Date: -33-sor Name: Use the following to answer questions 1-3: Call Corporation

Question

Date: -33-sor Name: Use the following to answer questions 1-3: Call Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for S140.50 per unit. Sales volume (units) Cost of sales Selling, general, and administrative costs 6,000 7,000 $497,400 $580,300 $273,600 $294,700 1 POINT 3. The best estimate of the total monthly fixed cost is: A) $875,000 B) $147,000 C) $771,000 D) $823,000

Explanation / Answer

Cost of sales = (497400/6000) = 82.9 per unit cost of sales is variable cost

only selling and administrative expense includes fixed cost

Variable selling and administrative expense = (294700-273600)/(7000-6000) = 21.10 per unit

Fixed cost = 294700-(7000*21.10) = 147000

so answer is b) $147000

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