Cover-to-Cover Company is a manufacturer of shelving for books. The company has compiled the following cost data, and wants your help in determining the cost behavior. After reviewing the data, complete requirements (1) and (2) that follow. Units Total Total Total Machine Produced Lumber Cost Utilities Cost Depreciation Cost 11,000 shelves $132,000 $13,650 $125,000 22,000 shelves 264,000 26,300 125,000 44,000 shelves 528,000 51,600 125,000 55,000 shelves 660,000 64,250 125,000 1. Determine whether the costs in the table are variable, fixed, mixed, or none of these. Variable Cost Fixed Cost Mixed Cost None of these Lumber Utilities Depreciation 2. For each cost, determine the fixed portion of the cost, and the per-unit variable cost. If there is no amount or an amount is zero, enter "0". Recall that, for N= Number of Units Produced, Total Costs = (Variable Cost Per Unit x N) + Fixed Cost. Complete the following table with your answers. Cost Fixed Portion of Cost Variable Portion of Cost (per Unit) Lumber Utilities Depreciation Biblio Files Company is the chief competitor of Cover-to-Cover Company in the bookshelf business. Biblio Files is analyzing its manufacturing costs, and has compiled the following data for the first six months of the year. After reviewing the data, answer questions (1) through (3) that follow. Number of Units Produced Total Cost January 4,360 $65,600 February 275 6,250 March 1,000 15,000 April 5,025 101,250 May 1,750 32,500 June 3,015 48,000 1. From the data previously provided, help Biblio Files Company estimate the fixed and variable portions of its total costs using the high-low method. Recall that Total Costs = (Variable Cost Per Unit x Number of Units Produced) + Fixed Cost. Complete the following table. Total Fixed Cost Variable Cost per Unit 2. With your Total Fixed Cost and Variable Cost per Unit from the high-low method, compute the total cost for the following values of N (Number of Units Produced). Number of Units Produced Total Cost 3,500 4,360 5,025 3. Why does the total cost computed for 4,360 units not match the data for January in the table at the top of this panel? The high-low method is accurate only for months in which production is at full capacity. The high-low method gives a formula for the estimated total cost and may not match levels of production other than the highest and lowest. The high-low method gives accurate data only for levels of production outside the relevant range. The high-low method only gives accurate data when fixed costs are zero. X Contribution Margin

Cover-to-Cover Company is a manufacturer of shelving for books. The company has compiled the following cost data, and wants your help in determining the cost behavior. After reviewing the data, complete requirements (1) and (2) that follow. Units Total Total Total Machine Produced Lumber Cost Utilities Cost Depreciation Cost 11,000 shelves $132,000 $13,650 $125,000 22,000 shelves 264,000 26,300 125,000 44,000 shelves 528,000 51,600 125,000 55,000 shelves 660,000 64,250 125,000 1. Determine whether the costs in the table are variable, fixed, mixed, or none of these. Variable Cost Fixed Cost Mixed Cost None of these Lumber Utilities Depreciation 2. For each cost, determine the fixed portion of the cost, and the per-unit variable cost. If there is no amount or an amount is zero, enter "0". Recall that, for N= Number of Units Produced, Total Costs = (Variable Cost Per Unit x N) + Fixed Cost. Complete the following table with your answers. Cost Fixed Portion of Cost Variable Portion of Cost (per Unit) Lumber Utilities Depreciation Biblio Files Company is the chief competitor of Cover-to-Cover Company in the bookshelf business. Biblio Files is analyzing its manufacturing costs, and has compiled the following data for the first six months of the year. After reviewing the data, answer questions (1) through (3) that follow. Number of Units Produced Total Cost January 4,360 $65,600 February 275 6,250 March 1,000 15,000 April 5,025 101,250 May 1,750 32,500 June 3,015 48,000 1. From the data previously provided, help Biblio Files Company estimate the fixed and variable portions of its total costs using the high-low method. Recall that Total Costs = (Variable Cost Per Unit x Number of Units Produced) + Fixed Cost. Complete the following table. Total Fixed Cost Variable Cost per Unit 2. With your Total Fixed Cost and Variable Cost per Unit from the high-low method, compute the total cost for the following values of N (Number of Units Produced). Number of Units Produced Total Cost 3,500 4,360 5,025 3. Why does the total cost computed for 4,360 units not match the data for January in the table at the top of this panel? The high-low method is accurate only for months in which production is at full capacity. The high-low method gives a formula for the estimated total cost and may not match levels of production other than the highest and lowest. The high-low method gives accurate data only for levels of production outside the relevant range. The high-low method only gives accurate data when fixed costs are zero. X Contribution Margin

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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Units	Total	Total	Total Machine
Produced	Lumber Cost	Utilities Cost	Depreciation Cost
11,000 shelves	$132,000	$13,650	$125,000
22,000 shelves	264,000	26,300	125,000
44,000 shelves	528,000	51,600	125,000
55,000 shelves	660,000	64,250	125,000

1. Determine whether the costs in the table are variable, fixed, mixed, or none of these.

	Variable Cost	Fixed Cost	Mixed Cost	None of these
Lumber
Utilities
Depreciation

2. For each cost, determine the fixed portion of the cost, and the per-unit variable cost. If there is no amount or an amount is zero, enter "0". Recall that, for N= Number of Units Produced, Total Costs = (Variable Cost Per Unit x N) + Fixed Cost. Complete the following table with your answers.

Cost	Fixed Portion of Cost	Variable Portion of Cost (per Unit)
Lumber
Utilities
Depreciation

Biblio Files Company is the chief competitor of Cover-to-Cover Company in the bookshelf business. Biblio Files is analyzing its manufacturing costs, and has compiled the following data for the first six months of the year. After reviewing the data, answer questions (1) through (3) that follow.

	Number of Units Produced	Total Cost
January	4,360	$65,600
February	275	6,250
March	1,000	15,000
April	5,025	101,250
May	1,750	32,500
June	3,015	48,000

1. From the data previously provided, help Biblio Files Company estimate the fixed and variable portions of its total costs using the high-low method. Recall that Total Costs = (Variable Cost Per Unit x Number of Units Produced) + Fixed Cost. Complete the following table.

Total Fixed Cost	Variable Cost per Unit

2. With your Total Fixed Cost and Variable Cost per Unit from the high-low method, compute the total cost for the following values of N (Number of Units Produced).

Number of Units Produced	Total Cost
3,500
4,360
5,025

3. Why does the total cost computed for 4,360 units not match the data for January in the table at the top of this panel?

The high-low method is accurate only for months in which production is at full capacity.

The high-low method gives a formula for the estimated total cost and may not match levels of production other than the highest and lowest.

The high-low method gives accurate data only for levels of production outside the relevant range.

The high-low method only gives accurate data when fixed costs are zero.

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