. Dollywood Corporation accumulates the following data concerning a mixed cost,

ID: 2409890 • Letter: #

Question

. Dollywood Corporation accumulates the following data concerning a mixed cost, using Miles Driven Total Cost miles as the activity level. Miles Driven Total Cost $16,500 10.000 8,000 March April 9,000 7,000 $12,500 $12,000 January February Instructions $14,500 compute the variable and fixed cost elements using the high-low method. 9. Determine the missing amounts. Unit Selling Price Unit Variable Costs Unit Contribution Contribution Margin Margin $300 $600 E. $165 C. F. Ratio B. D. 40% $150 $440 2 10. Kipling Company has sales of $1,500,000 for the first quarter of 2016. In making the sales, the company incurred the following costs and expenses. Variable $500,000 100,000 80,000 Fixed Product costs Selling expenses Administrative expenses $550,000 75,000 67,000 Instructions Calculate net income under CVP for 2016.

Explanation / Answer

1) Solution: Variable cost per mile = ($16,500 ? $12,000) / (10,000 - 7,000) = $1.50

Fixed cost = $16,500 - ($1.50 * 10,000) = $1,500

2) Solution:

Working

$135

300-165

45%

135/300

450

600-150

25%

150 / 600

1,100

440/40%

660

1100-440

3) Solution: $128,000

Working:

$1,500,000 - ($500,000 + $100,000 + $80,000) - ($550,000 + $75,000 + $67,000) = $128,000