Cost volume profit analysis (CVP) is used to ascertain the affect on company’s net income and operating income with respect to change in costs and volume of the production of the company. Break-even point is the level of sales which minimum required to overcome fixed and variable cost of the company. It is the condition of no profits and no loss for the company. To estimate : The fixed cost and variable cost of electricity per month using high low method.

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Answer 1

Question

Chapter 2A, Problem 2A.1E

1.

To determine

Introduction: Cost volume profit analysis (CVP) is used to ascertain the affect on company’s net income and operating income with respect to change in costs and volume of the production of the company. Break-even point is the level of sales which minimum required to overcome fixed and variable cost of the company. It is the condition of no profits and no loss for the company. To estimate: The fixed cost and variable cost of electricity per month using high low method.

1.

Expert Solution

Answer to Problem 2A.1E

Variable cost for electricity per month will be1.56 Fixed cost will be 1395

Explanation of Solution

	Occupancy day	Electrical cost
High Activity Level	2406	5148
Low Activity Level	124	1588
Change	2282	3560

Variable cost:

Variable cost=Chanel in CostChange in Level=35602282=1.56

Fixed cost:

Total Fixed cost = High activity level cost − High Activity Level × variable cost=5147−2406×1.56=1394.64 =Low activity Level cost− Low Activity level unit × variable cost =1588−124×1.56=1394.56

Thus, Variable cost for electricity per month will be1.56 Fixed cost will be 1395

2.

To determine

Introduction: Cost volume profit analysis (CVP) is used to ascertain the affect on company’s net income and operating income with respect to change in costs and volume of the production of the company. Break-even point is the level of sales which minimum required to overcome fixed and variable cost of the company. It is the condition of no profits and no loss for the company. The factors affecting the variation in electrical costs from month to month in addition to occupancy day.

2.

Expert Solution

Answer to Problem 2A.1E

Season factors like winter, summer, autumn and rainy season

Explanation of Solution

The factors affecting the variation in electrical costs from month to month in addition to occupancy day are:

Season factors like winter, summer, autumn and rainy season will affect the variation in electrical costs.
Factors like guests not switching off the light and fan at the time leaving the room.

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QNO.1 Raveen Products sells camping equipment. One of the company’s products, a camp lantern, sells for $90 per unit. Variable expenses are $63 per lantern, and fixed expenses associated with the lantern total $135,000 per month. Required: Compute the company’s break-even point in number of lanterns and in total sales dollars. Compute the company’s Margin of Safety in sales dollar and in percentage. At present, the company is selling 8,000 lanterns per month. The sales manager is convinced that a 10% reduction in the selling price will result in a 25% increase in the number of lanterns sold each month. Prepare two contribution format income statements, one under present operating conditions, and one as operations would appear after the proposed changes. Show both total and per unit data on your statements. Refer to the data in (3) above. How many lanterns would have to be sold at the new selling price to yield a minimum net operating income of $72,000 per month?

Answer 2

Question

Chapter 2A, Problem 2A.1E

1.

To determine

Introduction: Cost volume profit analysis (CVP) is used to ascertain the affect on company’s net income and operating income with respect to change in costs and volume of the production of the company. Break-even point is the level of sales which minimum required to overcome fixed and variable cost of the company. It is the condition of no profits and no loss for the company. To estimate: The fixed cost and variable cost of electricity per month using high low method.

1.

Expert Solution

Answer to Problem 2A.1E

Variable cost for electricity per month will be1.56 Fixed cost will be 1395

Explanation of Solution

	Occupancy day	Electrical cost
High Activity Level	2406	5148
Low Activity Level	124	1588
Change	2282	3560

Variable cost:

Variable cost=Chanel in CostChange in Level=35602282=1.56

Fixed cost:

Total Fixed cost = High activity level cost − High Activity Level × variable cost=5147−2406×1.56=1394.64 =Low activity Level cost− Low Activity level unit × variable cost =1588−124×1.56=1394.56

Thus, Variable cost for electricity per month will be1.56 Fixed cost will be 1395

2.

To determine

Introduction: Cost volume profit analysis (CVP) is used to ascertain the affect on company’s net income and operating income with respect to change in costs and volume of the production of the company. Break-even point is the level of sales which minimum required to overcome fixed and variable cost of the company. It is the condition of no profits and no loss for the company. The factors affecting the variation in electrical costs from month to month in addition to occupancy day.

2.

Expert Solution

Answer to Problem 2A.1E

Season factors like winter, summer, autumn and rainy season

Explanation of Solution

The factors affecting the variation in electrical costs from month to month in addition to occupancy day are:

Season factors like winter, summer, autumn and rainy season will affect the variation in electrical costs.
Factors like guests not switching off the light and fan at the time leaving the room.

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Answer 3

Question

Chapter 2A, Problem 2A.1E

1.

