Question

Exercise 3-6

Chapter 3 Cost Behaviour Analysis and Use r EXERCISE L Account Analysis Method (LOBI med manufactures des for industrial Most of their c aree ed costs. However, an a n alysis shows the following i s an Account Analysis Production supervision SOS fired 205 fired Sales staff wages ....... 705 fixed Quality control inspections 90 fixed "The 30% variable portion relates to sales commissions based on total sales **SOS of manufactured units are inspected each year 2016 Total Cost $150,000 $ 60,000 $200.000 S40.000 med: 4000 on In 2016 Anand Limited produced and sold 500 drones at $2.000 each. Required: 1. Management expects to sell 700 drones in 2017, does not anticipate any cost increases due to it tion, and plans to maintain the sales price of $2.000 per drone. Estimate total costs for each of the mixed cost items above. Be sure to show the variable and fixed components of the total cost 2. Assuming direct material costs are $500 per unit and direct labour costs are $250 per unit calculate the expected contribution margin for 2017 hased on sales of 700 drones. EXERCISE 3-7 Cost Behaviour: High-Low Method ILO We Deliver operates a fleet of delivery trucks in Halifax. Analysis shows that if a truck is drive 105,000 kilometres during a year, the average operating cost is 11.4 cents (S0114) per kilometre. If a truck is driven only 70,000 kilometres during a year, the average operating cost increases to 134 cm (S0.134) per kilometre. Required: 1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation 2. Express the variable and fixed costs in the formywa+AX 3. If a truck was driven 80,000 kilometres during a year, what total cost would you incurred? to be EXERCISE 3-8 High-Low Method; Predicting Cost 102 The number of blood tests performed and the related costs over the last nine erformed and the related costs over the last nine months in Brentie Hospital are given below: Month Blood Tests Performed Blood Test Casts January February..... March April... 3.125 SCO 2.500 $14.000 $14.500 Slim

Answer 1

500 drones in 2016 variable variable cost per total cost fixed cost cost unit 150,000 120000 30,000 60,000 12000 48,000 96 200,000 140000 60,000 120 40,000 36000 4,000 fixed component 80% 20% 70% 90% production supervision utilities sales staff wages quality control inspection 120 6% per drone 30% sales comission sales comission per drone 50% drones are inspected each year inspection cost per drone 16 production supervision utilities sales staff wages quality control inspection 700 drones in 2017 variable fixed variable cost per component total cost fixed cost cost unit 80% 162,000 120000 42,000 60 20% 79,200 12000 67,200 96 70% 224,000 140000 84,000 120 90% 41,600 36000 5,600 198,800 500 per unit 350,000 for 700 drones 250 per unit 175000 for 700 drones (total revenue-total variable cost) 1400000 723,800 676,200 cost 2 direct material cost direct labor cost contribution margin total revenue total variable cost contribution margin 25 26