Question

Integrative Exercise Cost Behavior and Cost-Volume-Pront Analysis for Many Glacier Hotel Using the High-Low Method to estimate Variable and Fixed Costs Located on Swiftcurrent Lake in Glacier National Park, Many Glacier Hotel was built in 1915 by the Great Northern Railway. In an effort to supplement its lodging revenue, the hotel decided in 20x1 to begin manufacturing and selling small wooden canoes decorated with symbols hand painted by Native Americans living near the park. Due to the great success of the canoes, the hotel began manufacturing and selling paddles as well in 20X3. Many hotel guests purchase a canoe and paddles for use in self-guided tours of Swiftcurrent Lake. Because production of the two products began in different years, the canoes and paddles are produced in separate production facilities and employ different laborers. Each canoe sells for $500, and each paddle sells for $50. A 20X3 fire destroyed the hotel's accounting records. However, a new system put into place before the 20X4 season provides the following aggregated data for the hotel's cance and paddle manufacturing and marketing activities: Manufacturing Data: Number of Total Canoe Canoes Manufacturing Year Manufactured Costs Number of Total Paddle Paddles Manufacturing Year Manufactured Costs 20x9 250 $38,500 20x8 275 49,000 $103,000 128,000 108,000 114,000 141,500 900 1,200 1,000 20x9 20x8 20x7 20X6 20x5 20x7 20x6 20x5 44,000 1,100 1,400 45,500 52,000

Answer 1

5. Units peace red to caron a = (Total Fixed cost+Taoget incom ts peace a zed to caron a tadget Pn.come of $ 96,000 Axed cost+Taroget hicome) weighted average costolbertson madgiro per cost Total Boxed cost : Cance CG1,250*1-05)) 64313 paddles C37 % *1-05) -> 38,850 നംറ 30,000 Total fexed cost 133,163 weighted average contorlatfon margim per unit: Cance paddles Sales pe voor 500 lesse vadlable cost reo obit 360-35 H2 (347*1.05) cuo*1-05) Contofbution maogen peo unit 135-658 * Sales mix]. - goy (300/1520) (1200/180) creighted average costsbution mangio per unfet 27.13 6.4 volts required to cron a target Pncome of $ 96,000 = (133163 +90000)/33-3 => 665562 = 6657 cits Seperation of onits Dequefoed; to eaon a tange Pocome $90000 based on sales max: Canoe - 6656 * 201. = 1331 units paddles = 6650 * 80%. = 53250fits 6. Maogpo o- safety in Units - Achal scles on pls - Bacok een pool Cance : Maogfo of safety = 700-665 = 3500ft. Sales units paddles = maoger of safety = 2500- 2658 = - 158 units maogh of safety Pro $ = Morogpo 8-safety monits * Sales porcepeo Cance - Marge of safety = 35* 500 - $7,500 paddles - Margºn of safety = -158 * 50 - $ -7900 =($ 7900) Explanation 5 : Total Foxed costs canoe Podles Manfactoring data 1 Marketing data Manfacturing data | Maokenrobala vadable cost ferunit vcrolable cost persoonlit valable cost peovadlable cool po Ci4 0000-703 03 (40020360000-44578000)(400-200) C60,500-38500)|0170-909) (96,500-7500)/ - $247 perunot >$100 peowner | ->$35 peoudit C1700900) => 103,000-(250*247) P 45000-(20*100) => 38520790S = 38500-90*5) 1 =75 perurit > 750 -69005) =) $21250 1 =>$20000 =) $34000 => $3000 Toteeffed cost = $41250+$20000 => $61,250 / Total Maxed costs $3puf =$37000