The controller at Speedy Delivery wants to break-out the cost of deliveries into fixed and variable components so that it will be better able to predict costs for next year. Below are the delivery costs incurred each month and the number of deliveries. Month January February March April May June July August September October November December Required: Delivery Cost $2,176.00 2,272.00 1,926.40 1,696.00 1,600.00 2,752.00 3,616.00 1,849.60 1,676.80 3,808.00 3,961.60 4,000.00 Using the high-low method: 1. Calculate the variable cost rate per deliveries. Round the answer to two decimal places. 2. Calculate the fixed cost of overhead. = 3. Construct the cost formula for total overhead cost. If required, round your answer to two decimal places. Total cost Fixed cost Variable cost ($ per unit x Number of deliveries) 4. The company is estimating that in January the number of deliveries will be 125. How much should it estimate to have in total delivery costs for January? $ = Deliveries 105 110 92 80 75 135 180 88 79 190 198 200 + +

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The controller at Speedy Delivery wants to break-out the cost of deliveries into fixed and variable components so that it will be better able to predict costs for next year. Below are the delivery costs incurred each month and the
number of deliveries.
Delivery Cost
January
$2,176.00
February
2,272.00
March
1,926.40
April
1,696.00
May
1,600.00
75
[]
June
2,752.00
135
July
3,616.00
180
August
1,849.60
88
September
1,676.80
79
October
3,808.00
November
3,961.60
4,000.00
Month
December
Required:
2. Calculate the fixed cost of overhead.
$
=
=
Deliveries
105
110
92
Using the high-low method:
1. Calculate the variable cost rate per deliveries. Round the answer to two decimal places.
$
+
80
+
190
3. Construct the cost formula for total overhead cost. If required, round your answer to two decimal places.
Total cost
Fixed cost
Variable cost
($
per unit x Number of deliveries)
4. The company is estimating that in January the number of deliveries will be 125. How much should it estimate to have in total delivery costs for January?
198
200
Transcribed Image Text:The controller at Speedy Delivery wants to break-out the cost of deliveries into fixed and variable components so that it will be better able to predict costs for next year. Below are the delivery costs incurred each month and the number of deliveries. Delivery Cost January $2,176.00 February 2,272.00 March 1,926.40 April 1,696.00 May 1,600.00 75 [] June 2,752.00 135 July 3,616.00 180 August 1,849.60 88 September 1,676.80 79 October 3,808.00 November 3,961.60 4,000.00 Month December Required: 2. Calculate the fixed cost of overhead. $ = = Deliveries 105 110 92 Using the high-low method: 1. Calculate the variable cost rate per deliveries. Round the answer to two decimal places. $ + 80 + 190 3. Construct the cost formula for total overhead cost. If required, round your answer to two decimal places. Total cost Fixed cost Variable cost ($ per unit x Number of deliveries) 4. The company is estimating that in January the number of deliveries will be 125. How much should it estimate to have in total delivery costs for January? 198 200
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