Question

1. Relevant Range and Fixed and Variable Costs

Child Play Inc. manufactures electronic toys within a relevant range of 76,800 to 128,000 toys per year. Within this range, the following partially completed manufacturing cost schedule has been prepared:

Complete the cost schedule below. When computing the cost per unit, round to two decimal places. Round all other values to the nearest dollar.

Toys produced	76,800	96,000	128,000
Total costs:
Total variable costs	$27,648	d. $	j. $
Total fixed costs	30,720	e.	k.
Total costs	$58,368	f. $	l. $
Cost per unit:
Variable cost per unit	a. $	g. $	m. $
Fixed cost per unit	b.	h.	n.
Total cost per unit	c. $	i. $	o. $

2. High-Low Method

Ziegler Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the total cost. The data for various levels of production are as follows:

Units Produced			Total Costs
1,235			$194,940
2,050			249,090
3,135			303,240

a. Determine the variable cost per unit and the total fixed cost.

Variable cost: (Round to the nearest dollar.)	$ per unit
Total fixed cost:	$

b. Based on part (a), estimate the total cost for 1,570 units of production.

Total cost for 1,570 units:

$

3. High-Low Method for a Service Company

Continental Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Continental Railroad is a measure of railroad operating activity, termed "gross-ton miles," which is the total number of tons multiplied by the miles moved.

	Transportation Costs		Gross-Ton Miles
January	$906,900		329,000
February	1,011,100		368,000
March	714,600		238,000
April	969,400		356,000
May	813,100		286,000
June	1,042,400		387,000

Determine the variable cost per gross-ton mile and the total fixed cost.

Variable cost (Round to two decimal places.)	$ per gross-ton mile
Total fixed cost	$

Answer 1

Complete the cost schedule below. When computing the cost per unit, round to two decimal places. Round all other values to the nearest dollar.

Toys produced	76,800	96,000	128,000
Total costs:
Total variable costs	$27,648	d. $34560	j. $46080
Total fixed costs	30,720	e.30720	k. 30720
Total costs	$58,368	f. $65280	l. $76800
Cost per unit:
Variable cost per unit	a. $0.36	g. $0.36	m. $0.36
Fixed cost per unit	b. 0.40	h. 0.32	n. 0.24
Total cost per unit	c. $0.76	i. $0.68	o. $0.60

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