Mixed cost and high-low method: Mixed cost can be defined as the cost which does not change directly proportional to the change in the level of output. It is neither considered variable cost as it does change directly with the change in the level of output nor it is considered as fixed cost as it does not remain constant at all levels of output. High-low method is the method used to segregate mixed cost into variable cost and fixed cost. In high low method, generally two levels of output are taken which are considered as highest and the lowest level of output. As well as the total mixed cost at these levels are also considered. The formulas used in high-low method to calculate variable cost and fixed cost are – Variable cost per unit = Total cost athighestlevel − Total cost at lowest level Total units athighestlevel − Total units at lowest level Total Variable cost at the level of output = Variable cost per unit X Total units at the level of activity Total fixed cost = Total cost – Total Variable cost at the level of output Requirement 1 To determine: Variable cost per inspection.

Question

The December 31, 2021, balance sheet of Chen, Incorporated, showed long-term debt of $1,420,000, $144,000 in the common stock account, and $2,690,000 in the additional paid-in surplus account. The December 31, 2022, balance sheet showed long-term debt of $1,620,000, $154,000 in the common stock account and $2,990,000 in the additional paid-in surplus account. The 2022 income statement showed an interest expense of $96,000 and the company paid out $149,000 in cash dividends during 2022. The firm’s net capital spending for 2022 was $1,000,000, and the firm reduced its net working capital investment by $129,000. What was the firm's 2022 operating cash flow, or OCF?

Answer 1

Question

Chapter 22, Problem E22.32E

To determine

Mixed cost and high-low method:

Mixed cost can be defined as the cost which does not change directly proportional to the change in the level of output. It is neither considered variable cost as it does change directly with the change in the level of output nor it is considered as fixed cost as it does not remain constant at all levels of output.

High-low method is the method used to segregate mixed cost into variable cost and fixed cost. In high low method, generally two levels of output are taken which are considered as highest and the lowest level of output. As well as the total mixed cost at these levels are also considered.

The formulas used in high-low method to calculate variable cost and fixed cost are –

$Variable cost per unit = \frac{Total cost athighestlevel - Total cost at lowest level}{Total units athighestlevel - Total units at lowest level}$

Total Variable cost at the level of output = Variable cost per unit X Total units at the level of activity

Total fixed cost = Total cost – Total Variable cost at the level of output

Requirement 1

To determine:

Variable cost per inspection.

To determine

Requirement 2:

To determine:

Total fixed costs from the mixed costs given

To determine

Requirement 3:

To determine:

• The equation of variable and fixed cost used to calculate mixed cost

• Operating costs for 1,000 inspections

To determine

Requirement 4:

To prepare:

Graph illustrating the total costs for 900, 1,000 and 1,300 inspections

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The December 31, 2021, balance sheet of Chen, Incorporated, showed long-term debt of $1,420,000, $144,000 in the common stock account, and $2,690,000 in the additional paid-in surplus account. The December 31, 2022, balance sheet showed long-term debt of $1,620,000, $154,000 in the common stock account and $2,990,000 in the additional paid-in surplus account. The 2022 income statement showed an interest expense of $96,000 and the company paid out $149,000 in cash dividends during 2022. The firm’s net capital spending for 2022 was $1,000,000, and the firm reduced its net working capital investment by $129,000. What was the firm's 2022 operating cash flow, or OCF?

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Answer 2

Question

Chapter 22, Problem E22.32E

To determine

Mixed cost and high-low method:

Mixed cost can be defined as the cost which does not change directly proportional to the change in the level of output. It is neither considered variable cost as it does change directly with the change in the level of output nor it is considered as fixed cost as it does not remain constant at all levels of output.

High-low method is the method used to segregate mixed cost into variable cost and fixed cost. In high low method, generally two levels of output are taken which are considered as highest and the lowest level of output. As well as the total mixed cost at these levels are also considered.

The formulas used in high-low method to calculate variable cost and fixed cost are –

$Variable cost per unit = \frac{Total cost athighestlevel - Total cost at lowest level}{Total units athighestlevel - Total units at lowest level}$

Total Variable cost at the level of output = Variable cost per unit X Total units at the level of activity

Total fixed cost = Total cost – Total Variable cost at the level of output

Requirement 1

To determine:

Variable cost per inspection.

