Question Details

Which cost estimation method is being used by Verill Company



Answer the following questions using the information below: 

At the Verill Company, the cost of the library and information center has always been charged to the various departments based upon number of employees. Recently, opinions gathered from the department managers indicate that the number of engineers within a department might be a better predictor of library and information center costs.

	Total library and information center costs are $200,000.

	Department	A	B	C
	Number of employees	135	530	135
	Number of engineers	0	80	20

1) Which cost estimation method is being used by Verill Company? 
A) the regression analysis method 
B) the marginal costing method
C) the conference method 
D) the operating costing method


2) If the number of employees is considered the cost driver, what amount of library and information center costs will be allocated to Department A? 
A) $30,000 
B) $33,750
C) $0
D) $66,667

3) If the number of engineers is considered the cost driver, what amount of library and information center costs will be allocated to Department A? 
A) $30,000 
B) $33,750 
C) $0
D) $66,667





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