Pelicans Ice is a snow cone stand near the local park. To plan for the future, it wants to determine its cost behavior patterns. It has the following information available about its operating costs and the number of snow cones served. Number of snow cones Total operating costs $5,980 $6.400 $5,000 $6,330 $8,000 $6,575 Month January February 6,400 7,000 4,000 6,900 9,000 7,250 March April May June Using the high - low method, the monthly operating costs if Pelicans sells 8,000 snow cones in a month are O A. $17,000 о В. $4,800 O C. $7,400 O D. $2,600
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- A company anticipates the cost to heat the building will be $21.000. Product A Lakes up 500 square feet of space, while Product B takes up 200 square feet. The activity rate per product using activity-based costing would be which of the following? A. $30/square foot B. $4.20/square foot C. $11/square foot D. $15.20/square footPelicans Ice is a snow cone stand near the local park. To plan for the future, it wants to determine its cost behavior patterns. It has the following information available about its operating costs and the number of snow cones served. Month Number of snow cones Total operating costs January 6,400 $5,980 February 7,000 $6,400 March 4000 $5000 April 6,900 $6,330 May 8000 $9000 June 7,250 $6,575 Using the high-low method, the monthly operating costs if Pelicans sells 12,000 snow cones in a month are $1000 $13,000 $12,000 $20,000Using the High-Low Method to Estimate Variable andFixed CostsLocated on Swiftcurrent Lake in Glacier National Park, Many Glacier Hotel was built in1915 by the Great Northern Railway. In an effort to supplement its lodging revenue, the hoteldecided in 20X1 to begin manufacturing and selling small wooden canoes decorated withsymbols hand painted by Native Americans living near the park. Due to the great success ofthe canoes, the hotel began manufacturing and selling paddles as well in 20X3. Many hotelguests purchase a canoe and paddles for use in self-guided tours of Swiftcurrent Lake. Becauseproduction of the two products began in different years, the canoes and paddles are producedin separate production facilities and employ different laborers. Each canoe sells for $500, andeach paddle sells for $50. A 20X3 fire destroyed the hotel’s accounting records. However, anew system put into place before the 20X4 season provides the following aggregated data forthe hotel’s canoe and paddle…
- San Juan, Incorporated, is considering two alternatives: A and B. The costs associated with the alternatives are listed below: Alternative A Alternative B Material costs $ 35,000 $ 57,000 Processing costs 36,000 57,000 Building costs 12,000 28,000 Equipment rental 19,000 19,000 Are the materials costs and processing costs differential in the choice between alternatives A and B? Multiple Choice Neither materials costs nor processing costs are differential. Both materials costs and processing costs are differential. Only processing costs are differential. Only materials costs are differential.CleanTech manufactures equipment to mitigate the environmental effects of waste. (a) If Product A has fixed expenses of $15,000 per year and each unit of product has a $0.20 variable cost, and Product B has fixed expenses of $5000 per year and a $0.50 variable cost, at what number of units of annual production will A have the same overall cost as B? (b) As a manager at CleanTech what other data would you need to evaluate these two products?Woodruff Company is currently producing a snowmobile that uses five specialized parts. Engineering has proposed replacing these specialized parts with commodity parts, which will cost less and can be purchased in larger order quantities. Current activity capacity and demand (with specialized parts required) and expected activity demand (with only commodity parts required) are provided. Activities Activity Driver ActivityCapacity Current ActivityDemand Expected ActivityDemand Material usage Number of parts 192,000 192,000 192,000 Installing parts Direct labor hours 90,000 90,000 72,000 Purchasing parts Number of orders 20,000 17,100 10,500 Additionally, the following activity cost data are provided: Material usage: $20 per specialized part used; $16 per commodity part; no fixed activity cost. Installing parts: $14 per direct labor hour; no fixed activity cost. Purchasing parts: Four salaried clerks, each earning a $45,000…
- Woodruff Company is currently producing a snowmobile that uses five specialized parts. Engineering has proposed replacing these specialized parts with commodity parts, which will cost less and can be purchased in larger order quantities. Current activity capacity and demand (with specialized parts required) and expected activity demand (with only commodity parts required) are provided. Activities Activity Driver ActivityCapacity Current ActivityDemand Expected ActivityDemand Material usage Number of parts 200,000 200,000 200,000 Installing parts Direct labor hours 20,000 20,000 16,000 Purchasing parts Number of orders 7,600 6,498 3,990 Additionally, the following activity cost data are provided: Material usage: $11 per specialized part used; $27 per commodity part; no fixed activity cost. Installing parts: $21 per direct labor hour; no fixed activity cost. Purchasing parts: Four salaried clerks, each earning a $47,000 annual salary; each clerk is capable of processing 1,900…XYZ Corp. currently produces a part but is looking to reduce costs. Units 20,000 Per Unit Total Cost Direct Materials $ 10 $ 200,000 Direct Labor $ 5 $ 100,000 Mfg. Overhead $ 8 $ 160,000 Total $ 23 $ 460,000 The fixed mfg. overhead includes $75,000 of costs that will continue even if outsourced. If the part is outsourced, the space can be used to make other parts and generate an additional $27,000 of contribution margin. A. Show calculations to determine how much XYZ would consider paying for the part from an outside source.A company is looking to launch a new product line, which requires new facilities to be used and at the moment has two planned products, called ‘Basic’ and ‘Super’. The cost per unit is planned as follows: Basic Super Direct materials £20 £24 Direct labour £14 £16 While using the absorption costing approach, the company uses machine hours as the basis to charge its production overheads. One unit of Basic will use 3 machine hours while one unit of Super will use 4 machine hours. The business sells these products at a price that gives a standard profit mark-up of 30% of full cost. For the coming year, the company expects to make and sell 8,000 units of Basic and 6,000 units of Super. If the company adopts the ABC approach, the details relating to the…
- A company is looking to launch a new product line, which requires new facilities to be used and at the moment has two planned products, called ‘Basic’ and ‘Super’. The cost per unit is planned as follows: Basic Super Direct materials £20 £24 Direct labour £14 £16 While using the absorption costing approach, the company uses machine hours as the basis to charge its production overheads. One unit of Basic will use 3 machine hours while one unit of Super will use 4 machine hours. The business sells these products at a price that gives a standard profit mark-up of 30% of full cost. For the coming year, the company expects to make and sell 8,000 units of Basic and 6,000 units of Super. If the company adopts the ABC approach, the details relating to the…A company is looking to launch a new product line, which requires new facilities to be used and at the moment has two planned products, called ‘Basic’ and ‘Super’. The cost per unit is planned as follows: Basic Super Direct materials £20 £24 Direct labour £14 £16 While using the absorption costing approach, the company uses machine hours as the basis to charge its production overheads. One unit of Basic will use 3 machine hours while one unit of Super will use 4 machine hours. The business sells these products at a price that gives a standard profit mark-up of 30% of full cost. For the coming year, the company expects to make and sell 8,000 units of Basic and 6,000 units of Super. If the company adopts the ABC approach, the details relating to the…Middle Industries produces a sensor for use in manufacturing. It produces the sensor in a plant with an annual practical capacity of 75,000 units. The variable cost of the sensor is $185.00 per unit, and the fixed costs of the plant are $12,375,000 annually. Current annual demand is 55,000 sensors. Middle Industries bought the plant because it was close to its other manufacturing facilities and was available for sale when they were searching for a location. Required: What cost per sensor should the cost system report to facilitate management decision making? What is the cost of excess capacity? What cost per sensor would the cost system report if the smallest manufacturing plant that could be built was able to produce 75,000 sensors? What would be the cost of excess capacity?