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Selected Solutions - 15

The document provides solutions to selected problems from Chapter 15. It includes the solutions for problems 2, 4, 6, 10, 13, 16, 19, 22, 25, 28, 31, 34, 37, 40, 43, 46, 49, and 51. The solutions show calculations for costs, cost indices, percentage increases, indirect cost rates, and activity rates for different departments.

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27 views3 pages

Selected Solutions - 15

The document provides solutions to selected problems from Chapter 15. It includes the solutions for problems 2, 4, 6, 10, 13, 16, 19, 22, 25, 28, 31, 34, 37, 40, 43, 46, 49, and 51. The solutions show calculations for costs, cost indices, percentage increases, indirect cost rates, and activity rates for different departments.

Uploaded by

moonisq
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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SOLUTIONS TO SELECTED PROBLEMS

Student: You should work the problem completely before referring to the solution.

CHAPTER 15
Solutions included for problems: 2, 4, 6, 10, 13, 16, 19, 22, 25, 28, 31, 34, 37, 40, 43, 46,
49, and 51
15.2

The bottom-up approach uses price as output and cost estimates as inputs. The
design-to-cost approach is just the opposite.

15.4

Property cost: (100 X 150)(2.50) = $37,500


House cost: (50 X 46)(.75)(125) = $215,625
Furnishings: (6)(3,000) = $18,000
Total cost: $271,125

15.6

Cost = 1200_ (78,000) = $91,095


1027.5

15.10 (a) First find the percentage increase (p%) between 1990 and 2000.
6221 = 4732 (F/P,p,10)
1.31467 = (1+p)10
p% increase = 2.773 %/year
Predicted index value in 2002 = 6221(F/P,2.773%,2) = 6571
(b) Difference = 6571 6538 = 33
15.13 Find the percentage increase between 1994 and 2002.
395.6 = 368.1(F/P,p,8)
1.0747 = (1+p)1/8
(1+p) = 1.009046
p % increase = 0.905 % per year
15.16 Index in 2005 = 1068.3(F/P,2%,6) = 1203.1
15.19 C2 = 13,000(450/250)0.32 = $15,690
15.22 (a) 450,000 = 200,000(60,000/35,000)x
2.25 = 1.7143x
x = 1.504
(b) Since x > 1.0, there is diseconomy of scale and the larger CFM capacity is
Chapter 15

more expensive than a linear relation would be.


15.25 (a) C2 = (1 million)(3)0.2(1.1)
= (1 million)(1.246)(1.1) = $1.37 million
Estimate was $630,000 low
(b) 2 million = (1 million)(3)x(1.25)
1.6 = (3)x
x = 0.428
15.28 ENR construction cost index ratio is (6538/4732).
Cost -capacity exponent is 0.60.
Let C1 = cost of 5,000 sq. m. structure in 1990
C2 in 1990 = $220,000 = C1 (10,000/5,000)0.60
C1 = $145,145
Update C1 with cost index.
C2002 = C1 (6538/4732) = $200,540
15.31 h = 1 + 0.2 + 0.5 + 0.25 = 1.95
CT in 1994: 1.75 (1.95) = $3.41 million
Update with the cost index to now.
CT now: 3.41 (3713/2509) = 3.41(1.48) = $5.05 million
15.34 Indirect cost rate for 1 = 50,000 = $ 83.33 per hour
600
Indirect cost rate for 2 = 100,000 = $500.00 per hour
200
Indirect cost rate for 3 = 150,000 = $187.50 per hour
800
Indirect cost rate for 4 = 200,000 = $166.67 per hour
1,200
15.37 Housing: DLH is basis; rate is $16.35
Actual charge = 16.35(480) = $7,848
Subassemblies: DLH is basis; rate is $16.35
Actual charge = 16.35(1,000) = $16,350
Final assembly: DLC is basis; rate is $0.23
Actual charge = 0.23 (12,460) = $2,866

Chapter 15

15.40 DLC average rate = (1.25 + 5.75 + 3.45) /3 = $3.483 per DLC $
Department 1:
Department 2:

3.483(20,000) = $ 69,660
3.483(35,000) = 121,905

Total actual charges: $1,068,584


Allocation variance = 800,000 1,068,584 = $-268,584
15.43 As the DL hours component decreases, the denominator in Eq. [15.7], basis level,
will decrease. Thus, the rate for a department using automation to replace direct
labor hours will increase in the computation
15.46

DLH rate = $400,00/51,300 = $7.80 per hour


Old cycle time rate = $400,000/97.3 = $4,111 per second
New cycle time rate = $400,000/45.7 = $8,752.74 per second
Actual charges = (rate)(basis level)
Line
DLH basis
Old cycle time
New cycle time

10
$156,000
53,443
34,136

11
99,060
229,394
148,797

12___
145,080
117,164
217,068

The actual charge patterns are significantly different for all 3 bases.
15.49 89,750 = 75,000(I2 /1027)
I2 = 1229
Answer is (a)
15.51 Costnow = 15,000(1164/1092) (2)0.65 = $25,089
Answer is (b)

Chapter 15

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