1.)Markowis Company accumulates the following data concerning a mixed cost, usin
ID: 2442601 • Letter: 1
Question
1.)Markowis Company accumulates the following data concerning a mixed cost, using miles as the activity level.
Miles Driven Total Cost Miles Driven Total Cost
January 7,920 $13,004 March 8,480 $13,324
February 7,500 12,050 April 8,240 13,174
Compute the variable and fixed cost elements using the high-low method. (Round variable costs to 2 decimal places, e.g. 10.50 and the other answer to 0 decimal places, e.g. 125.)
Variable costs per mile $ ?
Fixed costs $ ?
2.)Briggs Corp. has collected the following data concerning its maintenance costs for the past 6 months.
Units Produced Total Cost
July 18,090 $38,132
August 31,960 44,672
September 35,990 48,432
October 22,050 40,822
November 39,960 77,498
December 37,920 74,808
Compute the fixed and variable cost elements using the high-low method. (Round variable cost to 2 decimal places, e.g. 10.50 and the other answer to 0 decimal places, e.g. 125.)
Variable cost per unit $ ?
Fixed cost $ ?
3.)Astoria Company has a unit selling price of $566, variable costs per unit of $323, and fixed costs of $194,886. Compute the break-even point in units using the (a) mathematical equation and (b) contribution margin per unit.
BEP using the Mathematical equation?_______ units
BEP using the Contribution margin per unit?_____ units
Explanation / Answer
High Low Difference
$13,324 – $12,050 = $1,274
8,480 – 7,500 = 980
$1,274 ÷ 980 = $1.30—Variable cost per mile.
High
Low
Total cost
$13,324
$12,050
Less: Variable costs
8,480 * $1.30
$11,024
7,500 * $1.30
$9,750
Total fixed costs
$2,300
$2,300
The mixed cost is $2,300 plus $1.30 per mile.
(2)
High Low Difference
$77,498 – $38,132 = $39,366
39,960 – 18,090 = 21,870
$39,366 ÷ 21,870 = $1.80 per unit.
Activity Level
High
Low
Total cost
$77,498
$38,132
Less: Variable costs
39,960 * $1.80
$71,928
18,090* $1.80
$32,562
Total fixed costs
$5,570
$5,570
(a) $566Q = $323Q + $194,886 + $0
$243Q = $194,886
Q = [$194,886 / $243]
Q = 802 units
BEP using mathematical equation = 802 units
(b) Contribution margin per unit $243, or ($566 – $323)
X = $194,886 ÷ $243
X = 802 units
BEP using the Contribution Margin per unit = 802 units
High
Low
Total cost
$13,324
$12,050
Less: Variable costs
8,480 * $1.30
$11,024
7,500 * $1.30
$9,750
Total fixed costs
$2,300
$2,300
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