High-Low Method for a Service CompanyBoston Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costsThe activity base used by Boston Railroad is a measure of railroad operating activity, termed "gross-ton miles," which is the total number of tons multiplied by the milesmoved.Transportation CostsGross-Ton MilesJanuary$1,324,700294,000February1,476,900329,000March1,043,800213,000April1,416,000318,000May1,187,600256,000June1,522,600346,000Determine the variable cost per gross-ton mile and the fixed cost.Variable cost (Round to two decimal places.)%$4per gross-ton mileTotal fixed costCheck My Work 4 more Check My Work uses remaining.PreviousNextAll work saved.Email InstructorSave and ExitSubmit Assignment for Gra%24%24

High low method: Variable cost per unit = (Highest activity cost - Lowest activity cost) / (Highest…

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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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Question 1: Estimation of WC The management of ABC Company Limited has called for a statement showing the WC needed to finance a level of activity of 3,00,000 units of output per year. The cost statement of the company's product, for the above-mentioned activity level, is given below: Cost per unit TK 20 Direct material Direct labor Overhead Total cost Target profit Target selling price 5 TK 15 40 10 TK 50 1. Past records show that raw materials are held in stock, on an average, for two (2) months; 2. Work in process (WIP) will approximate to 15 days production; 3. Finished goods remain in warehouse on average for 1 month; 4. Suppliers for materials extend one month's credit; 5. Two months credit is normally allowed to customers (assume all sales are on credit) 6. A minimum cash balance of TK 5,00,000 is expected to be maintained; 7. The production pattern is assumed to be even during the year. Prepare a Statement of Working Capital Requirements
Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Variable costs per unit: Manufacturing: Direct materials $ 10 Direct labor $7 $3 Variable manufacturing overhead Variable selling and administrative Fixed costs per year: $3 Fixed manufacturing overhead $ 380,000 Pixed selling and administrative $ 290,000 During the year, the company produced 38,000 units and sold 18,000 units. The selling price of the company's product is $61 per unit. Required: 1. Assume that the company uses absorption costing: a. Compute the unit product cost. b. Prepare an income statement for the year. 2. Assume that the company uses variable costing: a. Compute the unit product cost. A b. Prepare an income statement for the year. Complete this question by entering your answers in the tabs below. Req 1A Reg 28 Reg 2A Req 18 Compute the unit product cost. Assume that the company uses absorption costing. During the year, the…
Service Emphasis The following analysis of selected data is for each of the two services Rockville Corporation provides. Service G Service H Per-unit data at 10,000 services Sales price Service costs: Variable Fixed Selling and administrative expenses: Variable Fixed $ Revenue Less: Variable cost Contribution margin Labor hours per unit Contribution margin per labor hour $ $36 $ 19 6 G 5 3 In the Rockville's operation, labor capacity is the company's constraining resource. Each unit of G requires 3 hours of labor, and each unit of H requires 1 hours of labor. Assuming that all service can be sold at a normal price, prepare an analysis showing which of the two services should be provided with any unused productive capacity that Rockville might have. Service $23 36 $ 25 X 11 * $ 3 3.67 × $ 15 4 2 1 H 23 19 x 4 x 1 4 × Any unused capacity should be devoted to Service H, which has $2 less contribution margin per labor hour than does Service G. Any unused capacity should be devoted to…
High-Low Method The manufacturing costs of Ackerman Industries for the first three months of the year follow: Total Costs Units Produced January $219,590 2,710 units February 168,480 1,680 March 262,080 4,080 Using the high-low method, determine (a) the variable cost per unit and (b) the total fixed cost. Round all answers to the nearest whole dollar. a. Variable cost per unit $ b. Total fixed cost
High-Low Method for a Service Company Continental Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Continental Railroad is a measure of railroad operating activity, termed "gross-ton miles," which is the total number of tons multiplied by the miles moved. January February March April May June Transportation Costs Gross-Ton Miles $536,200 225,000 597,800 252,000 422,500 163,000 573,200 244,000 480,700 196,000 616,300 265,000 Determine the variable cost per gross-ton mile and the total fixed cost. Variable cost (Round to two decimal places.) Total fixed cost pe
Answer
High-Low Method for a Service Company Boston Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Boston Railroad is a measure of railroad operating activity, termed “gross-ton miles,” which is the total number of tons multiplied by the miles moved. Transportation Costs Gross-Ton Miles January $1,061,200 303,000 February 1,183,200 338,000 March 836,200 219,000 April 1,134,400 328,000 May 951,400 263,000 June 1,219,800 356,000 Determine the variable cost per gross-ton mile and the fixed cost. Variable cost (Round to two decimal places.) $fill in the blank 1 per gross-ton mile Total fixed cost $fill in the blank 2
High-Low Method The manufacturing costs of Heather Industries for three months of the year are provided below. Total Costs Production January $297,360 1,540 units February 379,960 2,880 March 462,560 4,340 Using the high-low method, determine (a) the variable cost per unit and (b) the total fixed cost. Round all answers to the nearest whole dollar. a. Variable cost per unit $fill in the blank 1 b. Total fixed cost $fill in the blank 2

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