To determine

Introduction: Cost volume profit analysis (CVP) is used to ascertain the affect on company’s net income and operating income with respect to change in costs and volume of the production of the company. Break-even point is the level of sales which minimum required to overcome fixed and variable cost of the company. It is the condition of no profits and no loss for the company. To estimate: The fixed cost and variable cost of electricity per month using high low method.

1.

Expert Solution

Answer to Problem 2A.1E

Variable cost for electricity per month will be1.56 Fixed cost will be 1395

Explanation of Solution

	Occupancy day	Electrical cost
High Activity Level	2406	5148
Low Activity Level	124	1588
Change	2282	3560

Variable cost:

Variable cost=Chanel in CostChange in Level=35602282=1.56

Fixed cost:

Total Fixed cost = High activity level cost − High Activity Level × variable cost=5147−2406×1.56=1394.64 =Low activity Level cost− Low Activity level unit × variable cost =1588−124×1.56=1394.56

Thus, Variable cost for electricity per month will be1.56 Fixed cost will be 1395

2.

To determine

Introduction: Cost volume profit analysis (CVP) is used to ascertain the affect on company’s net income and operating income with respect to change in costs and volume of the production of the company. Break-even point is the level of sales which minimum required to overcome fixed and variable cost of the company. It is the condition of no profits and no loss for the company. The factors affecting the variation in electrical costs from month to month in addition to occupancy day.

2.

Expert Solution

Answer to Problem 2A.1E

Season factors like winter, summer, autumn and rainy season

Explanation of Solution

The factors affecting the variation in electrical costs from month to month in addition to occupancy day are:

Season factors like winter, summer, autumn and rainy season will affect the variation in electrical costs.
Factors like guests not switching off the light and fan at the time leaving the room.

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Answer 4

Question

Chapter 2A, Problem 2A.1E

1.

To determine

Introduction: Cost volume profit analysis (CVP) is used to ascertain the affect on company’s net income and operating income with respect to change in costs and volume of the production of the company. Break-even point is the level of sales which minimum required to overcome fixed and variable cost of the company. It is the condition of no profits and no loss for the company. To estimate: The fixed cost and variable cost of electricity per month using high low method.

1.

Expert Solution

Answer to Problem 2A.1E

Variable cost for electricity per month will be1.56 Fixed cost will be 1395

Explanation of Solution

	Occupancy day	Electrical cost
High Activity Level	2406	5148
Low Activity Level	124	1588
Change	2282	3560

Variable cost:

Variable cost=Chanel in CostChange in Level=35602282=1.56

Fixed cost:

Total Fixed cost = High activity level cost − High Activity Level × variable cost=5147−2406×1.56=1394.64 =Low activity Level cost− Low Activity level unit × variable cost =1588−124×1.56=1394.56

Thus, Variable cost for electricity per month will be1.56 Fixed cost will be 1395

2.

To determine

Introduction: Cost volume profit analysis (CVP) is used to ascertain the affect on company’s net income and operating income with respect to change in costs and volume of the production of the company. Break-even point is the level of sales which minimum required to overcome fixed and variable cost of the company. It is the condition of no profits and no loss for the company. The factors affecting the variation in electrical costs from month to month in addition to occupancy day.

2.

Expert Solution

Answer to Problem 2A.1E

Season factors like winter, summer, autumn and rainy season

Explanation of Solution

The factors affecting the variation in electrical costs from month to month in addition to occupancy day are:

Season factors like winter, summer, autumn and rainy season will affect the variation in electrical costs.
Factors like guests not switching off the light and fan at the time leaving the room.

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Answer 5

Chapter 2A, Problem 2A.1E

1.

To determine

Introduction: Cost volume profit analysis (CVP) is used to ascertain the affect on company’s net income and operating income with respect to change in costs and volume of the production of the company. Break-even point is the level of sales which minimum required to overcome fixed and variable cost of the company. It is the condition of no profits and no loss for the company. To estimate: The fixed cost and variable cost of electricity per month using high low method.

1.

Expert Solution

Answer to Problem 2A.1E

Variable cost for electricity per month will be1.56 Fixed cost will be 1395

Explanation of Solution

	Occupancy day	Electrical cost
High Activity Level	2406	5148
Low Activity Level	124	1588
Change	2282	3560

Variable cost:

Variable cost=Chanel in CostChange in Level=35602282=1.56

Fixed cost:

Total Fixed cost = High activity level cost − High Activity Level × variable cost=5147−2406×1.56=1394.64 =Low activity Level cost− Low Activity level unit × variable cost =1588−124×1.56=1394.56

Thus, Variable cost for electricity per month will be1.56 Fixed cost will be 1395

2.

To determine

Introduction: Cost volume profit analysis (CVP) is used to ascertain the affect on company’s net income and operating income with respect to change in costs and volume of the production of the company. Break-even point is the level of sales which minimum required to overcome fixed and variable cost of the company. It is the condition of no profits and no loss for the company. The factors affecting the variation in electrical costs from month to month in addition to occupancy day.

