   Chapter 3, Problem 8MCQ ### Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

#### Solutions

Chapter
Section ### Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
1 views

# The following cost formula for total purchasing cost in a factory was developed using monthly data. Total Cost = $235 , 000 + ($ 75 × Number of Purchase Orders ) Next month, 8,000 purchase orders are predicted. The total cost predicted for the purchasing department next month a. is $8,000. b. is$235,000. c. is $600,000. d. is$835,000. e. cannot be determined from the above formula.

To determine

Identify total cost anticipated for the purchasing department in the next month.

Explanation

Fixed Cost:

Fixed cost is the cost which is not affected by the change in level of output. It remains unchanged in the short run, for example, property taxes, rent and salaries.

d.

Use the following formula to calculate the estimated total cost for next month:

Totalcost=(Fixed cost+(Variable cost× Number of purchase order))=($235,000+($75<

### Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

#### The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started 