Shatner Inc. has decided to use the high-low method to estimatethe total cost and the fixed and variable cost components of thetotal cost. The data for various levels of production are asfollows:
UnitsProduced TotalCosts 7,040 $ 394,240 4,550 259,070 2,640 253,440
a. Determine the variable cost per unit and thefixed cost.
Variable cost per unit $ Fixed cost $
b. Based on part (a), estimate the total costfor 3,480 units of production.
$
Shatner Inc. has decided to use the high-low method to estimatethe total cost and the fixed and variable cost components of thetotal cost. The data for various levels of production are asfollows:
UnitsProduced | TotalCosts | ||
7,040 | $ 394,240 | ||
4,550 | 259,070 | ||
2,640 | 253,440 |
a. Determine the variable cost per unit and thefixed cost.
Variable cost per unit | $ |
Fixed cost | $ |
b. Based on part (a), estimate the total costfor 3,480 units of production.
$
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I'll rate do not skip any parts please if you can't dodon't do at all pass it to someone else don't waste my questionthanks ( I need all answers Cost behavior, High low, contributionmargin, Sales mix, target profit Etc)
Cover-to-Cover Company is a manufacturer of shelving forbooks. The company has compiled the following cost data, and wantsyour help in determining the cost behavior. After reviewing thedata, complete requirements (1) and (2) that follow.
Units | Total | Total | TotalMachine |
---|---|---|---|
Produced | Lumber Cost | Utilities Cost | Depreciation Cost |
13,000 shelves | $156,000 | $15,950 | $145,000 |
26,000 shelves | $312,000 | $30,900 | $145,000 |
52,000 shelves | $624,000 | $60,800 | $145,000 |
65,000 shelves | $780,000 | $75,750 | $145,000 |
1. Determine whether the costs in the table are variable, fixed,mixed, or none of these.
Variable Cost | Fixed Cost | Mixed Cost | None of these | ||
---|---|---|---|---|---|
Lumber | |||||
Utilities | |||||
Depreciation |
2. For each cost, determine the fixed portion of the cost, andthe per-unit variable cost. If there is no amount or an amount iszero, enter "0". Recall that, for N= Number of Units Produced,Total Costs = (Variable Cost Per Unit x N) + Fixed Cost. Completethe following table with your answers.
Cost | Fixed Portion of Cost | Variable Portion of Cost (per Unit) |
Lumber | ||
Utilities | ||
Depreciation |
High-Low
Biblio Files Company is the chief competitor of Cover-to-CoverCompany in the bookshelf business. Biblio Files is analyzing itsmanufacturing costs, and has compiled the following data for thefirst six months of the year. After reviewing the data, answerquestions (1) through (3) that follow.
Month | Number of Units Produced | TotalCost |
---|---|---|
January | 4,360 | $65,600 |
February | 250 | $6,250 |
March | 1,000 | $15,000 |
April | 5,250 | $56,250 |
May | 1,750 | $32,500 |
June | 3,015 | $48,000 |
1. From the data previously provided, help Biblio Files Companyestimate the fixed and variable portions of its total costs usingthe High-Low Method. Recall that Total Costs = (Variable Cost PerUnit x Units Produced) + Fixed Cost. Complete the followingtable.
Total FixedCost | Variable Cost perUnit |
2. With your Total Fixed Cost and Variable Cost per Unit fromthe High-Low Method, compute the total cost for the followingvalues of N (Number of Units Produced).
Number of UnitsProduced | TotalCosts |
3,500 | |
4,360 | |
5,250 |
3. Why does the total cost computed for 4,360 units not matchthe data for January in the table at the top of this panel?
The High-Low method gives accurate data only for levels ofproduction outside the relevant range.
The High-Low method gives a formula for the estimated total costand may not match levels of production other than the highest andlowest.
The High-Low method is accurate only for months in whichproduction is at full capacity.
The High-Low method only gives accurate data when fixed costsare zero.
Contribution Margin
Review the contribution margin income statements forCover-to-Cover Company and Biblio Files Company on their respectiveIncome Statements panels. Complete the following table from thedata provided in the income statements. Each company sold 84,800units during the year.
Cover-to-Cover Company | Biblio Files Company | |
Contribution margin ratio (percent) | ||
Unit contribution margin | ||
Break-even sales (units) | ||
Break-even sales (dollars) |
Income Statement - Cover-to-Cover
Cover-to-Cover Company |
Contribution Margin Income Statement |
For the Year Ended December 31 |
1 | Sales | $424,000.00 | ||
2 | Variable costs: | |||
3 | Manufacturing | $212,000.00 | ||
4 | Selling | 21,200.00 | ||
5 | Administrative | 63,600.00 | 296,800.00 | |
6 | Contribution margin | 127,200.00 | ||
7 | Fixed Costs: | |||
8 | Manufacturing | $5,000.00 | ||
9 | Selling | 4,000.00 | ||
10 | Administrative | 54,600.00 | 63,600.00 | |
11 | Income from operations | $63,600.00 |
Income Statement - Biblio Files
Biblio Files Company |
Contribution Margin Income Statement |
For the Year Ended December 31 |
1 | Sales | $424,000.00 | ||
2 | Variable costs: | |||
3 | Manufacturing | $169,600.00 | ||
4 | Selling | 16,960.00 | ||
5 | Administrative | 33,920.00 | 220,480.00 | |
6 | Contribution margin | 203,520.00 | ||
7 | Fixed Costs: | |||
8 | Manufacturing | $121,920.00 | ||
9 | Selling | 8,000.00 | ||
10 | Administrative | 10,000.00 | 139,920.00 | |
11 | Income from operations | $63,600.00 |
Sales Mix
Biblio Files Company is making plans for its next fiscalyear, and decides to sell two new types of bookshelves, Basic andDeluxe. The company has compiled the following estimates for thenew product offerings.
