E5-20 (Algo) Estimating Cost Behavior Using High-Low Method, Preparing Contribution Margin IncomeStatement [LO 5-3, 5-5]Anita Kaur runs a courier service in downtown Seattle. She charges clients $0.56 per mile driven. Anita has determined that if shedrives 2,150 miles in a month, her total operating cost is $575. If she drives 3,250 miles in a month, her total operating cost is $751.Required:1. Using the high-low method, determine Anita's variable and fixed operating cost components.2. Complete the contribution margin income statement for Anita's service assuming she drove 1,300 miles last month. (Assume thisfalls within the relevant range of operations).Complete this question by entering your answers in the tabs below.Required 1 Required 2Using the high-low method, determine Anita's variable and fixed operating cost components.Note: Round your cost per mile answer to 2 decimal places.Variable Cost per Mile DrivenFixed Cost

The objective of the question is to determine the variable and fixed operating cost components of…

Answered: E5-20 (Algo) Estimating Cost Behavior…

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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Explain what contribution margin on a per unit basis and contribution margin ratio is to the management of Motors Ltd. Motors Ltd sells small motors as a component part to automobiles. The Model 101 motor sells for $850 and has per-unit variable costs of $400 associated with its production. The company has fixed expenses of $90,000 per month. In August, the company sold 425 of the Model 101 motors. A. Calculate the contribution margin per unit for their Model 101. B. Calculate the contribution margin ratio of their Model 101. C. Prepare a contribution margin income statement for the month of August.
Joey Bag-o-donuts owns an ice cream shop. Looking at last year's utility bills, the highest utility bill was $4000 for 2000 machine hours. The lowest utility bill was $2500 for 1200 machine hours. Calculate the variable rate per machine hour and the total fixed utility cost. Show the equation for determining total utility costs. If Joey plans on using 1500 machine hours, what will the total utility bill be using the equation in part 2.
Elizabeth and William are considering offering a doggy day-care service. After some research, they found several pet day-care facilities in their area, but they were expensive! Further, the facilities were sterile and didn't provide a "homey" or fun environment for pets. Elizabeth and William felt they could easily fix these shortcomings. Elizabeth's home would be the location for their business, since it already has a fenced-in yard and is located two blocks from a dog park. Estimated costs for building an outdoor shelter, plus other licensing and business start-up costs, are as follows. Shelter (depreciated over 7 years) Licensing and other annual costs Hourly wage for hired labor; planned for only 200 hours per year Variable costs for food Estimated volume of dogs per day (open for business 5 days per week, 50 weeks per year; average length of stay 8 hours per day) $600 per year $700 per year $16 per hour $16 per day per dog. 24 per day
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Through November, Cameron has received gross income of $130,500. For December, Cameron is considering whether to accept one more work engagement for the year. Engagement 1 will generate $9,730 of revenue at a cost to Cameron of $4,050, which is deductible for AGI. In contrast, engagement 2 will generate $7,100 of qualified business income (QBI), which is eligible for the 20 percent QBI deduction. Cameron files as a single taxpayer, and he did not contribute to charity during the year. Calculate Cameron's taxable income assuming he chooses engagement 1 and assuming he chooses engagement 2. Assume he has no itemized deductions. Description (1) Gross income before new work engagement (2) Income from engagement (3) Additional for AGI deduction (4) Adjusted gross income (6) Deduction for QBI Taxable income Engagement 1 Engagement 2
Assume Hairy-Cairy Salon, a hair styling salon in Matthews, NC, provides cuts, perms, and hairstyling services. Annual fixed costs are $225,000, and variable costs are 40 percent of sales revenue. Sales revenue totaled $450,000. Determine the margin of safety in sales dollars.
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How do I determine the company's total contribution margin, contribution margin per service call, and contribution margin ratio when 50 service calls are made in the month of June? Problem E21-23
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Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Incorporated, has been experiencing financial difficulty for some time. The company's contribution formaet Income statement for the most recent month is given below Sales (12,600 units $30 per unit) Variable expenses Contribution margin Fixed expenses $ 378,000 226,800 151,280 160,200 Net operating loss $ (18,000) Required: 1. Compute the company's CM ratio and its break-even point in unit sales and dollar sales. 2. The president believes that a $6,600 Increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will increase unit sales and the total sales by $82,000 per month. If the president is right, what will be the Increase (decrease) in the company's monthly net operating Income? 3. Refer to the original dets. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $39,000 in the monthly advertising…
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