REQUIRED: 1. Use the high-low method to estimate the company's energy cost behavior and express it in equation form. 2. Predict the energy cost for a month in which 78,000 kilos of banana chips are produced.
REQUIRED: 1. Use the high-low method to estimate the company's energy cost behavior and express it in equation form. 2. Predict the energy cost for a month in which 78,000 kilos of banana chips are produced.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Answer only Activity 2. Thanks
(Cost accounting)
Transcribed Image Text:4G
4G
08:44 NE
39
3 - Activity.Cos.
Activities
Activity 1
Ang-bang Co., doing business in the province of La Union, reports the following total costs at two levels
of production:
Cost Item
Direct labor
Indirect labor
2,000 units
P 12,000
4,000
20,000
7,000
24,000
8,000
16,000
5,000 units
P 30,000
15,000
20,000
16,000
24,000
19,000
40,000
Classification
Property taxes
Maintenance
Depreciation
Utilities
Direct materials
REQUIRED: Classify each cost as variable, fixed, or mixed.
Activity 2
Jimmy P. is a highly successful farmer who has formed his own company to produce and package banana
chips. The recently hired controller for the firm is about to apply the high- low method in estimating the
company's energy cost behavior. The following costs were incurred during the past 12 months:
Kilos of Banana Chips Produced
105.000
63,000
66,000
72,000
Energy Costs
P70,200
66,300
66,000
67,350
Month
January
February
March
April
90,000
96,000
2,000
90,000
90,000
84,000
123,000
117,000
May
June
July
August
September
October
November
68,700
70,050
12,500
68.400
69,000
68,100
72,300
74,850
December
REQUIRED:
1. Use the high-low method to estimate the company's energy cost behavior and express it in equation
form.
2. Predict the energy cost for a month in which 78,000 kilos of banana chips are produced.
Activity 3
Mighty Muffler, Inc. operates an automobile service facility that specializes in replacing mufflers on
compact cars. The following table shows the costs incurred during a month when 700 mufflers were
replaced.
Muffler replacements
Total costs:
600
700
800
Fixed costs
Variable costs
Total costs
P56,000
28,000
P84.000
a
Cost per muffler replacement:
Fixed cost
Variable cost
Total cost per muffler replacement
h
k
m
Required:
a. Fill in the missing amounts, labeled (a) through ( o), in the table.
b. Compute income, assuming that the service fee per muffler replacement is P120, and that the company
made 730 muffler replacements during the period.
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