Type ofBookshelf | SalesPrice per Unit | Variable Cost per Unit |
---|---|---|
Basic | $5.00 | $1.75 |
Deluxe | $9.00 | $8.10 |
The company is interested in determining how many of each typeof bookshelf would have to be sold in order to break even. If wethink of the Basic and Deluxe products as components of one overallenterprise product called âCombined,â the unit contribution marginfor the Combined product would be $2.31. Fixed costs for theupcoming year are estimated at $346,962. Recall that the totals ofall the sales mix percents must be 100%. Determine the amounts tocomplete the following table.
Type of Bookshelf | Percent of Sales Mix | Break-Even Sales in Units | Break-Even Sales in Dollars |
Basic | |||
Deluxe |
Target Profit
Refer again to the income statements for Cover-to-CoverCompany and Biblio Files Company on their respective IncomeStatement panels. Note that both companies have the same sales andnet income. Answer questions (1) - (3) that follow, assuming thatall data for the coming year is the same as the current year,except for the amount of sales. If required, round answers to thenearest dollar.
1. If Cover-to-Cover Company wants to increase its profit by$40,000 in the coming year, what must their amount of sales be?
2. If Biblio Files Company wants to increase its profit by$40,000 in the coming year, what must their amount of sales be?
3. What would explain the difference between your answers for(1) and (2)?
Cover-to-Cover Companyâs contribution margin ratio is lower,meaning that itâs more efficient in its operations.
Biblio Files Company has a higher contribution margin ratio, andso more of each sales dollar is available to cover fixed costs andprovide income from operations.
The companies have goals that are not in the relevant range.
The answers are not different; each company has the samerequired sales amount for the coming year to achieve the desiredtarget profit.
Lorenzo operates a brushless car wash. Incoming cars are put onan automatic, continuously moving conveyor belt. A car is washed asthe conveyor belt carries it from the start station to the finishstation. After the car moves off the conveyor belt, workers dry itand clean and vacuum the inside. Workers are managed by a singlesupervisor. Lorenzo's accountant wants to estimate total costs inOctober, when 10,500 cars are expected to be washed. She uses twodifferent methods to estimate total October costs, account analysisand high-low, with number of cars washed as the independentvariable for both methods. For the account analysis method, shedeveloped cost function parameter estimates by analyzing actualcosts in June, when 9,600 cars were washed. The following are Junetotal costs and her variable cost estimates:
Cost Item | Total Cost | Variable Portion |
Soap, cloths, and supplies | $5,760 | $5,760 |
Water | $4,800 | $4,800 |
Car wash labor | $26,910 | $24,000 |
Power for conveyor | $10,360 | $7,680 |
Supervisor and cashier | $3,000 | $0 |
For the high-low method, she developed cost function parameterestimates by using the actual costs in April and May, when 8,600and 11,300 cars were washed, respectively. The following are totalcosts for these two months:
Cost Item | April | May |
Soap, cloths, and supplies | $5,160 | $6,780 |
Water | $1,720 | $2,260 |
Car wash labor | $26,220 | $33,510 |
Power for conveyor | $9,180 | $11,340 |
Supervisor and cashier | $3,400 | $3,400 |
REQUIRED [ROUND PER-UNIT COSTS TO TWO DECIMAL PLACES AND TOTALCOSTS TO THE NEAREST DOLLAR.]
Part A (6 tries; 5 points)
1. Using account analysis, what is the accountant's estimate oftotal fixed costs for October?
2. Using account analysis, what is the accountant's estimate ofvariable costs per unit for October?
Part B (6 tries; 5 points)
1. Using the high-low method, what is the accountant's estimate oftotal fixed costs for October?
2. Using the high-low method, what is the accountant's estimate oftotal variable costs for October?
The following data have been extracted from the records of Puzzle, Inc.:
February | August | ||||||
Production level, in units | 11,800 | 25,960 | |||||
Variable costs | $ | 33,040 | $ | ? | |||
Fixed costs | ? | 32,500 | |||||
Mixed costs | 29,120 | ? | |||||
Total costs | $ | 94,660 | $ | 161,212 | |||
Required:
a. Calculate the missing costs. (Do not round intermediate calculations.)
b. Calculate the cost formula for mixed cost using the high-low method. (Do not round intermediate calculations. Round "Variable cost" to 2 decimal places.)
cost formula _____ + _____ per unit
c. Calculate the total cost that would be incurred for the production of 16,949 units. (Do not round intermediate calculations.)
Total cost ____
d. Identify the two key cost behavior assumptions made in the calculation of your answer to part c.
cost behavior pattern is ____ relevant range ____