2.

Expert Solution

Answer to Problem 2A.1E

Season factors like winter, summer, autumn and rainy season

Explanation of Solution

The factors affecting the variation in electrical costs from month to month in addition to occupancy day are:

Season factors like winter, summer, autumn and rainy season will affect the variation in electrical costs.
Factors like guests not switching off the light and fan at the time leaving the room.

Answer 6

Chapter 2A, Problem 2A.1E

1.

To determine

Introduction: Cost volume profit analysis (CVP) is used to ascertain the affect on company’s net income and operating income with respect to change in costs and volume of the production of the company. Break-even point is the level of sales which minimum required to overcome fixed and variable cost of the company. It is the condition of no profits and no loss for the company. To estimate: The fixed cost and variable cost of electricity per month using high low method.

1.

Expert Solution

Answer to Problem 2A.1E

Variable cost for electricity per month will be1.56 Fixed cost will be 1395

Explanation of Solution

	Occupancy day	Electrical cost
High Activity Level	2406	5148
Low Activity Level	124	1588
Change	2282	3560

Variable cost:

Variable cost=Chanel in CostChange in Level=35602282=1.56

Fixed cost:

Total Fixed cost = High activity level cost − High Activity Level × variable cost=5147−2406×1.56=1394.64 =Low activity Level cost− Low Activity level unit × variable cost =1588−124×1.56=1394.56

Thus, Variable cost for electricity per month will be1.56 Fixed cost will be 1395

Answer 7

Chapter 2A, Problem 2A.1E

1.

To determine

Introduction: Cost volume profit analysis (CVP) is used to ascertain the affect on company’s net income and operating income with respect to change in costs and volume of the production of the company. Break-even point is the level of sales which minimum required to overcome fixed and variable cost of the company. It is the condition of no profits and no loss for the company. To estimate: The fixed cost and variable cost of electricity per month using high low method.

Answer 8

1.

Expert Solution

Answer to Problem 2A.1E

Variable cost for electricity per month will be1.56 Fixed cost will be 1395

Answer 9

1.

Expert Solution

Answer 10

1.

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

	Occupancy day	Electrical cost
High Activity Level	2406	5148
Low Activity Level	124	1588
Change	2282	3560

Variable cost:

Variable cost=Chanel in CostChange in Level=35602282=1.56

Fixed cost:

Total Fixed cost = High activity level cost − High Activity Level × variable cost=5147−2406×1.56=1394.64 =Low activity Level cost− Low Activity level unit × variable cost =1588−124×1.56=1394.56

Thus, Variable cost for electricity per month will be1.56 Fixed cost will be 1395

Answer 13

2.

To determine

Introduction: Cost volume profit analysis (CVP) is used to ascertain the affect on company’s net income and operating income with respect to change in costs and volume of the production of the company. Break-even point is the level of sales which minimum required to overcome fixed and variable cost of the company. It is the condition of no profits and no loss for the company. The factors affecting the variation in electrical costs from month to month in addition to occupancy day.

2.

Expert Solution

Answer to Problem 2A.1E

Season factors like winter, summer, autumn and rainy season

Explanation of Solution

The factors affecting the variation in electrical costs from month to month in addition to occupancy day are:

Season factors like winter, summer, autumn and rainy season will affect the variation in electrical costs.
Factors like guests not switching off the light and fan at the time leaving the room.

Answer 14

2.

To determine

Introduction: Cost volume profit analysis (CVP) is used to ascertain the affect on company’s net income and operating income with respect to change in costs and volume of the production of the company. Break-even point is the level of sales which minimum required to overcome fixed and variable cost of the company. It is the condition of no profits and no loss for the company. The factors affecting the variation in electrical costs from month to month in addition to occupancy day.

Answer 15

2.

Expert Solution

Answer to Problem 2A.1E

Season factors like winter, summer, autumn and rainy season

Answer 16

2.

Expert Solution

Answer 17

2.

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

The factors affecting the variation in electrical costs from month to month in addition to occupancy day are:

Season factors like winter, summer, autumn and rainy season will affect the variation in electrical costs.
Factors like guests not switching off the light and fan at the time leaving the room.

Answer 20

Ch. 2A - Prob. 2A.1E Ch. 2A - Prob. 2A.2E Ch. 2A - Prob. 2A.3E Ch. 2A - Prob. 2A.4E Ch. 2A - Least-Squares Regression LO2-11 George Caloz **...Ch. 2A - Prob. 2A.6P Ch. 2A - Prob. 2A.7P Ch. 2A - High-Low Method; Predicting Cost LO2â€”10 Nova...Ch. 2A - Prob. 2A.9P Ch. 2A - Prob. 2A.10P

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Answer to Problem 2A.1E

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