Maintenance Machine Health Number of Shipping Units Month Costs Hours Insurance Employees Costs Shipped January February $4,500 $4,452 8,600 $8,600 $8,600 $25,776 $29,664 165 68 7,160 120 75 8,240 $4,600 $4,850 $5,166 March 230 92 $28,674 7,965 April May 318 $8,600 105 $23,058 6,405 $8,600 $8,600 $21,294 5,915 9,245 460 89 June $4,760 280 87 $33,282 July August September $4,910 340 $8,600 93 $31,428 8,730 $4,960 360 $8,600 88 $30,294 8,415 $5,070 420 $8,600 95 $25,110 6,975 October $5,250 495 $8,600 102 $25,866 7,185 November $5,271 510 $8,600 97 $20,124 5,590 December $4,760 275 $8,600 94 S34,596 9,610 Required 1. Which of the preceding costs is variable? Fixed? Mixed? Explain. 2. Using the high-low method, determine the cost function for each cost. 3. Combine the preceding information to get a monthly operating cost function for the Stein Corporation. 4. Next month, Stein expects to use 400 machine hours, have 80 employees, and ship 9,000 units. Estimate the total operating cost for the month.

Maintenance Machine Health Number of Shipping Units Month Costs Hours Insurance Employees Costs Shipped January February $4,500 $4,452 8,600 $8,600 $8,600 $25,776 $29,664 165 68 7,160 120 75 8,240 $4,600 $4,850 $5,166 March 230 92 $28,674 7,965 April May 318 $8,600 105 $23,058 6,405 $8,600 $8,600 $21,294 5,915 9,245 460 89 June $4,760 280 87 $33,282 July August September $4,910 340 $8,600 93 $31,428 8,730 $4,960 360 $8,600 88 $30,294 8,415 $5,070 420 $8,600 95 $25,110 6,975 October $5,250 495 $8,600 102 $25,866 7,185 November $5,271 510 $8,600 97 $20,124 5,590 December $4,760 275 $8,600 94 S34,596 9,610 Required 1. Which of the preceding costs is variable? Fixed? Mixed? Explain. 2. Using the high-low method, determine the cost function for each cost. 3. Combine the preceding information to get a monthly operating cost function for the Stein Corporation. 4. Next month, Stein expects to use 400 machine hours, have 80 employees, and ship 9,000 units. Estimate the total operating cost for the month.

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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Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

Account analysis, high-low. Stein Corporation wants to nd an equation to estimate some of their monthly operating costs for the operating budget for 2018. The following cost and other data were gathered for 2017:

Maintenance
Machine
Health
Number of
Shipping
Units
Month
Costs
Hours
Insurance
Employees
Costs
Shipped
January
February
$4,500
$4,452
8,600
$8,600
$8,600
$25,776
$29,664
165
68
7,160
120
75
8,240
$4,600
$4,850
$5,166
March
230
92
$28,674
7,965
April
May
318
$8,600
105
$23,058
6,405
$8,600
$8,600
$21,294
5,915
9,245
460
89
June
$4,760
280
87
$33,282
July
August
September
$4,910
340
$8,600
93
$31,428
8,730
$4,960
360
$8,600
88
$30,294
8,415
$5,070
420
$8,600
95
$25,110
6,975
October
$5,250
495
$8,600
102
$25,866
7,185
November
$5,271
510
$8,600
97
$20,124
5,590
December
$4,760
275
$8,600
94
S34,596
9,610
Required
1. Which of the preceding costs is variable? Fixed? Mixed? Explain.
2. Using the high-low method, determine the cost function for each cost.
3. Combine the preceding information to get a monthly operating cost function for the Stein Corporation.
4. Next month, Stein expects to use 400 machine hours, have 80 employees, and ship 9,000 units. Estimate
the total operating cost for the month.

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