Question

PLEASE ANSWER THE FOLLOWING QUESTIONS

1.

High-Low Method The manufacturing costs of Gregory Industries for three months of the year are provided below. Total Costs Production January $149,040 990 units February 205,680 2,040 231,840 2,790 Using the high-low method, determine (a) the variable cost per unit and (b) the total fixed cost. Round all answers to the nearest whole dollar. a. Variable cost per unit March $ b. Total fixed cost $

2.

3.

4.

Answer 1

Req 1.
			Cost	Units Produced
High-March		2790	231840
Low-January		990	149040
Changes			1800	82800
VC per unit produced = Change in cost / Change in Units
		82800 /1800 = 46 per unit
Total Cost at high activity	231840
Less: VC (2790*46)		128340
Total Fixed cost		103500
a. Variable cost per unit	46	per unit
b. Total Fixed cost		103500
Req 2.
Selling price per unit		43
Less: Variable cost per unit	36.12
Unit contribution margin	6.88
Divide: Selling price		43
Contribution margin ratio	16%
Income:
Contribution (6.88*33000)	227040
Less: Fixed cost		90800
Net Income		136240
Answer:
Contribution margin ratio	16%
Unit contribution margin	6.88
Income from operations	136240
Req 3.
Selling price per unit		118
Less: Variable cost per unit	59
Unit contribution margin	59
Divide: Selling price		118
Contribution margin ratio	50%
Break even sales units:
Fixed cost			891136
Divide: Unit contribution margin	59
Break even sales units:	15104	units
Break sales revenue
Fixed cost			891136
Divide: CM ratio		50%
Break even sales revenue	1782272
Req 4.
Selling price per unit		100
Less: Variable cost per unit	55
Unit contribution margin	45
Divide: Selling price		100
Contribution margin ratio	45%
Break even sales units
Fixed cost			288000
Add: Target profit		106560
Target contribution		394560
Divide: Unit contribution margin	45
Break even sales units:	8768	units
Break sales revenue
Fixed cost			288000
Add: Target profit		106560
Target contribution		394560
Divide: CM ratio		45%
Break even sales revenue	876800