Zerbel Company, a wholesaler of large, custom-built air conditioning unitsfor commercial buildings, has noticed considerable fluctuation in its shippingexpense from month to month:MonthJanuaryUnits Total Shipping Shipped ExpenseFebruary 7MarchAprilMayJune4752368$2,200$3,100$2,600$1,500$2,200$3,000$3,600Using the high-low method, estimate the cost formula for shippingexpense.July

Step 1: Definition of High-Low Method:The high-low method is used to separate mixed costs into their…

Answered: Zerbel Company, a wholesaler of large,…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 6CE

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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, as shown below:Month Units Shipped Total Shipping ExpenseJanuary. . . . . . . . . . 4 $2,200February . . . . . . . . .7 $3,100March . . . . . . . . . . .5 $2,600April . . . . . . . . . . . . 2 $1,500May . . . . . . . . . . . . . 3 $2,200June . . . . . . . . . . . . . 6 $3,000July . . . . . . . . . . . . . .8 $3,600Required:1. Prepare a scatter graph using the data given above. Plot cost on the vertical axis and activity on the horizontal axis. Is there an approximately linear relationship between shipping expense and the number of units shipped?2. Using the high-low method, estimate the cost formula for shipping expense. Draw a straight line through the high and low data points shown in the scatter graph that you prepared in requirement 1. Make sure your line intersects the Y axis.3. What factors, other…
General Accounting Question Solution
a. Using the least squares method, develop the equation for predicting weekly receiving report costs based on the number of shipments received. b. What is the predicted amount of receiving report costs for a month (assume a month is exactly four weeks) in which 165 shipments are received?
A wholesaler of custom-built air-conditioning units for commercial buildings gathered the following monthly data relating to units shipped and total shipping expense: Units shipped Total shipping expense $2,000 $2,500 $1,900 $2,200 $2,500 $3,030 $1,950 Month 2. January February March 3. April May June 4. 7. July 3 Using the high-low method estimate the cost formula for shipping expenses, calculate the variable shipping expense as well as fixed shipping expense per unit. %24 (All answers are whole numbers - unless specified otherwise. You should NOT include the $ sign or a comma. E.g., you should type 1000 for one thousand. Negative numbers should be added with a minus sign, e.g, -1000 for a decrease or loss of one thousand.) Variable shipping expense = $ per unit. Fixed shipping expense = $ per unit.
Required information [The following information applies to the questions displayed below.] Archer Company is a wholesaler of custom-built air-conditioning units for commercial buildings. It gathered the following monthly data relating to units shipped and total shipping expense: Month January February March April May June July Units Shipped 3 6 4 Variable shipping expense Fixed shipping expense 5 7 Total Shipping Expense $1,800 $ 2,300 $1,700 $2,000 $ 2,300 $ 2,700 $1,200 2. Using the high-low method, estimate the cost formula for shipping expense. Answer is complete but not entirely correct. $ 760 per unit $ 22 per month
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 *
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?
Quick-Copy Duplicating Company uses 110,000 reams of standard-size paper a year at its various duplicating centers. Its current paper supplier charges $2.00 per ream. Annual inventory carrying costs are 15 percent of inventory value. The costs of placing and receiving an order of paper are $41.25. Assuming that inventory replenishment occurs virtually instantaneously, determine the following: a. The firm's EOQ b. The total annual inventory costs of this policy c. The optimal ordering frequency d. Compute and plot ordering costs, carrying costs, and total inventory costs for order quantities of 2,000, 4,000, 5,000, 5,500, 6,000, 7,000, and 9,000 reams. Connect the points on each function with a smooth curve, and determine the EOQ from the graph (and the table used in constructing the graph).
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Sales of industrial vacuum cleaners at Yarena Supply CO. over the past 13 months are as follows: Sales in P1,000 Month Sales in P1,000 Month 11 January 14 August 14 February 17 September 15 March 12 October 10 April 14 November 15 May 16 December 17 June 11 January 11 July Required suing a moving average with three periods, determine the demand for vacuum cleaners for next February? Problem 1: Mendelev Company is a small producer of several coffee products. One of the products is Kapeng Barrack’o that is sold to retail outlets. Jensen Mendelev must decide how many boxes of the Kapeng Barrack’o to produce each month. The probability that the demand will be six boxes is 0.1, for seven boxes is 0.3, for 8 boxes is 0.5, and for 9 boxes is 0.1. The cost of every box is P400, and the price that Jensen gets for each box is P800. Unfortunately, any boxes not sold at the end of the month are of no value…
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