Exercise 5-35 (Algo) Methods of Estimating Costs: High-Low, Ethical Issues (LO 5-4) Oak Island Amusements Center provides the following data on the costs of maintenance and the number of visitors for the last three years. Number of Visitors per Year(thousands) Maintenance Costs ($000) 1,850 $ 3,025 2,030 3,322 2,500 4,000 Required: a. Use the high-low method to estimate the fixed cost of maintenance annually and the variable cost of maintenance per visitor. b. The company expects a record 2,400,000 visitors next year. What would be the estimated maintenance costs?

Exercise 5-35 (Algo) Methods of Estimating Costs: High-Low, Ethical Issues (LO 5-4) Oak Island Amusements Center provides the following data on the costs of maintenance and the number of visitors for the last three years. Number of Visitors per Year(thousands) Maintenance Costs ($000) 1,850 $ 3,025 2,030 3,322 2,500 4,000 Required: a. Use the high-low method to estimate the fixed cost of maintenance annually and the variable cost of maintenance per visitor. b. The company expects a record 2,400,000 visitors next year. What would be the estimated maintenance costs?

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter11: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11.1E: Classify costs Following is a list of various costs incurred in producing and selling college...

See similar textbooks

Exercise 5-35 (Algo) Methods of Estimating Costs: High-Low, Ethical Issues (LO 5-4)

Oak Island Amusements Center provides the following data on the costs of maintenance and the number of visitors for the last three years.

Number of Visitors per Year(thousands)	Maintenance Costs ($000)
	1,850	$	3,025
	2,030		3,322
	2,500		4,000

Required:

a. Use the high-low method to estimate the fixed cost of maintenance annually and the variable cost of maintenance per visitor.