To determine

Requirement 2:

To determine:

Total fixed costs from the mixed costs given

To determine

Requirement 3:

To determine:

• The equation of variable and fixed cost used to calculate mixed cost

• Operating costs for 1,000 inspections

To determine

Requirement 4:

To prepare:

Graph illustrating the total costs for 900, 1,000 and 1,300 inspections

Expert Solution & Answer

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Answer 3

Question

Chapter 22, Problem E22.32E

To determine

Mixed cost and high-low method:

Mixed cost can be defined as the cost which does not change directly proportional to the change in the level of output. It is neither considered variable cost as it does change directly with the change in the level of output nor it is considered as fixed cost as it does not remain constant at all levels of output.

High-low method is the method used to segregate mixed cost into variable cost and fixed cost. In high low method, generally two levels of output are taken which are considered as highest and the lowest level of output. As well as the total mixed cost at these levels are also considered.

The formulas used in high-low method to calculate variable cost and fixed cost are –

$Variable cost per unit = \frac{Total cost athighestlevel - Total cost at lowest level}{Total units athighestlevel - Total units at lowest level}$

Total Variable cost at the level of output = Variable cost per unit X Total units at the level of activity

Total fixed cost = Total cost – Total Variable cost at the level of output

Requirement 1

To determine:

Variable cost per inspection.

To determine

Requirement 2:

To determine:

Total fixed costs from the mixed costs given

To determine

Requirement 3:

To determine:

• The equation of variable and fixed cost used to calculate mixed cost

• Operating costs for 1,000 inspections

To determine

Requirement 4:

To prepare:

Graph illustrating the total costs for 900, 1,000 and 1,300 inspections

Expert Solution & Answer

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Answer 4

Question

Chapter 22, Problem E22.32E

To determine

Mixed cost and high-low method:

Mixed cost can be defined as the cost which does not change directly proportional to the change in the level of output. It is neither considered variable cost as it does change directly with the change in the level of output nor it is considered as fixed cost as it does not remain constant at all levels of output.

High-low method is the method used to segregate mixed cost into variable cost and fixed cost. In high low method, generally two levels of output are taken which are considered as highest and the lowest level of output. As well as the total mixed cost at these levels are also considered.

The formulas used in high-low method to calculate variable cost and fixed cost are –

$Variable cost per unit = \frac{Total cost athighestlevel - Total cost at lowest level}{Total units athighestlevel - Total units at lowest level}$

Total Variable cost at the level of output = Variable cost per unit X Total units at the level of activity

Total fixed cost = Total cost – Total Variable cost at the level of output

Requirement 1

To determine:

Variable cost per inspection.

To determine

Requirement 2:

To determine:

Total fixed costs from the mixed costs given

To determine

Requirement 3:

To determine:

• The equation of variable and fixed cost used to calculate mixed cost

• Operating costs for 1,000 inspections

To determine

Requirement 4:

To prepare:

Graph illustrating the total costs for 900, 1,000 and 1,300 inspections

Expert Solution & Answer

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Answer 5

Chapter 22, Problem E22.32E

To determine

Mixed cost and high-low method:

Mixed cost can be defined as the cost which does not change directly proportional to the change in the level of output. It is neither considered variable cost as it does change directly with the change in the level of output nor it is considered as fixed cost as it does not remain constant at all levels of output.

High-low method is the method used to segregate mixed cost into variable cost and fixed cost. In high low method, generally two levels of output are taken which are considered as highest and the lowest level of output. As well as the total mixed cost at these levels are also considered.

The formulas used in high-low method to calculate variable cost and fixed cost are –

$Variable cost per unit = \frac{Total cost athighestlevel - Total cost at lowest level}{Total units athighestlevel - Total units at lowest level}$

Total Variable cost at the level of output = Variable cost per unit X Total units at the level of activity

Total fixed cost = Total cost – Total Variable cost at the level of output

Requirement 1

To determine:

Variable cost per inspection.

