Disadvantages of using high- low method
1. This method ignores all cost observations other than the observations for the lowest and
highest activity levels
2. Cost observations at the extreme ranges of activity levels are not always typical of normal
operating conditions
3. The method can give inaccurate cost estimates and may reflect abnormal rather than
normal cost relationships.
marto answered the question on February 15, 2019 at 08:47
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Briefly explain the following cost estimation methods:
(i). High-low method.
(ii). Simple regression method.
(Solved)
Briefly explain the following cost estimation methods:
(i). High-low method.
(ii). Simple regression method.
.
Date posted:
February 15, 2019
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Answers (1)
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Jitegemee Company Ltd. Carries on its operations in Isiolo. In the recent, the Company has been
experiencing trading difficulties and is currently operating at 50% production...
(Solved)
Jitegemee Company Ltd. Carries on its operations in Isiolo. In the recent, the Company has been
experiencing trading difficulties and is currently operating at 50% production capacity. For the
year ending 31 January 2007, the company expects to achieve a revenue amount of Sh.24,
750,000 at 50% production capacity.
Date posted:
February 15, 2019
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Answers (1)
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ABC Dental Clinic outsources specialized dental surgeons from private hospitals. The following
relates to the total labour hours and indirect labour costs for the year ended...
(Solved)
ABC Dental Clinic outsources specialized dental surgeons from private hospitals. The following relates to the total labour hours and indirect labour costs for the year ended 31 October 2010.
Date posted:
February 15, 2019
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Answers (1)
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Explain the methods of cost estimation
(Solved)
Explain the methods of cost estimation
Date posted:
February 15, 2019
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Answers (1)
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The information given below relates to Brutes Ltd which manufactures a single type of chemical.
Overhead processing costs for the last 8 months have been as...
(Solved)
Date posted:
February 15, 2019
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Answers (1)
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Differentiate between a bin card and a stores ledger card.
(Solved)
Differentiate between a bin card and a stores ledger card.
Date posted:
February 15, 2019
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Answers (1)
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Arap Teta General Hospital hires doctors from private hospitals. The following data relate to the
total labour hours and indirect labour costs for the year ended...
(Solved)
Arap Teta General Hospital hires doctors from private hospitals. The following data relate to the
total labour hours and indirect labour costs for the year ended 31 October 2012:
Date posted:
February 15, 2019
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Answers (1)
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Explain two advantages of using simple linear regression method for cost estimation.
(Solved)
Explain two advantages of using simple linear regression method for cost estimation.
Date posted:
February 15, 2019
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Answers (1)
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Briefly explain the following terms as used in cost accounting:
(i). Mixed costs
(Solved)
Briefly explain the following terms as used in cost accounting:
(i). Mixed costs
Date posted:
February 15, 2019
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Answers (1)
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Differentiate between the following sets of terms:
i) Sunk cost and opportunity cost
ii) Cost centers and profit centers
iii) Direct lab our costs and indirect labor costs
iv)...
(Solved)
Differentiate between the following sets of terms:
i) Sunk cost and opportunity cost
ii) Cost centers and profit cent res
iii) Direct lab our costs and indirect lab our costs
iv) Prime cost and manufacturing overheads
Date posted:
February 15, 2019
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Answers (1)
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The Luxury Hotels Ltd is used for conference bookings and private bookings. The conference
bookings include bookings for rooms each week while the remaining rooms are...
(Solved)
The Luxury Hotels Ltd is used for conference bookings and private bookings. The conference bookings include bookings for rooms each week while the remaining rooms are used for private guest bookings.
Additional information:
1. Variable cost of accommodating each guest is Sh. 1,750
2. Variable cost per week per room available is Sh. 5,600
3. The general fixed cost for private bookings per week is Sh. 8,100
4. The hotel charges Sh. 3,000 per person per night for accommodation for private guest bookings.
5. The hotel has been experiencing a high rate of staff turnover over the last 12 months.
6. Some of the costs for private guest bookings vary with the number of guests, regardless of the
length of their stay, while others vary with the number of rooms available in any week.
Required:
a) Total cost per guest per night for private guest bookings over the ten week period
b) Contribution and profit for private guest bookings for the ten week period
c) Highlight four possible reasons for the high rate of staff turnover in the hotel
Date posted:
February 15, 2019
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Answers (1)
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Fair Price Limited produces a single product 'Zed': The store's manager has provided the
following information relating to the month of August 2010:
(Solved)
Fair Price Limited produces a single product "Zed': The store‟s manager has provided the
following information relating to the month of August 2010:
Date posted:
February 15, 2019
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Answers (1)
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Distinguish between the following terminologies as used in cost accounting:
i) Relevant range and relevant costs.
ii) Opportunity costs and discretionary costs.
iii) By-products and joint products.
(Solved)
Distinguish between the following terminologies as used in cost accounting:
i) Relevant range and relevant costs.
ii) Opportunity costs and discretionary costs.
iii) By-products and joint products.
Date posted:
February 15, 2019
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Answers (1)
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Distinguish between 'committed fixed costs' and 'discretionary fixed costs'.
(Solved)
Distinguish between 'committed fixed costs' and 'discretionary fixed costs'.
Date posted:
February 15, 2019
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Answers (1)
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Explain the meaning of the following term in the context of cost accounting:
- Cost centre.
(Solved)
Explain the meaning of the following term in the context of cost accounting:
- Cost centre.
Date posted:
February 15, 2019
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Answers (1)
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Understanding of cost behavior patterns is important in making financial planning and cost
control decisions.
Required:
In relation to the above statement, describe three ways in which costs...
(Solved)
Understanding of cost behavior patterns is important in making financial planning and cost
control decisions.
Required:
In relation to the above statement, describe three ways in which costs might be classified
according to behavior.
Date posted:
February 15, 2019
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Answers (1)
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Afya Bora Health Centre has a capacity of 20 beds. The following information relates to the
centre's operations for the year ended 30 June 2014:
(Solved)
Afya Bora Health Centre has a capacity of 20 beds. The following information relates to the
centre's operations for the year ended 30 June 2014:
Date posted:
February 15, 2019
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Answers (1)
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Cost accounting is often described as the provision of information required by management for
specific purposes'
Required:
State six of these specific purposes.
(Solved)
Cost accounting is often described as the provision of information required by management for
specific purposes'
Required:
State six of these specific purposes.
Date posted:
February 15, 2019
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Answers (1)
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Daniel Mutiso, the Cost Accountant of Abra Ltd. feels that he is getting overworked and has
recommended that a management accountant be employed to take up...
(Solved)
Daniel Mutiso, the Cost Accountant of Abra Ltd. feels that he is getting overworked and has
recommended that a management accountant be employed to take up other responsibilities in the
organization.
However, the management of the company equally argues that the work is the same and that a
decision to hire a management accountant is against their cost reduction policy.
Required:
In the light of the above statement, explain to the management three differences between management
accounting and cost accounting to help them make a fair decision.
Date posted:
February 15, 2019
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Answers (1)
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Describe five ways in which cost accounting complements financial accounting in terms of
providing information to managers for better decision making.
(Solved)
Describe five ways in which cost accounting complements financial accounting in terms of
providing information to managers for better decision making.
Date posted:
February 15, 2019
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Answers (1)