2.5 The only variable input a janitorial service firm uses to clean offices is workers who are paid a wage, w, of $8 an hour. Each worker can clean four offices in an hour. Use math to determine the variable cost, the average variable cost, and the marginal cost of cleaning one more office. Draw a diagram like Figure 7.1 to show the variable cost, average variable cost, and marginal cost curves. A

2.5 The only variable input a janitorial service firm uses to clean offices is workers who are paid a wage, w, of $8 an hour. Each worker can clean four offices in an hour. Use math to determine the variable cost, the average variable cost, and the marginal cost of cleaning one more office. Draw a diagram like Figure 7.1 to show the variable cost, average variable cost, and marginal cost curves. A

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter3: Cost Behavior And Cost Forecasting

Section: Chapter Questions

Problem 9DQ: Describe the cost formula for a strictly variable cost such as electrical power cost of 1.15 per...

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(3) A company manufacturing laundry sinks has fixed costs of $100 per day but has total costs of $2,500 per day when producing 15 sinks. The company has a daily demand function of q = 360 − p, where q is the number if laundry sinks demanded and p is te price of a laundry sink. (c) If production increases continuously, what is likely to be the average cost per sink?(d) How many laundry sinks will the company need to produce in order to maximise it′s profits?(e) What is the maximum profit?
If the plant manager uses the average cost per unit to predict total costs, what would the forecast be for 1,900 mailboxes? 5. If the plant manager uses the cost equation to predict total costs, what would the forecast be for 1,900 mailboxes? 6. What is the dollar difference between your answers to questions 4 and 5? Which approach to forecasting costs is appropriate? Why?
Choose the letter of answer: Hilby, Inc., uses the high-low method to analyze cost behavior. The company observed that at 12,000 machine hours of activity, total maintenance costs averaged P7.00 per hour. When activity jumped to 15,000 machine hours, which was still within the relevant range, the average cost per machine hour totaled P6.40. On the basis of this information, the variable cost per machine hour was: a. P4.00.b. P6.40.c. P6.70.d. P7.00.
7. A restaurant has an average check of $12.75, with an average variable cost of $4.85. Fixed costs are $142,200. Calculate the following: a. What is the unit contribution margin? b. What are breakeven units? c. What is the variable cost percentage? d. What is the contribution as a percentage? e. What is breakeven sales revenue?
1. Which of the following is an example of a fixed cost? Paper used in the manufacturing of textbooks. Surgical supplies use in a hospitals operating room Propery tax paid by a firm to a large city Gasoline consumed by a salespersons car The wages of part-time workers who are paid $8.00 per hour 2. The fixed cost per unit, will remain the same, will increase as activity decreases, will increase as activity increases, will decrease as activity remains the same, will decrease as activity increases?
5.) If 8,000 units are sold, what is the total fixed manufacturing overhead costs to support this production level? 6.) If 8,000 units are sold, what is the average fixed manufacturing overhead cost per unit sold? 7.) If 12,000 units are sold, what is the variable cost per unit sold? 8.) If 12,500 units are sold, what is the total variable cost per unit sold?
Bourbon House, a luxury waterfront restaurant, has store hours fluctuate from week to week.Its utilities costs and hours of operation for the last six (6) weeks are as follow:Week Hours of Operation Utilities Cost1 55 6 4802 60 6 6003 64 7 4604 70 7 6005 45 5 4006 40 5 200Required:a) Use the high-low method to estimate the cost behaviour for the restaurant’s utilitiescosts, assuming that variable costs vary in proportion to the hours of operation. Expressthe cost behaviour in a cost function (Y = a + bX). b) During the second week of June, Bourbon House will be opened for 49 hours. Predict therestaurant’s total utilities cost for the week. c) Explain the impact of a decrease in the level of activity on (i) total variable cost; and (ii)variable cost per unit of activity. need to answer all questions with workings
1.Using the high-low method of analyzing costs, answer the following questions and show computations to support your answers. a. What is the estimated variable portion of maintenance costs per labor hour? 2.What is the estimated fixed maintenance cost each month? 3.Formulate the regression equation 4.If it is estimated that 600 labor hours will be used in July, what is the expected total power cost for July? 5.Using the least-squares method of analyzing costs, answer the following questions and show computations to support your answers. a. What is the estimated variable portion of maintenance costs per labor hour? 5a. What is the estimated fixed maintenance cost each month? 5b.Formulate the regression equation 5c.If it is estimated that 600 labor hours will be used in July, what is the expected total power cost for July?
Moon Bright Sdn. Bhd. is a manufacturer of dish cleaners. The following figures show the cost per unit of production based upon an annual production and sales of 20,000 units: RM Direct materials 80 Direct labour (variable) 40 Variable overhead 20 Fixed overhead 15 Selling price 200 1) Calculate the breakeven point, in units and in value2) Determine the margin of safety in units and in value3) Calculate the profit-volume ratio and indicate what it means.4) Given that there is a sudden extra fixed cost of RM25,000, how many extra units does the company need to sell?
4. Assuming direct labor is a fixed cost: a. Determine the number of WVD drums (if any) that should be purchased and the number of WVD drums and/or bike frames (if any) that should be manufactured. b. What is the increase (decrease) in net operating income that would result from this plan over current operations? 5. Compute the contribution margin per unit. [assume direct labor is a variable cost] 6. Compute the contribution margin per welding hour. [assume direct labor is a variable cost]
4. Hicks Contracting collects and analyzes cost data in order to track the cost of installing decks on new home construction jobs. The following are some of the costs that they incur. Classify these costs as fixed or variable costs and as product or period costs. Costs Variable / Fixed Product / Period Lumber used to construct decks ($12.00 per square foot) Carpenter labor used to construct decks ($10 per hour) Construction supervisor salary ($45,000 per year) Depreciation on tools and equipment ($6,000 per year) Selling and administrative expenses ($35,000 per year) Rent on corporate office space ($34,000 per year) Nails, glue, and other materials required to construct deck (varies per job)
Please answer both of the questions. Number of Workers Monthly Fixed Costs Range of Outputs 1 60 0 to 50 3 120 51 to 150 5 200 151 to 250 1. Using the table above, what is the break-even point for 3 workers? 1. 42 2. 60 3. 30 4. 100 2. If it costs $100,000 to operate a factory monthly that makes doodads for $42 variable cost each or the company can purchase the doodads for $50 each with no fixed costs what is the difference in monthly cost between the make or buy options if the monthly volume is forecasted to be 10,000 doodads?