To determine

Requirement 2:

To determine:

Total fixed costs from the mixed costs given

To determine

Requirement 3:

To determine:

• The equation of variable and fixed cost used to calculate mixed cost

• Operating costs for 1,000 inspections

To determine

Requirement 4:

To prepare:

Graph illustrating the total costs for 900, 1,000 and 1,300 inspections

Answer 6

Chapter 22, Problem E22.32E

To determine

Mixed cost and high-low method:

Mixed cost can be defined as the cost which does not change directly proportional to the change in the level of output. It is neither considered variable cost as it does change directly with the change in the level of output nor it is considered as fixed cost as it does not remain constant at all levels of output.

High-low method is the method used to segregate mixed cost into variable cost and fixed cost. In high low method, generally two levels of output are taken which are considered as highest and the lowest level of output. As well as the total mixed cost at these levels are also considered.

The formulas used in high-low method to calculate variable cost and fixed cost are –

$Variable cost per unit = \frac{Total cost athighestlevel - Total cost at lowest level}{Total units athighestlevel - Total units at lowest level}$

Total Variable cost at the level of output = Variable cost per unit X Total units at the level of activity

Total fixed cost = Total cost – Total Variable cost at the level of output

Requirement 1

To determine:

Variable cost per inspection.

Answer 7

Chapter 22, Problem E22.32E

To determine

Mixed cost and high-low method:

Mixed cost can be defined as the cost which does not change directly proportional to the change in the level of output. It is neither considered variable cost as it does change directly with the change in the level of output nor it is considered as fixed cost as it does not remain constant at all levels of output.

High-low method is the method used to segregate mixed cost into variable cost and fixed cost. In high low method, generally two levels of output are taken which are considered as highest and the lowest level of output. As well as the total mixed cost at these levels are also considered.

The formulas used in high-low method to calculate variable cost and fixed cost are –

$Variable cost per unit = \frac{Total cost athighestlevel - Total cost at lowest level}{Total units athighestlevel - Total units at lowest level}$

Total Variable cost at the level of output = Variable cost per unit X Total units at the level of activity

Total fixed cost = Total cost – Total Variable cost at the level of output

Requirement 1

To determine:

Variable cost per inspection.

Answer 8

To determine

Requirement 2:

To determine:

Total fixed costs from the mixed costs given

Answer 9

To determine

Requirement 2:

To determine:

Total fixed costs from the mixed costs given

Answer 10

To determine

Requirement 3:

To determine:

• The equation of variable and fixed cost used to calculate mixed cost

• Operating costs for 1,000 inspections

Answer 11

To determine

Requirement 3:

To determine:

• The equation of variable and fixed cost used to calculate mixed cost

• Operating costs for 1,000 inspections

Answer 12

To determine

Requirement 4:

To prepare:

Graph illustrating the total costs for 900, 1,000 and 1,300 inspections

Answer 13

To determine

Requirement 4:

To prepare:

Graph illustrating the total costs for 900, 1,000 and 1,300 inspections

Answer 14

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Requirement 2:

To determine:

Total fixed costs from the mixed costs given

Requirement 3:

To determine:

• The equation of variable and fixed cost used to calculate mixed cost

• Operating costs for 1,000 inspections

Requirement 4:

To prepare:

Graph illustrating the total costs for 900, 1,000 and 1,300 inspections

Chapter 22 Solutions

Concept explainers

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Requirement 2: To determine: Total fixed costs from the mixed costs given

Requirement 3: To determine: • The equation of variable and fixed cost used to calculate mixed cost • Operating costs for 1,000 inspections

Requirement 4: To prepare: Graph illustrating the total costs for 900, 1,000 and 1,300 inspections

Chapter 22 Solutions

Requirement 2:

To determine:

Total fixed costs from the mixed costs given

Requirement 3:

To determine:

• The equation of variable and fixed cost used to calculate mixed cost

• Operating costs for 1,000 inspections

Requirement 4:

To prepare:

Graph illustrating the total costs for 900, 1,000 and 1,300 inspections