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1) High-Low Method to find the equation for a mixed cost XYZ Manufacturing wants to understand its machine costs Machine Hrs. Machine Costs January 248 $ 9,891 February 490 13,200 March 340 10,555 April 200 9,054 May 370 10,662 June 568 12,883 a) Find the slope of the line (VC/unit) VC/unit= b) Find the Y - intercept (total FC) Total FC = c) Write the equation for this mixed cost Cost equation = d) Use the cost equation to predict total cost if the firm expects to use a total of 480 MH next period Predicted total cost at

1) High-Low Method to find the equation for a mixed cost XYZ Manufacturing wants to understand its machine costs Machine Hrs. Machine Costs January 248 $ 9,891 February 490 13,200 March 340 10,555 April 200 9,054 May 370 10,662 June 568 12,883 a) Find the slope of the line (VC/unit) VC/unit= b) Find the Y - intercept (total FC) Total FC = c) Write the equation for this mixed cost Cost equation = d) Use the cost equation to predict total cost if the firm expects to use a total of 480 MH next period Predicted total cost at

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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1) High-Low Method to find the equation for a mixed cost XYZ Manufacturing wants to understand its machine costs Machine Hrs. Machine Costs January 248 $ 9,891 February 490 13, 200 March 340 10,555 April 200 9,054 May 370 10,662 June 568 12,883 a) Find the slope of the line (VC/unit) VC/unit = b) Find the Y - intercept (total FC) Total FC = c) Write the equation for this mixed cost Cost equation = d) Use the cost equation to predict total cost if the firm expects to use a total of 480 MH next period Predicted total cost at 480 MH= CVP Analysis Acme Widgets has the following data for September o Sales = $0.60/unit o Variable COGS = $0.30/unit o Variable selling & admin. = $0.06/unit o Fixed COGS = $1,000/month o Fixed selling & admin. = $500/month o Units sold = 12,000 a) What is Acme's total CM in September? Total CM = b) What is Acme's unit. contribution margin (CM/unit) in September? CM/unit c) What is Acme's break - even in units and in dollars? B - E in units = B-E in $ = d) Sales in units and in dollars if Acme wants target profit of $1,800 Units for target profit = Sales $ for target profit = Sensitivity analysis: e) Effect on break - even if Acme raises its selling price by 6¢: o Old selling price = $0.60 o New selling price = $0.66 Old B - E = New B-E = Effect f) Effect on break - even if Acme's variable costs increase by 3¢? o Old VC = $0.36 o New VC = $0.39 Old B-E = New B-E = Effect g) If Acme's fixed costs increase by $150, how does break - even change? o Old FC = $1,500 o New FC = $1,650 Old B-E = New B-E = Effect Margin of Safety: h) Acme Widgets' current break - even is 6,250 units. The firm expects to sell 7,000 units next month Margin of safety in units = Margin of safety in dollars = Margin of safety ratio = Multi - Product Firm: o Acme Widgets now makes two products: A and B o The firm sells 9 units of product A for each unit of product B that it sells A and B Price/unit $0.60 $1.00 VC/Unit 0.36 0.56 Total VC $1,820 i) Break - even for the product mix: A = B = =
Transcribed Image Text:1) High-Low Method to find the equation for a mixed cost XYZ Manufacturing wants to understand its machine costs Machine Hrs. Machine Costs January 248 $ 9,891 February 490 13, 200 March 340 10,555 April 200 9,054 May 370 10,662 June 568 12,883 a) Find the slope of the line (VC/unit) VC/unit = b) Find the Y - intercept (total FC) Total FC = c) Write the equation for this mixed cost Cost equation = d) Use the cost equation to predict total cost if the firm expects to use a total of 480 MH next period Predicted total cost at 480 MH= CVP Analysis Acme Widgets has the following data for September o Sales = $0.60/unit o Variable COGS = $0.30/unit o Variable selling & admin. = $0.06/unit o Fixed COGS = $1,000/month o Fixed selling & admin. = $500/month o Units sold = 12,000 a) What is Acme's total CM in September? Total CM = b) What is Acme's unit. contribution margin (CM/unit) in September? CM/unit c) What is Acme's break - even in units and in dollars? B - E in units = B-E in $ = d) Sales in units and in dollars if Acme wants target profit of $1,800 Units for target profit = Sales $ for target profit = Sensitivity analysis: e) Effect on break - even if Acme raises its selling price by 6¢: o Old selling price = $0.60 o New selling price = $0.66 Old B - E = New B-E = Effect f) Effect on break - even if Acme's variable costs increase by 3¢? o Old VC = $0.36 o New VC = $0.39 Old B-E = New B-E = Effect g) If Acme's fixed costs increase by $150, how does break - even change? o Old FC = $1,500 o New FC = $1,650 Old B-E = New B-E = Effect Margin of Safety: h) Acme Widgets' current break - even is 6,250 units. The firm expects to sell 7,000 units next month Margin of safety in units = Margin of safety in dollars = Margin of safety ratio = Multi - Product Firm: o Acme Widgets now makes two products: A and B o The firm sells 9 units of product A for each unit of product B that it sells A and B Price/unit $0.60 $1.00 VC/Unit 0.36 0.56 Total VC $1,820 i) Break - even for the product mix: A = B = =
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