20 T/F E x 3/14/2010 A1 E.N. 21 T/F E x 3/14/2010 C2 E.N. 22 T/F E x 3/14/2010 E1 E.N. 23 T/F E x 3/14/2010 G2 E.N. 24 T/F E x 3/14/2010 J1 E.N. 25 T/F E x 3/14/2010 L2 E.N. 26 T/F M x 4/6/97C E.N. 27 T/F H x 4/6/97D E.N. 28 T/F H x 4/6/97E E.N. 29 T/F E x 8/e:ATB2-9 David Keyes 30 Conceptual M/C H x x x 8/e: ATB2-13 David Keyes 31 Conceptual M/C M x x 5/e: 2-58 Authors 32 Conceptual M/C M x x 5/e: 2-27 Authors 33 Conceptual M/C M x 5/e: 2-70 Authors 34 Conceptual M/C M x 4/e: 50 Authors 35 Conceptual M/C E x 3/e: 2-MC8 Authors 36 Conceptual M/C E x 3/e: 2-MC7 Authors 37 Conceptual M/C M x x 8/e: ATB2-14 David Keyes 38 Conceptual M/C E x 4/e: 43 Authors 39 Conceptual M/C E x 4/e: 84 Authors 40 Conceptual M/C M x 4/e: 44 Authors 41 Conceptual M/C E x 3/e: 2-MC6 Authors 42 Conceptual M/C E x LD9e:CH02Q13 Deppe
Total manufacturing overhead at 5,000 units = 5,000 units × $60.30 per unit = $301,500 Total manufacturing overhead at 4,000 units = 4,000 units × $70.50 per unit = $282,000 Variable manufacturing overhead per unit = Change in cost ÷ Change in activity = ($301,500 - $282,000) ÷ (5,000 units - 4,000 units) = $19,500 ÷ 1,000 units = $19.50 per unit Total variable manufacturing cost = Direct materials + Direct labor + Variable manufacturing overhead = $89.70 per unit + $22.60 per unit + $19.50 per unit = $131.80 per unit AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Learning Objective: 02-03 Understand cost behavior patterns including variable costs; fixed costs; and mixed costs. Learning Objective: 02-04 Analyze a mixed cost using a scattergraph plot and the high-low method. Level: 3 Hard 65. Carbaugh Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product. The best estimate of the cost to manufacture 3,300 units is closest to:
Direct materials is a variable cost, so it can be computed as follows: Direct materials cost per unit = $70,500/5,000 units = $14.10 per unit Direct labor could also be computed the same way, but just to make sure it is purely a variable cost, we'll use the high-low method: Variable direct labor cost per unit = Change in cost ÷ Change in activity = ($156,600 - $130,500) ÷ (6,000 units - 5,000 units) = $26,100 ÷ 1,000 units = $26.10 per unit Direct labor fixed cost element = Total cost - Variable cost element = $156,600 - ($26.10 per unit × 6,000 units) = $156,600 - ($156,600) = $0 Variable manufacturing overhead cost per unit = Change in cost ÷ Change in activity = ($824,400 - $802,000) ÷ (6,000 units - 5,000 units) = $22,400 ÷ 1,000 units = $22.40 per unit Manufacturing overhead fixed cost element = Total cost - Variable cost element = $824,400 - ($22.40 per unit × 6,000 units) = $824,400 - ($134,400) = $690,000 Total variable cost = Direct materials + Direct labor + Variable manufacturing overhead = $14.10 per unit + $26.10 per unit + $22.40 per unit = $62.60 per unit Total fixed overhead cost = $690,000 Total cost to manufacture 5,300 units = Total fixed cost + Total variable cost = $690,000 + ($62.60 per unit × 5,300 units) = $690,000 + ($331,780) = $1,021,780 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Learning Objective: 02-03 Understand cost behavior patterns including variable costs; fixed costs; and mixed costs. Learning Objective: 02-04 Analyze a mixed cost using a scattergraph plot and the high-low method. Level: 2 Medium
Variable cost per unit = Change in cost ÷ Change in activity = $550 ÷ 300 units = $1.83 per unit AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Learning Objective: 02-04 Analyze a mixed cost using a scattergraph plot and the high-low method. Level: 1 Easy 85. The following data pertains to activity and maintenance costs for two recent years: Using the high-low method, the cost formula for maintenance would be: Variable cost per unit = Change in cost ÷ Change in activity = $3,000 ÷ 4,000 units = $0.75 per unit Fixed cost = Total cost - Variable cost element = $15,000 - ($0.75 per unit × 12,000 units) = $15,000 - $9,000 = $6,000