o 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 ver questions (1) through (3) that follow. Units Produced Total Cost 4,360 units 300 1,000 5,800 1,750 3,015 $65,600 6,250 15,000 88,750 32,500 e 48,000 rom 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 plete the following table. Total Fixed Cost Variable Cost per Unit 15 0 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 Jary ruary ch 1 3,500 4,360 5,800 Total Cost
o 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 ver questions (1) through (3) that follow. Units Produced Total Cost 4,360 units 300 1,000 5,800 1,750 3,015 $65,600 6,250 15,000 88,750 32,500 e 48,000 rom 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 plete the following table. Total Fixed Cost Variable Cost per Unit 15 0 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 Jary ruary ch 1 3,500 4,360 5,800 Total Cost
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![**High-Low Method Explanation**
Biblio Files Company, a competitor of Cover-to-Cover Company in the bookshelf business, is evaluating its manufacturing costs. Below is the data for the first six months of the year:
| Month | Units Produced | Total Cost |
|------------|----------------|-------------|
| January | 4,360 units | $65,600 |
| February | 300 units | $6,250 |
| March | 1,000 units | $15,000 |
| April | 5,800 units | $88,750 |
| May | 1,750 units | $32,500 |
| June | 3,015 units | $48,000 |
### Instructions:
1. **Estimate Fixed and Variable Costs**:
Using the high-low method, analyze the variable and fixed portions of the costs. The total cost formula is:
\[
\text{Total Costs} = (\text{Variable Cost Per Unit} \times \text{Number of Units Produced}) + \text{Fixed Cost}
\]
Fill in the following table for total fixed cost and variable cost per unit:
| Total Fixed Cost | Variable Cost per Unit |
|------------------|------------------------|
| $0 | $15 |
2. **Compute Total Costs for Given Production Levels**:
Using the fixed and variable costs obtained from the high-low method, calculate the total costs for the specified production quantities:
| Number of Units Produced | Total Cost |
|--------------------------|------------|
| 3,500 | $ |
| 4,360 | $ |
| 5,800 | $ |](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F034c8dbf-c1e3-4fe7-a5c2-11d6cef5d635%2Fa01efd82-abe7-4c3c-898a-775e436a288b%2Fmgjcs6m_processed.png&w=3840&q=75)
Transcribed Image Text:**High-Low Method Explanation**
Biblio Files Company, a competitor of Cover-to-Cover Company in the bookshelf business, is evaluating its manufacturing costs. Below is the data for the first six months of the year:
| Month | Units Produced | Total Cost |
|------------|----------------|-------------|
| January | 4,360 units | $65,600 |
| February | 300 units | $6,250 |
| March | 1,000 units | $15,000 |
| April | 5,800 units | $88,750 |
| May | 1,750 units | $32,500 |
| June | 3,015 units | $48,000 |
### Instructions:
1. **Estimate Fixed and Variable Costs**:
Using the high-low method, analyze the variable and fixed portions of the costs. The total cost formula is:
\[
\text{Total Costs} = (\text{Variable Cost Per Unit} \times \text{Number of Units Produced}) + \text{Fixed Cost}
\]
Fill in the following table for total fixed cost and variable cost per unit:
| Total Fixed Cost | Variable Cost per Unit |
|------------------|------------------------|
| $0 | $15 |
2. **Compute Total Costs for Given Production Levels**:
Using the fixed and variable costs obtained from the high-low method, calculate the total costs for the specified production quantities:
| Number of Units Produced | Total Cost |
|--------------------------|------------|
| 3,500 | $ |
| 4,360 | $ |
| 5,800 | $ |
Transcribed Image Text:# Mastery Problem: Cost-Volume-Profit Analysis
## 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.
### Table of Cost Data
| Units Produced | Lumber Cost | Total Utilities Cost | Total Machine Depreciation |
|----------------|-------------|----------------------|----------------------------|
| 9,000 shelves | $99,000 | $11,850 | $120,000 |
| 18,000 shelves | 198,000 | 22,200 | 120,000 |
| 36,000 shelves | 396,000 | 42,900 | 120,000 |
| 45,000 shelves | 495,000 | 53,250 | 120,000 |
1. **Determine whether the costs in the table are variable, fixed, mixed, or none of these.**
- Lumber: **Variable Cost**
- Utilities: **Mixed Cost**
- Depreciation: **Fixed Cost**
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.**
| Cost | Fixed Portion of Cost | Variable Portion of Cost (per Unit) |
|--------------|-----------------------|-------------------------------------|
| Lumber | $0 | $11 |
| Utilities | $1,000 | $1.15 |
| Depreciation | $120,000 | $0 |
Expert Solution
Step 1 Introduction
"Since you have asked multiple questions, we will solve first question for you. If you want any specific question to be solved then please specify the question number or post only that question."
The costs incurred during the production are classified as fixed and variable costs. The high low method is used to separate the variable and fixed cost from the mixed costs of production.
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