Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN: 9781337115773
Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher: Cengage Learning
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Chapter 3, Problem 28BEB
Brief Exercise 3-28 Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for a Time Period that Differs from the Data Period
Refer to the information for Speedy Pete’s on the previous page. Assume that this information was used to construct the following formula for monthly delivery cost.
Required:
Assume that 3,000 deliveries are budgeted for the coming year. Use the total delivery cost formula to make the following calculations:
- 1. Calculate total variable delivery cost for the coming year.
- 2. Calculate total fixed delivery cost for the year.
- 3. Calculate total delivery cost for the year.
Use the following information for Brief Exercises 3-26 through 3-29:
Speedy Pete’s is a small start-up company that delivers high-end coffee drinks to large metropolitan office buildings via a cutting-edge motorized coffee cart to compete with other premium coffee shops. Data for the past 8 months were collected as follows:
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Question 4.3
Lemon Lime Ltd. forecast sales of 42,000 units and production of 40,000 units. Other budget information related to the company for the year included:
Direct manufacturing labour
$171,900
Variable manufacturing overhead
83,500
Direct materials
52,300
Variable selling expenses
23,000
Fixed administrative expenses
190,000
Fixed manufacturing overhead
240,000
The standard costs remained the same as in the previous year.
Lemon Lime Ltd. is considering various cost bases. The company management require a 15% return on an investment of $2,500,000. The company wants this cost built into all cost base options.
Required
Compute the cost-plus price per unit using direct costing.
Compute the cost-plus price per unit using absorption costing.
Compute the cost-plus price per unit using the full product cost.
QUESTION 5 The following budgeted profit statement has been prepared using absorption costing principles.A company manufactures and sells a single product which has the following cost and sellingprice structure:
P/unit
P/unit
Selling price
P120
Direct material
22
Direct labour
36
Variable overhead
14
Fixed overhead
12
P84
Profit per unit
P36
The fixed overhead absorption rate is based on the normal capacity of 2,000 units per month.Assume that the same amount is spent each month on fixed overheads.Budgeted sales for next month are 2,200 units.You are required to calculate:a. The breakeven point, in sales units per month. b. The margin of safety for the next month.
c. The budgeted profit for the next month. d. The sales required to achieve a profit of P96,000.
Question 2
The accountant for ABX Limited compiled the following cost information regarding the budgetary period of four moths.
Sales in Kgs are expected to be 2000 per month for Jan, Feb, Mar and April.
The selling price of K10 per Kg will remain uniform throughout the four months.
The company is expected to have cash at hand of K15,000 at the beginning of the period.
ABX Limited is expecting a particular debtor to settle his outstanding amount in January for K12,000. The possibility of collecting this amount is 100%.
The accountant has also noted the following:
The company will hire a grader for the first two months at K2000 per month.
Prepared electricity will be paid only in Mar and April at K3000 for each month.
Wages and salaries are expected to be K3500 on a monthly basis.
Stationery is budgeted at K1,500 in month one and K2500 in month 2 and 3.
Transport and fuel is expected to be K2500 per month for the entire period
Repairs and maintenance for the build will…
Chapter 3 Solutions
Managerial Accounting: The Cornerstone of Business Decision-Making
Ch. 3 - Prob. 1DQCh. 3 - What is a driver? Give an example of a cost and...Ch. 3 - Suppose a company finds that shipping cost is...Ch. 3 - Some firms assign mixed costs to either the fixed...Ch. 3 - Explain the difference between committed and...Ch. 3 - Explain why the concept of relevant range is...Ch. 3 - Why do mixed costs pose a problem when it comes to...Ch. 3 - Describe the cost formula for a strictly fixed...Ch. 3 - Describe the cost formula for a strictly variable...Ch. 3 - What is the scattergraph method, and why is it...
