ACC120 Accounting Quiz 2-12/11/2017 section, Mildred-Elley NYC Metro Campus Inst
ID: 2594276 • Letter: A
Question
ACC120 Accounting Quiz 2-12/11/2017 section, Mildred-Elley NYC Metro Campus Instructor: Hadley Benoit Please answer ALL questions. (Questions 1-6 10 Points Each) 1) James Choose the best answer for each question. mpany incurred fixed costs of $270,000. Total costs, both fixed and variable, are $400,000 its are produced. It sold 70,000 units during the year. Calculate the variable cost per unit A) $7.60 B) $6.50 C) $6.20 D) $3.10 2) Mendoza Company's highest point of total cost was 550,000 in June. Their point of lowest co $35,000 in January. The company makes a single product. Production volume in 10,000 and 5,000 units, respectively. What is the fixed for the month une and Jat of June?Explanation / Answer
Answer:- 1)- Variable cost per unit =$6.50 per unit (option B).
Explanation:-
Total cost (both fixed and variable) =$400000
Units produced = 20000 units
Total fixed cost = $270000
Variable cost = Total cost- Fixed cost
=$400000-$270000
=$130000
Variable cost per unit = Total variable cost/units produced
=$130000/20000 units
=$6.5 per unit
2)-
)- High-Low Method:-
Variable Cost per Unit
Variable cost per unit (b) is calculated using the following formula:
Variable cost per unit=Y2-Y1/X2-X1
Where,
y2 is the total cost at highest level of activity;
y1 is the total cost at lowest level of activity;
x2 are the number of units/rooms/labor ,machine hours etc. at highest level of activity; and
x1 are the number of units/rooms/labor,machine hours etc. at lowest level of activity
The variable cost per unit is equal to the slope of the cost volume line (i.e. change in total cost ÷ change in number of machine hours).
Total Fixed Cost
Total fixed cost (a) is calculated by subtracting total variable cost from total cost, thus:
Total Fixed Cost = y2 – b*x2 = y1 – b*x1
We have,
at highest activity: x2 = 10000; y2 = $50000
at lowest activity: x1 = 5000; y1 = $35000
Variable Cost per unit = ($50000 $35000) ÷ (10000 5000)
= $15000/5000 rooms =$3 per unit
Total Fixed Cost = $50000 ($3 × 10000) = $50000 – $30000 =$20000
Variable cost per unit=Y2-Y1/X2-X1
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