3 - (Appendix 3A) Cost Formulas, Single and Multiple...Ch. 3 - Suspicious Acquisition of Data, Ethical Issues...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
Which of the following is not a reason for the physical inventory count to differ from what is recognized on the companys books? A. mismanagement B. shrinkage C. damage D. sale of services to customers
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Process Activity Analysis for a Service Company
Statewide Insurance Company has a process for making payments on insurance claims as follows:
Â
An activity analysis revealed that the cost of these activities was as follows:
Receiving claim   $39,900    Adjusting claim   172,900    Paying claim   53,200    Total   $266,000    This process includes only the cost of processing the claim payments, not the actual amount of the claim payments. The adjusting activity involves verifying and estimating the amount of the claim and is variable to the number of claims adjusted.
The process received, adjusted, and paid 3,800 claims during the period. All claims were treated identically in this process.
To improve the cost of this process, management has determined that claims should be segregated into two categories. Claims under $1,000 and claims greater than $1,000: claims under $1,000 would not be adjusted but would be accepted upon the insured's evidence of claim. Claims above $1,000…
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When a company pays employee healthcare, that is usually considered what kind of activity?
a. operating
b. financing
c. investing
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When should a company report the cost of an insurancepolicy as an expense?a. When the company first signs the policy.b. When the company pays for the policy.c. When the company receives the benefits from thepolicy over its period of coverage.d. When the company receives payments from the insurance company for its insurance claims.
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A proper perspective on economics of workplace accidents can be gained by viewing them in the overall context of all accidents. Overall cost of accidents is about 150 million Cedis annually: 1) Wage lost is 20 million Cedis, 2) Medical expenses is 38 million Cedis, 3) Insurance administration is 29 million Cedis, 4) Motor vehicle damage is 27 million Cedis and 5) Fire losses is 15 million Cedis. Against the backdrop:a) Calculate the % wage lost medical expenses, insurance administration, motor vehicle damage and fire lost.
b) Comment on the results in question (a).
c) Propose a model that facilitates cost analysis in question (b).
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Which of the following statements is NOT correct?
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A.
A caravan is an asset for its owner.
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B.
The fortnightly government pension is an income for the retiree.
Â
C.
The rent paid to the landlord is an expense for the tenant.
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D.
 The purchase of a TV is an expense for the buyer of the TV.
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E.
The credit card balance is a liability for the credit card holder.
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Should top management of The Insurance Company close down the South region? Explain.
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For the following descriptions, state whether the cost is controllable or uncontrollable by responsibility center managers. A. advertising for a merchandiser B. corporate income taxes C. office supplies for a merchandiser D. donations to the Salvation Army E. insurance for delivery vehicles
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For which of the following reasons would David Laugherty, owner of the Laugherty Associates law firm, want to know the total costs of a job (serving a particular client)?
a. For inventory valuation
b. To determine the fees to charge clients
c. For external reporting
d. a, b, and c are correct
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Where does managing office finances begin in the providers office? Explain your answer.Discuss which step in the process tends to have the most errors.Explain the difference between coinsurance and copayment.
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Which of the following is nonbusiness transaction?
a. Payment of advance salary to an employee just hired
b. Setting up of chart of accounts
c. Payment of rent in advance
d. Receipt of electricity bill
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The owner of a local business complains that the adjustments process consumes a lot of time and delays reportingmonth-end financial results. How would you convince herof the importance of this process?
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