b. The company expects a record 2,400,000 visitors next year. What would be the estimated maintenance costs?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Please help me find fixed costs. Oak Island Amusements Center provides the following data on the costs of maintenance and the number of visitors for the last three years. Number of Visitors per Year (thousands) Maintenance Costs($000) 1,825 $ 2,925 2,007 3,225 2,375 3,750 Required: a. Use the high-low method to estimate the fixed cost of maintenance annually and the variable cost of maintenance per visitor
Standards for nonmanufacturing expenses The Radiology Department provides imaging services for Northeast Washington Medical Center. One important activity in the Radiology Department is transcribing digitally recorded analyses of images into a written report. The manager of the Radiology Department determined that the average transcriptionist could type 800 lines of a report in an hour. The plan for the first week in July called for 64,000 typed lines to be written. The Radiology Department has two transcriptionists. Each transcriptionist is hired from an employment firm (hat requires temporary employees to be hired for a minimum of a 40-hour week. Transcriptionists are paid $18.00 per hour. The manager offered a bonus if the department could type more than 70,000 lines for the week, without overtime. Due to high service demands, the transcriptionists typed more lines in the first week of July than planned. The actual amount of lines typed in (he first week of July was 70,400 lines, without overtime. As a result, the bonus caused the average transcriptionist hourly rate to increase to $20.00 per hour during the first week in July. Instructions Are there any performance-related issues that the labor time and rate variances fail to consider? Explain.
Classify costs Following is a list of various costs incurred in producing and selling college textbooks. With respect to the production and sale of textbooks, classify each cost as either variable, fixed, or mixed. 1. Art commission of $36,000 paid for use of art on textbook cover. 2. Sales commissions paid sales representatives based upon number of textbooks sold. 3. Electricity costs, $0.04 per kilowatt-hour. 4. Hourly wages of operators of printing presses. 5. Janitorial costs, $5,000 per month. 6. Packaging for customized texts and texts shipped with software codes. 7. Paper used in priming the textbooks. 8. Property insurance premiums, $1,800 per month plus $0.05 for each dollar of property over $2,000,000 9. Property taxes, $615,000 per year on factory building and equipment. 10. Rent on warehouse, $12,800 per month plus $2.50 per square foot of storage used. 11. Royalty paid authors for each textbook sold. 12. Salary of plant manager. 13. Sales commission paid lo Amazon.com of $ 100,000 plus $0.50 for each textbook sold online. 14. Straight-line depreciation on the production equipment. 15. Technology development costs of $1,200,000.
CH7-44 Cherry Blossom Products Inc. produces and sells yoga-training products: how-to DVDs and a basic equipment set (blocks, strap, and small pillows). Last year, Cherry Blossom Products sold 13,500 DVDs and 4,500 equipment sets. Information on the two products is as follows: Questions are attached. Please ensure to answer only Question 4 : COMPUTE THE MARGIN OF SAFETY FOR THE COMING YEAR IN SALES DOLLARS - THANK YOU DVDs Equipment Sets Price $8 $25 Variable cost per unit 4 15 Total fixed cost is $110,100. Suppose that in the coming year, the company plans to produce an extra-thick yoga mat for sale to health clubs. The company estimates that 9,000 mats can be sold at a price of $20 and a variable cost per unit of $11. Total fixed cost must be increased by $36,700 (making total fixed cost $146,800). Assume that anticipated sales of the other products, as well as their prices and variable costs, remain the same.
The management of a high-rise office building uses 3,000 square feet of space in the building for its own administrative functions. This space could be rented for P50,000. What economic term describes this P50,000 of lost rental revenue? Average cost Out of pocket cost Sunk cost Opportunity cost
3. A safety manager recommends spending $3,000 on an initiative to reduce accidents in an organization. Assume the company has a 3% profit margin. The manager believes the investment will take three years to recoup the expenses. What is the present value of the investment over the three-year period?
University Car Wash built a deluxe car wash across the street from campus. The new machines cost $246,000 including installation. The company estimates that the equipment will have a residual value of $27,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. Actual use per year was as follows: Year Hours Used 1 2,800 2 1,900 3 2,000 4 2,000 5 1,800 6 1,500 Problem 7-5A Part 3 3. Prepare a depreciation schedule for six years using the activity-based method. (Round your "Depreciation Rate" to 2 decimal places and use this amount in all subsequent calculations.)
University Car Wash built a deluxe car wash across the street from campus. The new machines cost $246,000 including installation. The company estimates that the equipment will have a residual value of $27,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. Actual use per year was as follows: Year Hours Used 1 2,800 2 1,900 3 2,000 4 2,000 5 1,800 6 1,500 Problem 7-5A Part 1 Required: 1. Prepare a depreciation schedule for six years using the straight-line method. (Do not round your intermediate calculations.)
PLEASE ANSWER QUESTION A, B & C. NOT PUT IN EXCEL Question 2 Jack Knife Electronics manufactures audio speakers for desktop computers. The following data relate to the period just ended when the company produced and sold 42000 speaker sets: Sales $3,360,000 Variable costs $840,000 Fixed costs $2,280,000 Management is considering relocating its manufacturing facilities to northern Cuba to reduce costs. Variable costs are expected to average $18 per set; annual fixed costs are anticipated to be $1,984,000. Required: A. Calculate the company’s current income and determine the level of dollar sales needed to double that (Assuming operations remain in Jamaica). B. Determine the break-even point in speaker sets if operations are shifted to Cuba. C. Using an excel sheet, prepare the breakeven chart if operations are shifted to Cuba
University Car Wash built a deluxe car wash across the street from campus. The new machines cost $246,000 including installation. The company estimates that the equipment will have a residual value of $27,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. Actual use per year was as follows: Year Hours Used 1 2,800 2 1,900 3 2,000 4 2,000 5 1,800 6 1,500 Problem 7-5A Part 2 2. Prepare a depreciation schedule for six years using the double-declining-balance method. (Do not round your intermediate calculations.)
Please answers questions in bold Q1 The production department of Y Company is planning to purchase a new machine to improve product quality. The company’s management accountant is currently evaluating two options- Buy the machine OR Rent it. Following information is available: The company has to pay £3,200 to set up the machine. Insurance cost £450 per annum. If it is bought, the new machine is depreciated on reducing balance basis at the rate of 25%. After various calculations, the company has to pay £4,200 maintenance cost every year and estimated repair cost would be £300 per year. The firm will have to sell old machines, which had cost £65,000 six years ago. Apart from the above information, the £500 of delivery cost is incurred for this purchase option. If it is rented, £ 4,650 per year to pay as rent. There is no cost for repair and maintenance. However, the firm is required to pay the administration charge of £650 with this rent option. For rent option, the delivery cost…
Car/Truck Repair Small Engines Boats/ Marine Total Sales Revenue $3,500,000 $1,000,000 $4,500,000 $9,000,000 Less: Variable Expenses ($2,000,000) ($250,000) ($4,200,000) ($6,450,000) Contribution Margin $1,500,000 $750,000 $300,000 $2,550,000 Less: Direct Fixed Expenses Garage/Warehouse Rent ($600,000) ($55,000) ($300,000) ($955,000) Supervision ($50,000) ($70,000) ($100,000) ($220,000) Equipment Depreciation ($200,000) ($75,000) ($100,000) ($375,000) Segment Margin $650,000 $550,000 ($200,000) $1,000,000 The boat/marine line is losing money. Management is considering dropping it. The company can avoid the following fixed costs associated with the boat/marine line if the line is dropped: Garage/Warehouse Rent 40.0% Supervision 25.0% Depreciation 0.0% Mark the schedule above with “R” for relevant revenues/costs and…