1.
Baaca Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product.
The best estimate of the total variable manufacturing cost per unit is:
First, calculate the variable manufacturing overhead cost per unit: Variable manufacturing overhead cost Change in cost Change in activity !"1,#1$,### % "1,##&,'##( !),### % *,###( "11.+# Fi,ed cost element of manufacturing overhead Total cost % Variable cost element "1,#1$,### % !"11.+# , ),###( "-&',.## Variable direct materials cost "&.#,'## *,### units "$*.)# Variable direct labor cost "+1,### *,### units "1&.$# Total variable manufacturing cost per unit /irect materials 0 /irect labor 0 1anufacturing overhead Total variable manufacturing cost per unit "$*.)# 0 "1&.$# 0 "11.+# "+'.##
'. 1a,well Company has a total e,pense per unit of "'.## per unit at the 1*,### level of activity and total e,pense per unit of "1.-$ at the '1,### unit level of activity. The best estimate of the total fi,ed cost per period for 1a,well Company is:
To calculate the variable manufacturing cost per unit:
Variable manufacturing overhead cost = Change in cost Change in activity = ($40, !0 " $#$,000% ($&,000 " &',000% = $&() *i+ed cost element of manufacturing overhead = Total cost " Variable cost element = $40, !0 " ($&() + $&,000% = $#,#'0
&. 2nspection costs at one of 3ulley Corporation4s factories are listed below:
1anagement believes that inspection cost is a mi,ed cost that depends on units produced. 5sing the high%low method, the estimate of the variable component of inspection cost per unit produced is: Change in activity = ($&0,,)! " $ , ,0% ()
Variable cost = Change in cost )&&% = $&0(&) (rounded%
"
.. 2n 6ctober, 7aldeman Corporation, a manufacturing company, reported the following financial data:
The company had no beginning or ending inventories. The contribution margin for 6ctober was:
$. Baaca Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. The best estimate of the total cost to manufacture *,&## units is8
*irst, calculate the variable manufacturing overhead cost per unit: Variable manufacturing overhead cost = Change in cost Change in activity = ($&,0&!,000 " $&,00#,$00% (),000 " ',000% = $&&(,0 *i+ed cost element of manufacturing overhead = Total cost " Variable cost element = $&,0&!,000 " ($&&(,0 + ),000% = $ #$,400 Variable direct materials cost = $#40,$00 ',000 units = $!'()0 Variable direct labor cost = $,&,000 ',000 units = $&#(!0 Total variable manufacturing cost per unit = -irect materials . -irect labor . /anufacturing overhead Total variable manufacturing cost per unit = $!'()0 . $&#(!0 . $&&(,0 = $,$(00 0 = $ #$,400 . ($,$(00 + ',#00% = $&,44 ,000
*. Ba99en Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product.
The best estimate of the total variable manufacturing cost per unit is:
-irect materials and direct labor are entirely variable since cost per unit does not change 1ith changes in volume( Thus none of these costs are fi+ed and only manufacturing overhead is used to calculate the monthly fi+ed manufacturing cost( *irst, calculate the variable manufacturing cost per unit:
Variable manufacturing overhead cost = Change in cost Change in activity = ($!4$,!00 " $!$',000% (!,000 " 4,000% = $&'(!0 Variable manufacturing cost = $4!(!0 . $44( 0 . $&'(!0 = $&0'( 0
). The following data pertains to activity and the cost of electricity for two recent months:
The best estimate of the total monthly fi,ed electrical cost is:
To calculate the variable manufacturing cost per unit:
Variable manufacturing overhead cost = Change in cost Change in activity = ($&,,00 " $&,!00% (!,000 " 4,000% = $0(#0 *i+ed cost element of manufacturing overhead = Total cost " Variable cost element = $&,+## % !"#.&# , $,###( "&##
+. :upply costs at ;upard Corporation4s chain of gyms are listed below
1anagement believes that supply cost is a mi,ed cost that depends on client%visits. 5sing the high%low method to estimate the variable and fi,ed components of this cost, those estimates would be closest to:
Variable cost = Change in cost Change in activity = ($$,,)0) " $$,,0 #% (&#, ', " &#,&''% = $0()) *i+ed cost element = Total cost " Variable cost element = $$,,)0) " ($0()) + &#, ',% = $&), !$ Therefore, the cost formula for total supply cost is $&), !$ per period plus $0()) per client"visit, or 0 = $&), !$ . $0())2
-. The following information was collected for one of the costs at /emetra 1anufacturing Corporation over the past two years
<ssuming that there has been no change in the cost structure over the last two years and this activity is within the relevant range, this cost at /emetra would best be described as a /i+ed Cost
Variable component of cost: Variable cost = Change in costs Change in units Variable cost = ($&4),000 " $&$!,000% (',000 " !,000% Variable cost = $$$(00 per unit *i+ed cost: 3igh units: $&4),000 " $$$(00 + ',000 = $&!,000 4o1 units: $&$!,000 " $$$(00 + !,000 = $&!,000 5ince there is a variable component and a fi+ed component, this cost 1ould be considered to be a mi+ed cost(
