The controller of Manufacturing Co. has collected the following data on drilling machines: Month Total Cost Total Hours March $12,460 8,100 April $12,000 7,600 May $63,000 30,000 June $14, 740 9,800 July $25,000 20000 August $55,000 22,000 The price per unit of the drilling machines is $25. Please calculate all of the following: Variable Cost and Fixed Cost using the High-Low Method. Breakeven point in units. Breakeven point in dollars using the Contribution Margin Ratio. Margin of Safety Percentage if their sales are $756,000. How many units they would need to sell in order to have a Net Income of $1,200,000.

The controller of Manufacturing Co. has collected the following data on drilling machines: Month Total Cost Total Hours March $12,460 8,100 April $12,000 7,600 May $63,000 30,000 June $14, 740 9,800 July $25,000 20000 August $55,000 22,000 The price per unit of the drilling machines is $25. Please calculate all of the following: Variable Cost and Fixed Cost using the High-Low Method. Breakeven point in units. Breakeven point in dollars using the Contribution Margin Ratio. Margin of Safety Percentage if their sales are $756,000. How many units they would need to sell in order to have a Net Income of $1,200,000.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 7P

See similar textbooks

Similar questions

Harbor Images has collected the following cost data for various levels of activity: Images Created Total Cost $5,700 $6,320 $9,210 $5,250 Month 6,000 7,750 8,100 4,500 August September October November a. Using the high-low method, determine the variable cost per image created and the total fixed cost. (Round your variable cost to 2 decimal places.) Variable Cost Per Image Fixed Cost Per Month b. Estimate the total costs when 6,500 images are created. (Do not round your intermediate calculations.) Total Costs
Deidoro Company has provided the following data for maintenance cost: Machine hours Maintenance cost Multiple Choice Maintenance cost is a mixed cost with variable and fixed components. The fixed and variable components of maintenance cost are closest to: (Round your intermediate calculations to 2 decimal places.) O O Prior Year 17,100 20,100 $ 29,400 $ 34,200 $29,400 per year; $1.701 per machine hour Current Year $2,040 per year; $1.701 per machine hour $2,040 per year; $1.600 per machine hour $29,400 per year; $1.600 per machine hour
Write a linear cost function equation for each of the following conditions. Use y for estimated costsand X for activity of the cost driver.a. Direct materials cost is $2.70 per pound b. Total cost is fixed at $800 per month regardless of the number of units produced. c. Auto rental has a fixed fee of $90.00 per day plus $1.75 per mile driven. d. Machine operating costs include $1,000 of maintenance per month, and $15.00 of coolant usagecosts for each day the machinery is in operation.
Uninder Company uses the high-low method to estimate the cost function. The information for 2017 is provided below: Machine-hours Labor Costs Highest observation of cost driver 550 $22,000 Lowest observation of cost driver 250 $13,000 What is the slope coefficient? Select one: a. $30.00 b. $40.00 c. $43.75 d. $52.00
A manager must decide which type of machine to buy, A, B, or C. Machine costs (per individual machine) are as follows: Cost $50,000 $40,000 $70,000 Machine A BU C Product forecasts and processing times on the machines are as follows: Annual Product Demand 1 2 3 4 27,000 13,000 28,000 29,000 PROCCESSING TIME PER UNIT (minutes) AL63 m А 1 3 BL323 1 Click here for the Exool Doto Filo CH3N6 с 1 2
The Miramichi Company uses the high-low method to estimate its cost function. The information for the current year is provided below: Highest observation of cost driver Lowest observation of cost driver $12,500 Machine-hours a. O b. $0 O C. $25,000 O d. $125,000 O e. $225,000 2,000 1,000 What is the constant for the estimating cost equation? Costs $225,000 $125,000
Please explain each anwer with formula. Regarding the following information, how many machines would be needed to handle the required volume? Processing time per unit (minute) product demand A B C 1 16000 3 4 2 2 12000 4 4 3 3 6000 5 6 4 4 30000 2 2 1 In order to meet annual demand for all products, how many machines in each type are needed? Based on fixed annual cost (Alternative A with $40,000, B with $30,000 and C with $80,000), which type of machine and how many will cost least to satisfy the demand? Consider the operation of machines 10 hours per day and 200 days a year.
Floryn Instruments Co. developed the following regression equations to indicate costs at various activity levels: Direct labor = P4 per unitMaterials = P3 per unitSupervision = P5,000Power = 300 + P0.25 per unit + P0.50 per machine hourFactory supplies = P250 + P0.75 per unitDepreciation—equipment = P1 per machine hourDepreciation—building = P10,000During the next period, the company anticipates production of 20,000 units and usage of 3,000 machine hours.Required: Prepare a schedule of the production costs to be incurred during the next period.
Luisa Rentals offers machine rental services for concrete cutting. Consider the following costs of the company over the relevant range of 4,000 to 10,000 hours of operating time for its concrete cutting equipment. Hours of Operating Time 4,000 5,000 8,000 10,000 Total Costs: Variable Costs $ 20,000 ? ? ? Fixed Costs 82,000 ? ? ? Total Costs $102,000 ? ? ? Cost per hour: Variable cost ? ? ? ? Fixed cost ? ? ? ? Total cost per hour ? ? ? ? What are the estimated total costs at a volume of 5,000 hours?
Luca Co offers machine rental services for concrete cutting. Consider the following costs of the company over the relevant range of 4,000 to 10,000 hours of operating time for its concrete cutting equipment. Hours of Operating Time 4,000 5,000 8,000 10,000 Total Costs: Variable Costs $ 20,000 ? ? ? Fixed Costs 82,000 ? ? ? Total Costs $102,000 ? ? ? Cost per hour: Variable cost ? ? ? ? Fixed cost ? ? ? ? Total cost per hour ? ? ? ? What is the estimated total cost per hour at a volume of 8,000 hours?
Given the following cost and activity observations for Bounty Company's utilities, use the high-low method to calculate Bounty' variable utilities costs per machine hour. Round your answer to the nearest cent. March April May June Cost $3,100 2,700 2,900 3,600 Machine Hours 15.000 10,000 12,000 18,000
A manager must decide which type of machine to buy, A, B, or C. Machine costs (per individual machine) are as follows: Machine Cost A $ 60,000 B $ 50,000 C $ 60,000 Product forecasts and processing times on the machines are as follows: PROCCESSING TIME PER UNIT (minutes) Product AnnualDemand A B C 1 16,000 3 4 4 2 10,000 6 5 1 3 15,000 1 3 6 4 17,000 5 3 4 a. Assume that only purchasing costs are being considered. Compute the total processing time required for each machine type to meet demand, how many of each machine type would be needed, and the resulting total purchasing cost for each machine type. The machines will operate 10 hours a day, 240 days a year. (Enter total processing times as whole numbers. Round up machine quantities to the next higher whole number. Compute total purchasing costs using these rounded machine quantities. Enter the resulting total purchasing cost as a whole number. Omit the "$" sign.) Total…