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This 10 page Class Notes was uploaded by Gerda Pacocha on Saturday October 3, 2015. The Class Notes belongs to ACC208 at California State Polytechnic University taught by AshokNatarajan in Fall. Since its upload, it has received 11 views. For similar materials see /class/218394/acc208-california-state-polytechnic-university in Accounting at California State Polytechnic University.
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Date Created: 10/03/15
GR UP 1 PRESENTWHEN 2 Ashley Kevin Frank Maya Rick and Justin Chapter 5 Analytical Thinking Pg 237 Given information Angora company has the greatest demand during the fall the winter and the Christmas Holiday They must increase production each summer to meet demand Data for Company s Activity and direct labor costs over last year Month Units Produced Paid Days Direct Labor Cost 98 20 January 14162 February 76 20 12994 March 75 21 15184 April 75 22 15038 May 85 22 15768 June 102 21 15330 July 52 19 13724 August 136 21 14162 September 138 22 15476 October 132 23 15476 November 86 18 12972 December 56 21 14074 Chapter 5 Analytical Thinking Pg 237 Given information The number of workdays varies from month to month due to weekdays holidays and days of vacation The company has eight workers who are classified as direct labor 1 Plot the direct labor cost and units produced on a scattergraph Units Produced VS Direct a if 0 18000 17000 16000 9 H I 8 o o 9 0 quotE 15000 6 5 E Q 39 0 14000 6 13000 6 6 12000 45 55 65 75 85 95 105 115 125 135 145 Units Produced in thousands 2 Plot the direct labor cost and number of paid days on a scattergraph Direct Labor Cost 18000 17000 16000 15000 14000 13000 12000 39NuTnb af P39aiii D ays vsiD39i F O O O O O O 39 3 O 39 3 17 18 19 20 21 22 23 24 Nmnber of Days Paid 39 r i 3 Which measure of activity number of units produced or paid days should be used as the activity base for explaining direct labor cost Explain Requirement 3 o The number of paid days should be the used as the activity base for explaining direct labor cost The company has paid vacations in July and paid holidays in November and December In those months the number of units roduced are much lower than the other months but the irect labor costs for those months are similar to the other months This is because labor can be both a fixed cost and a variable cost Since the direct labor costs are some what similar each month the direct labor costs are made up of mostly fixed costs You can also tell which measure of activity should be used as the activity base by just looking at the graphs The second graph is much more linear than the first graph
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