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# ACCT 349 Week 4 Midterm

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Author: Harvey Maxwell
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1.(TCO 5) The following information is available from the Taylor Company.

\$15,000

\$7,200

\$7,000

Actual hours

3,500

Standard hours

3,800

Variable overhead rate per direct labor hour

\$2.50

Assuming that Taylor uses a three-way analysis of overhead variances, what is the spending variance?
(Points : 11)
2. (TCO 5) In an activity-based costing system, what should be used to assign a department’s manufacturing overhead costs to products produced in varying lot sizes? (Points : 11)
3. (TCO 1) An examination of Boener Company’s past maintenance records disclosed the following costs and volume measures the following.

Highest

Lowest

Cost per month

\$39,200

\$32,000

Machine hours

24,000

15,000

Using the high-low technique, estimate the annual fixed cost for maintenance expenditures.
(Points : 11)
4. (TCO 1) Serendipity Co. uses regression analysis to develop a model for prediction overhead costs. Two different cost drivers (machine hours and direct materials weight) are under consideration as the independent variable. Relevant data were run on a computer using one of the standard regression programs, with the following results.
Machine hours

Coefficient

Y intercept

2,500

B

5.0

r-squared = .70

Direct materials weight

Y intercept

4,600

B

2.6

r-squared = .50

Which regression equation should be used?
(Points : 11)
5. (TCO 2) Relevant or differential cost analysis (Points : 11)
6. (TCO 2) McConnell is a manufacturer of industrial components. One of its products that is used as a subcomponent in auto manufacturing is JC-46. This product has the following financial structure per unit.
Selling price

\$150

Direct materials

20

Direct labor

15

12

30

Shipping and handling

3

10

Total costs

\$ 90

(more)

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