Zerbel Company, a wholesaler of large, custom-built air conditioning units for commercial buildings, has noticed considerable fluctuation in its shipping expense from month to month: Units Total Shipping Shipped Expense Month January 4 February 7 March 5 April 2 May 3 June 6 July 8 $2,200 $3,100 $2,600 $1,500 $2,200 $3,000 $3,600 Using the high-low method, estimate the cost formula for shipping expense.
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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…Carla Vista Company produces a molded briefcase that is distributed to luggage stores. The following operating data for the current year has been accumulated for planning purposes. Sales price Variable cost of goods sold Variable selling expenses Variable administrative expenses Annual fixed expenses Overhead Selling expenses Administrative expenses (a) $80 * Your answer is incorrect. 21.20 24 Break even units $9,400,000 Carla Vista can produce 1.5 million cases a year. The projected net income for the coming year is expected to be $2,100,000. Carla Vista is subject to a 40% income tax rate. 6 1,550,000 During the planning sessions, Carla Vista's managers have been reviewing costs and expenses. They estimate that the company's variable cost of goods sold will increase 20% in the coming year and that fixed administrative expenses will increase by $120,000. All other costs and expenses are expected to remain the same. 3,250,000 Carla Vista Company's managers are considering expanding the…Piedmont Fasteners Corporation makes three different clothing fasteners in its manufacturing facility in North Carolina. All three products are sold in highly competitive markets, so the company is unable to raise prices without losing an unacceptable number of customers. Data from the most recent period concerning these products appear below: Annual sales volume Velcro 101,800 Metal 203,600 Nylon 407,200 Unit selling price $ 1.65 $ 1.50 $ 0.85 Variable expense per unit $ 1.25 $ 0.70 Contribution margin per unit $ 0.40 $ 0.80 $ 0.25 $ 0.60 Total fixed expenses are $407,200 per period. Of the total fixed expenses, $20,000 could be avoided if the Velcro product is dropped, $80,000 if the Metal product is dropped, and $60,000 if the Nylon product is dropped. The remaining fixed expenses of $247,200 consist of common fixed expenses such as administrative salaries and rent on the factory building that could be avoided only by going out of business entirely. The company's managers would like…
- Memofax Inc. produces memory enhancement kits for fax machines. Sales have been very erratic, with some months showing a profit and some months showing a loss. The company's contribution format income statement for the most recent month is given below. Sales (12,600 units at $40 per unit $504,000 Variable 202.40 *Widget Co. produces widgets for customers. The company has provided the following financial information for the past year. Each scenario below is separate. Product Selling price per unit Sales Quantity Variable cost per unit Fixed costs Widgets $9.00 528,000 $2.00 $67,000 Do not enter dollar signs or commas in the input boxes. Round breakeven units up to the nearest whole number. Round breakeven sales to the nearest whole number. a) Calculate break-even units and break-even sales. Breakeven units = Breakeven sales = $ b) Suppose the company would like to generate an operating profit of $5,000. Determine the revenue that is needed to obtain this target, and calculate the number of units that need to be produced to meet this goal. Breakeven units = Breakeven sales = $ c) Suppose the company decides to lower the selling price from $9.00 per unit to $8.00 per unit. Calculate break-even units and break- even sales. Breakeven units = Breakeven sales = $ d) Suppose that fixed costs drop to…Taizhong Semiconductor Company mass produces several common computer chips. Type A sells for $120 per unit. Variable cost was $95 per unit and the fixed costs were $3,200,000 per month. Taizhong currently sells 140,000 units per month. Because of volatility in the precious metals market, the variable cost per unit has just gone up by $5, but the company does not believe it can pass the extra cost on to the customer. To offset higher variable costs, the production manager has developed a plan which will reduce fixed costs by 20%. By how much percentage will this affect net operating income?
- Hapza cleaning services has opening hours that fluctuate from month to month. The electricity costs and hours of operation for past six months is listed below: Month Total hours of operation Total electricity cost January 650 $ 4 240 February 700 $ 4 400 March 800 $ 4 800 April 600 $ 4 200 May 550 $ 3 700 June 500 $ 3 600 Required: (a) Use the high-low method to estimate the cost behaviour for the complex’s electricity costs, assuming that the variable costs vary in proportion to the hours of operation. Express the total cost behaviour in formula form (Y = a + bx). What is the variable electricity cost per hour of operation? (b) During July, the complex will open for 570 hours. Predict the complex’s total electricity costs for July using the cost estimation method employed in above requirement (a). (c) What is the main drawback of the high-low method of cost estimation?Memofax Inc. produces memory enhancement kits for fax machines. Sales have been very erratic, with some months showing a profit and some months showing a loss. The company's contribution format income statement for the most recent month is given below. Sales (12,600 units at $40 per unit $504,000 Variable expenses Contribution margin Fixed expenses 302,400 201,600 Net operating loss 225,600 $(24,000) The sales manager feels that a $7,700 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in a $73,000 increase in monthly sales. If the sales manager is right, what will the revised net operating income or loss?Preppy Co. makes and sells a single product. The current selling price is $30 per unit. Variable costs are $21 per unit, and fixed expenses total $90,000 per month. Sales volume for July totaled 12,000 units. (a) Calculate the operating income for July. (b) Calculate the break-even point in units sold and total revenues. (c) Management is considering the use of automated production equipment. If this were done, variable costs would drop to $15.00 per unit, but fixed expenses would increase to $100,000 per month. (1.) Calculate operating income at a volume of 12,000 units per month with the new cost structure. (2.) Calculate the break-even point in units with the new cost structure.