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. Total Lumber Utilities Cost Cost Total Total Machine Depreciation Cost $145.000 145.000 145.000 145.000 1. Determine whether the costs in the table are variable, fixed, mixed, or none of these -√ Motilities Depreciation Variable Cost Mixed Cost Fixed Cost ✓ ✔ 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 Unitx N) - Fixed Cost. Complete the following table with your answers. Round variable portion of cost (per uni answers to two decimal places. Units Produced 8.000 shelves $96.000 $10.200 16.000 shelves 192.000 19.400 32.000 shelves 384.000 37,800 40.000 shelves 480.000 47.000 Cost Depreciation Foodback 1000 Fixed Portion of Cost Variable Portion of Cost (per Unit)

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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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
3,500
4,360
8,800
3. Why does the total cost computed for 4,360 units not match the data for January?
a. The high-low method is accurate only for months in which production is at full capacity.
b. The high-low method only gives accurate data when fixed costs are zero.
c. 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.
d. The high-low method gives accurate data only for levels of production outside the relevant range.
с
с
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Total Cost
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Contribution Margin
Review the contribution margin income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statements. Complete the following table from the data provided on the income statements. Each company
sold 82,800 units during the year.
Contribution margin ratio (percent)
Unit contribution margin
Break-even sales (units)
Break-even sales (dollars)
Cover-to-Cover
Company
%
Biblio Files
Company
$
$
%
Transcribed Image Text: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 3,500 4,360 8,800 3. Why does the total cost computed for 4,360 units not match the data for January? a. The high-low method is accurate only for months in which production is at full capacity. b. The high-low method only gives accurate data when fixed costs are zero. c. 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. d. The high-low method gives accurate data only for levels of production outside the relevant range. с с V Feedback Total Cost ►Check My Work Contribution Margin Review the contribution margin income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statements. Complete the following table from the data provided on the income statements. Each company sold 82,800 units during the year. Contribution margin ratio (percent) Unit contribution margin Break-even sales (units) Break-even sales (dollars) Cover-to-Cover Company % Biblio Files Company $ $ %
Cost Behavior
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.
Total Total Machine
Depreciation
Cost
Total
Units Lumber Utilities
Produced Cost Cost
8,000 shelves $96,000 $10,200
16,000 shelves 192,000 19,400
$145,000
145,000
32,000 shelves 384,000 37,800
145,000
40,000 shelves 480,000 47,000
145,000
1. Determine whether the costs in the table are variable, fixed, mixed, or none of these.
Variable Cost
Mixed Cost
Fixed Cost
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. Round variable portion of cost (per unit)
answers to two decimal places.
Lumber
Utilities
Cost
Lumber
Utilities
Depreciation
Feedback
Fixed Portion
of Cost
Check My Work
January
February
March
April
✓
✓
✓
Variable Portion
of Cost (per Unit)
High-Low
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.
Units Produced
Total Cost
4,360 units
300
$65,600
6,250
15,000
133.750
1,000
8,800
May
1,750
32,500
48,000
June
3,015
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
Transcribed Image Text:Cost Behavior 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. Total Total Machine Depreciation Cost Total Units Lumber Utilities Produced Cost Cost 8,000 shelves $96,000 $10,200 16,000 shelves 192,000 19,400 $145,000 145,000 32,000 shelves 384,000 37,800 145,000 40,000 shelves 480,000 47,000 145,000 1. Determine whether the costs in the table are variable, fixed, mixed, or none of these. Variable Cost Mixed Cost Fixed Cost 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. Round variable portion of cost (per unit) answers to two decimal places. Lumber Utilities Cost Lumber Utilities Depreciation Feedback Fixed Portion of Cost Check My Work January February March April ✓ ✓ ✓ Variable Portion of Cost (per Unit) High-Low 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. Units Produced Total Cost 4,360 units 300 $65,600 6,250 15,000 133.750 1,000 8,800 May 1,750 32,500 48,000 June 3,015 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
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Follow-up Question
High-Low
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.
January
February
Units Produced
4,360 units
300
1,000
8,800
1,750
3,015
Total Cost
3,500
4,360
8,800
$65,600
6,250
March
15,000
April
133,750
May
32,500
48,000
June
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
215 X
$
15 X
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
54,625 X
67,525 X
73,750 X
Transcribed Image Text:High-Low 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. January February Units Produced 4,360 units 300 1,000 8,800 1,750 3,015 Total Cost 3,500 4,360 8,800 $65,600 6,250 March 15,000 April 133,750 May 32,500 48,000 June 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 215 X $ 15 X 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 54,625 X 67,525 X 73,750 X
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