ADM 2341 Lecture Notes - Lecture 3: Gross Margin, Fixed Cost, Variable Cost
18 Apr 2017
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Q. 1 the books of robin williams company, wholesalers of hand-held calculators, reflected the following revenues and expenses for various months during the year ended july 31, 2016. Required: identify the above expenses as variable, fixed, or mixed. Selling expense - mixed expense: separate each mixed expense into variable and fixed expense by using the high-low methods. State the cost formula for each mixed expense. 18,600 (high) - 15,600 (low) = sh. 5 per unit. 18,600 (cost at a high level of activity) - 14,000 (variable cost =28,000*0. 5) = ,600/mth. Manufacturing overhead consists of both variable and fixed cost elements. Management wants to determine the overhead breakdown between variable and fixed cost per year. Required: for both years, determine total manufacturing overhead costs. Total manufacturing cost = 1,420,000 - 40,000 = 1,380,000. Manufacturing overhead = 1,380,000 - 750,000 - 400,000 = 230,000: determine the cost formula for manufacturing overhead by means of the high-low method of cost analysis.
