MANAGERIAL ACCOUNTING FUND. W/CONNECT
5th Edition
ISBN: 9781259688713
Author: Wild
Publisher: MCG
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Chapter 5, Problem 2PSA
To determine
Concept introduction:
Scatter diagram is used to depict a relationship between two variables and to spot trends and correlation and shows the following conclusion.
With increase in Y-axis variable with rise in X-axis variable, correlation will be positive.
With decrease in Y-axis variable with rise in X-axis variable, correlation will be negative.
If correlation is equal to zero, then, it will not be possible from above criteria.
Scattered diagram for the data with sales volume on a horizontal axis and the total cost on a vertical axis.
To determine
Concept introduction:
Scatter diagram is used to depict a relationship between two variables, spot trends and correlation and show the following conclusion.
With increase in Y-axis variable with rise in X-axis variable, correlation will be positive.
With decrease in Y-axis variable with rise in X-axis variable, correlation will be negative.
If correlation is equal to zero, then, it will not be possible to form the above criteria.
Variable cost changes with the level of production and fixed cost remain constant.
To explain:
The variable cost per sales dollar and the total monthly fixed cost using high −low method and a linear graph.
To determine
Concept introduction:
Scatter diagram is used to depict a relationship between two variables making it easier to spot trends and correlations and show the following conclusion.
With increase in Y-axis variable with rise in X-axis variable, correlation will be positive.
With decrease in Y-axis variable with rise in X-axis variable, correlation will be negative.
If correlation is equal to zero, then, it will not be possible from above criteria.
Requirement 3:
The estimated line of cost behaviour, result from part 2 and prediction of the total cost when sale is $200000 and $300000.
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Required information
[The following information applies to the questions displayed below.]
Alden Company's monthly data for the past year follow. Management wants to use these data to predict future variable
and fixed costs.
Month Units Sold
Total Cost
Month
Units Sold
1
321,000
$ 158,500
7
359,000
Total Cost
$ 270,736
2
166,000
102,250
8
271,000
152,750
3
266,000
206,600
9
75,800
64,000
4
206,000
101,000
10
151,000
131,625
5
291,000
6
191,000
202,500
113,000
11
95,000
95,000
12
101,000
80,650
1. Estimate both the variable costs per unit and the total monthly fixed costs using the high-low method. (Do not round intermediate
calculations.)
Total cost at the high point
Variable costs at the high point:
Volume at the high point:
Variable cost per unit
Total variable costs at the high point
Total fixed costs
Total cost at the low point
Variable costs at the low point:
Volume at the low point:
Variable cost per unit
Total variable costs at the low point
Total fixed costs
High-Low…
Sohar Company’s financial information is given in the table below.
Year
Sales (OMR)
Fixed Costs
Variable Costs
2019
405000
90000
225000
2020
450000
120000
240000
Calculate:
P/V ratio,
E.P.
Sales required to earn a profit of OMR 40000.
Margin of safety at a profit of OMR 50000
Profit when sales are OMR. 200000.
For the coming year, Cabinet Inc. anticipates fixed costs of $199,100, a unit variable
cost of $70, and a unit selling price of $125. The maximum sales within the relevant
range are $912,250.
a. Determine the maximum possible operating loss.
$
X
Chapter 5 Solutions
MANAGERIAL ACCOUNTING FUND. W/CONNECT
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