Exercise 3-10 High-Low Method; Predicting Cost [LO2]Prairie Motels has a total of 3,400 rooms in its chain of motels located in eastern Canada. On average, 55% of the rooms are occupiedeach day. The company's operating costs are $39 per occupied room per day at this occupancy level, assuming a 30-day month. This$39 contains both variable and fixed cost elements. During April, the occupancy rate dropped to only 40%. A total of $2,013,480 inoperating cost was incurred during April.Required:1. Estimate the variable cost per occupied room per day. (Do not round intermediate calculations and round your final answer to 2decimal places.)Variable costper room per day2. Estimate the total fixed operating costs per month.Fixed operating costper month3. Assume that the occupancy rate increases to 55% during May. What total operating costs would you expect the company to incur inMay? (Do not round intermediate calculations.)Total expected operating cost

The high low method is used to separate the variable and fixed cost from the mixed cost of…

Answered: Exercise 3-10 High-Low Method;…

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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DISCUSSION 10 – MARGINAL COSTING Gia's Foods produces frozen meals, which it sells for $6 each. The company computes a new monthly fixed manufacturing overhead rate based on the planned number of meals to be produced that month. All costs and production levels are exactly as planned. The following data are from Gia's Foods first month in business. Sales Production Variable manufacturing cost per meal Sales commission cost per meal Total fixed manufacturing overhead Total fixed marketing and administrative costs January 2о07 1,000 meals 1,400 meals $4.00 $1.00 $700 $600 Requirements: i) Compute the product cost per meal produced under absorption costing and under variable costing. ii) Prepare the income statement for January 2007 using variable costing iii) List three situations in which marginal costing, as a technique, aids decision-making.
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Question 3 The following monthly data in contribution format are available for the Timor Company and its only product. Product SD: Sales Variable expenses Contribution margin Fixed expenses Net operating income Total $ $ $ $ $ 227,500 162.500 65,000 45.000 20,000 Per Unit $ $ $ 91 65 26 The company produced and sold 2,500 units during the month and had no beginning or ending inventories. a) What is the current margin of safety? b) Management is concerned about having the funds to pay dividends next quarter. They believe net operating income of $35,000 will be sufficient. How much sales revenue is necessary to achieve this target profit?
QUESTION 8 Grass is Greener, Inc., plans to charge its customers by the hour and to work 350 hours at $16 per hour. It expects its variable costs to be $6 per hour and fixed costs to be $600. Calculate the number of hours needed to earn $1,800 in operating income? (Round to the nearest hour)
Exercise 2-5A (Algo) Fixed versus variable cost behavior LO 2-1 Solomon Company's cost and production data for two recent months included the following: Production (units) Rent Utilities March 700 $1,100 $900 Required a. Separately calculate the rental cost per unit and the utilities cost per unit for both March and April. b. Identify which cost is variable and which is fixed. Complete this question by entering your answers in the tabs below. Required A Required B April 800 $1,100 $1,029 Rent cost per unit Utility cost per unit Separately calculate the rental cost per unit and the utilities cost per unit for both March and April. Note: Round your answers to 2 decimal places. March April
Exercise 18-22 (Algo) CVP analysis with two products LO P3 Handy Home sells windows (80% of sales) and doors (20% of sales). The selling price of each window is $330 and of each door is $760. The variable cost of each window is $190 and of each door is $480. Fixed costs are $940,800. (1) Compute the weighted-average contribution margin (2) Compute the break-even point in units using the weighted-average contribution margin (3) Compute the number of units of each rpoduct that will be sold at the break-even point
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QUESTION 4 4.1 Study the information given below and answer the following questions independently INFORMATION: Banco Limited produces a single product. The following budgeted information for 2021 is made available: Variable manufacturing costs per unit R85.24 Selling price per unit R246 Fixed manufacturing costs R4 552 000 Marketing Costs R648 000 plus 6% of sales Administration costs R320 000 plus R8 per unit sold The number of units expected to be produced and sold during 2021 is 45 000. 4.1.1 Calculate the expected break- even quantity for 2021 4.1.2 Calculate the sales volume required to achieve an operating profit of R2 4848 000 4.1.3 Suppose Banco Limited is considering a decrease of R18 per unit in the selling price of the product, With the expectation that this would increase the sales volume by 10%. Is this a good idea? Motivate your answer
EXERCISE 6-12 Target Profit and Break-Even Analysis; Margin of Safety; CM Ratio [LO1, LO3, LO5, L06, LO7] Menlo Company distributes a single product. The company's sales and expenses for last month follow: Total Per Unit Sales... Variable expenses $450,000 $30 180,000 12 Contribution margin Fixed expenses. 270,000 216,000 $18 Net operating income $ 54,000 Required: 1. What is the monthly break-even point in units sold and in sales dollars? Without resorting to computations, what is the total contribution margin at the break-even point? 3. How many units would have to be sold each month to earn a target profit of $90,000? Use the formula method. Verify your answer by preparing a contribution format income statement at the target sales level. 2. 4. Refer to the original data. Compute the company's margin of safety in both dollar and percent- age terms. 5. What is the company's CM ratio? If sales increase by $50,000 per month and there is no change in fixed expenses, by how much would you…
t ces Exercise 6-5 (Algo) Compute the Margin of Safety [LO6-5] Molander Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning the next month's budget appear below: Selling price per unit Variable expense per unit Fixed expense per month Unit sales per month Required: 1. What is the company's margin of safety? $ 24 $ 16 $ 7,200 1,050 Note: Do not round intermediate calculations. 2. What is the company's margin of safety as a percentage of its sales? Note: Round your percentage answer to 2 decimal places (i.e. .1234 should be entered as 12.34). 1. Margin of safety (in dollars) 2. Margin of safety percentage %
Problem 5-4&5 The Lucas Inn has room and food operations. The rooms operation provides 65 percent of the total revenue and has variable costs of 25 percent. The food operation provides 35 percent of the total revenue and has variable costs of 60 percent. The total annual fixed costs are $300,000. 4. What is the breakeven point? (use 2 decimal places for dollars and cents) 478087.65 5. Revenue required for $100,000 profit with 20% tax rate. (use 2 decimal places for dollars and cents) 677290.84

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