Ch. 3 - Describe how the scattergraph method breaks out...Ch. 3 - What are the advantages of the scattergraph method...Ch. 3 - Prob. 13DQCh. 3 - What is meant by the best-fitting line?Ch. 3 - What is the difference between the unit cost of a...Ch. 3 - Prob. 16DQCh. 3 - (Appendix 3A) Explain the meaning of the...Ch. 3 - A factor that causes or leads to a change in a...Ch. 3 - Which of the following would probably be a...Ch. 3 - Prob. 3MCQCh. 3 - In the cost formula, the term 128,000,000 a. is...Ch. 3 - In the cost formula, the term 12,000 a. is the...Ch. 3 - Prob. 6MCQCh. 3 - Prob. 7MCQCh. 3 - The following cost formula for total purchasing...Ch. 3 - An advantage of the high-low method is that it a....Ch. 3 - Prob. 10MCQCh. 3 - Prob. 11MCQCh. 3 - Prob. 12MCQCh. 3 - The total cost for monthly supervisory cost in a...Ch. 3 - Yates Company shows the following unit costs for...Ch. 3 - (Appendix 3A) In the method of least squares, the...Ch. 3 - Creating and Using a Cost Formula Big Thumbs...Ch. 3 - Using High-Low to Calculate Fixed Cost, Calculate...Ch. 3 - Using High-Low to Calculate Predicted Total...Ch. 3 - Using High-Low to Calculate Predicted Total...Ch. 3 - Using Regression to Calculate Fixed Cost,...Ch. 3 - Inventory Valuation under Absorption Costing Refer...Ch. 3 - Inventory Valuation under Variable Costing Refer...Ch. 3 - Absorption-Costing Income Statement Refer to the...Ch. 3 - Variable-Costing Income Statement Refer to the...Ch. 3 - Creating and Using a Cost Formula Kleenaire Motors...Ch. 3 - Using High-Low to Calculate Fixed Cost, Calculate...Ch. 3 - Using High-Low to Calculate Predicted Total...Ch. 3 - Brief Exercise 3-28 Using High-Low to Calculate...Ch. 3 - Using Regression to Calculate Fixed Cost,...Ch. 3 - Inventory Valuation under Absorption Costing Refer...Ch. 3 - Inventory Valuation under Variable Costing Refer...Ch. 3 - Brief Exercise 3-32 Absorption-Costing Income...Ch. 3 - Brief Exercise 3-33 Variable-Costing Income...Ch. 3 - Variable and Fixed Costs What follows are a number...Ch. 3 - Cost Behavior, Classification Smith Concrete...Ch. 3 - Prob. 36ECh. 3 - Prob. 37ECh. 3 - Prob. 38ECh. 3 - Step Costs, Relevant Range Bellati Inc. produces...Ch. 3 - Matching Cost Behavior Descriptions to Cost...Ch. 3 - Examine the graphs in Exercise 3-40. Required: As...Ch. 3 - Prob. 42ECh. 3 - Prob. 43ECh. 3 - High-Low Method Refer to the information for Luisa...Ch. 3 - Scattergraph Method Refer to the information for...Ch. 3 - Method of Least Squares Refer to the information...Ch. 3 - Use the following information for Exercises 3-47...Ch. 3 - Use the following information for Exercises 3-47...Ch. 3 - Method of Least Squares, Developing and Using the...Ch. 3 - The method of least squares was used to develop a...Ch. 3 - Identifying the Parts of the Cost Formula;...Ch. 3 - Inventory Valuation under Absorption Costing...Ch. 3 - Inventory Valuation under Variable Costing Lane...Ch. 3 - Income Statements under Absorption and Variable...Ch. 3 - (Appendix 3A) Method of Least Squares Using...Ch. 3 - (Appendix 3A) Method of Least Squares Using...Ch. 3 - Identifying Fixed, Variable, Mixed, and Step Costs...Ch. 3 - Identifying Use of the High-Low, Scattergraph, and...Ch. 3 - Identifying Variable Costs, Committed Fixed Costs,...Ch. 3 - Scattergraph, High-Low Method, and Predicting Cost...Ch. 3 - Method of Least Squares, Predicting Cost for...Ch. 3 - Cost Behavior, High-Low Method, Pricing Decision...Ch. 3 - Prob. 63PCh. 3 - Variable and Fixed Costs, Cost Formula, High-Low...Ch. 3 - Cost Separation About 8 years ago, Kicker faced...Ch. 3 - Variable-Costing and Absorption-Costing Income...Ch. 3 - Refer to the information for Farnsworth Company...Ch. 3 - (Appendix 3A) Scattergraph, High-Low Method,...Ch. 3 - (Appendix 3A) Separating Fixed and Variable Costs,...Ch. 3 - (Appendix 3A) Cost Formulas, Single and Multiple...Ch. 3 - Suspicious Acquisition of Data, Ethical Issues...
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