Managerial - Exam 2 - Part B - Fall 22 - DL - Questions - CVP - Inc Analy

Name ________Mai Nguyen__ _______ Managerial Accounting Fall 22 Instructor: Thomas Stack Exam 2 – Part B - DL 1. The following graphical breakeven analysis is for Product XR-7. Questions related to the graph should be answered in the spaces provided. (16 Points / 2 points each) a. The line H-B represents what C-V-P element? Sales Line____ . b. The area depicting profit occurring is _BAC____ . c. The breakeven point for $ of output is at letter _A__ . d. Production at point J would be at a loss__ (profit or loss?). e. Letter A represents ____break-even point____ . f. The area where loss occurs is outlined by letters _FAE__ . g. Total costs of operations are reflected in line __G-C___ . h. The fixed cost area is within letters __G-D___ .

High/Low Method - Calculations/work must be shown to support your answers ( numbers without supporting work will receive NO credit ). 2. Gates Cleaning Co. leases a vacuum cleaning system for a basic monthly fee plus an additional cost per hour used above a given minimum for each month. Given below is the information for the most recent six-month period on the number of machine hours of use and the total cost under this lease. Month Machine Hours Total Cost July 8,997 $195,404 August 17,590 363,611 September 16,335 341,200 October 9,255 217,476 November 8,420 181,128 December 12,140 273,077 Gates has asked you to provide information for planning on the variable and fixed cost elements in this contract. Use the high-low method to: (a) determine the variable cost per machine hour (6 points) - The highest month of machine hours and total cost: 17,590 & $363,611 - The lowest month of machine hours and total cost: 8,420 & $181,128 - The difference between the highest and lowest month of machine hours: 17,590 hours- 8,420 hours= 9,170 hours - The difference between the highest and lowest month of total cost: $363,611 - $181,128= $182,483 - The variable cost per machine hour: Vcu= $182,483/9,170 hours= $19.9/machine hour (b) find and prove the fixed costs show your work .(4 points) - Fixed cost= $363,611- (17,590 machine hours* $19.9/hour)= $13,570 (Total cost of highest month)-((the activity of highest month)*(variable cost)) - Proved the fixed costs- the lowest month: $181,128- (8,420 machine hours* $19.9/hour)= $13,570 (Total cost of lowest month)-((the activity of lowest month)*(variable cost))

- Really Honest Motors will have to sell less 3 cars to achieve the new profit amount. ii. How many cars must they now sell for the new profit amount? (2 points) - Targeted number of sales: ($259,900 + $203,600)/$6,180= 75 cars - They must now sell 75 cars for the new profit amount. Special Order – Calculations/work must be shown to support your answers ( any numbers without supporting work will receive NO credit ). 5. Bright Light Corporation is considering a special order that it received for 60 overhead lamps. The controller has gathered the following data: Direct materials costs per 100 overhead lamps $6,200 Average hourly labor rate $18.00 Direct labor hours per overhead lamp 4 hours Administrative expenses per order received $120 Shipping cost per overhead lamp $41 Manufacturing overhead rates per direct labor hour: Fixed $15.00 Variable $ 8.00 Assuming Bright Light Corporation would be satisfied with a $85 gross profit per overhead lamp, compute (show your work in detail) the bid price for the entire order . (10 Points) The bid price for the entire order Total number of overhead lamps: 60 Cost and profit per overhead lamp: Unit cost per overhead lamp Total cost of 60 overhead lamps Direct materials $62.00 ($6,200/100 lamp) $3,720 ($62*60 lamps) Direct labor $72.00 ($18.00*4 hours) $4,320 ($72.00*60 lamps) Variable overhead $32.00 ($8.00*4 hours) $1,920 ($32.00*60 lamps) Shipping cost $41.00 $2,460 ($41.00*60 lamps) Administrative expenses $2.00 ($120/60 lamps) $120 Profit $85 $5,100 ($85*60 lamps) Total bid price $294 $17,640