a)Classify each cost element as either fixed, variable, or mixedb)Calculate:i) the variable production cost per unit and the total fixed production overhead.ii) The total variable cost per unit and the total fixed costsHint: Use the high-low method to separate mixed costs into their fixed and variable components. Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round.The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lowerlimits of activity for the year ended December 31, 2020.Lower Limit Upper LimitProduction (# of boxes)Production Costs:4,0006,000Direct Materials.$60,000$90,000Direct Labour80,000120,000Overhead:Indirect Materials..25,00037,500Indirect Labour40,00050,000Depreciation20,00020,000Selling & Administrative Expenses:Sales Salaries .Office Salaries50,00065,00030,00030,000Advertising45,00045,000Other15,00020.000Total$365.000$477.500

Workings Particulars Lower limit Upper limit Using High-low method Variable Fixed…

a) Classify each cost element as either fixed, variable, or mixed b) Calculate: i) the variable production cost per unit and the total fixed production overhead. ii) The total variable cost per unit and the total fixed costs Hint: Use the high-low method to separate mixed costs into their fixed and variable components.

a) Classify each cost element as either fixed, variable, or mixed b) Calculate: i) the variable production cost per unit and the total fixed production overhead. ii) The total variable cost per unit and the total fixed costs Hint: Use the high-low method to separate mixed costs into their fixed and variable components.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

a)
Classify each cost element as either fixed, variable, or mixed
b)
Calculate:
i) the variable production cost per unit and the total fixed production overhead.
ii) The total variable cost per unit and the total fixed costs
Hint: Use the high-low method to separate mixed costs into their fixed and variable components.

Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round.
The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lower
limits of activity for the year ended December 31, 2020.
Lower Limit Upper Limit
Production (# of boxes)
Production Costs:
4,000
6,000
Direct Materials.
$60,000
$90,000
Direct Labour
80,000
120,000
Overhead:
Indirect Materials..
25,000
37,500
Indirect Labour
40,000
50,000
Depreciation
20,000
20,000
Selling & Administrative Expenses:
Sales Salaries .
Office Salaries
50,000
65,000
30,000
30,000
Advertising
45,000
45,000
Other
15,000
20.000
Total
$365.000
$477.500

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