[The following information applies to the questions displayed below.] Alden Co.’
ID: 2578746 • Letter: #
Question
[The following information applies to the questions displayed below.]
Alden Co.’s monthly unit sales and total cost data for its operating activities of the past year follow. Management wants to use these data to predict future fixed and variable costs.
Problem 21-2A Part 2
2. Estimate both the variable costs per unit and the total monthly fixed costs using the high-low method. (Do not round intermediate calculations.)
[The following information applies to the questions displayed below.]
Alden Co.’s monthly unit sales and total cost data for its operating activities of the past year follow. Management wants to use these data to predict future fixed and variable costs.
Problem 21-2A Part 3
3. Predict future total costs when sales volume is (a) 379,000 units and (b) 419,000 units.
The following information applies to the questions displayed below.]
Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year’s plans call for a $290 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $313,200, up to a maximum capacity of 550,000 yards of rope. Forecasted variable costs are $203 per 100 yards of XT rope.
Problem 21-3A Part 1
1. Estimate Product XT’s break-even point in terms of sales units and sales dollars. (1 unit = 100 yards) (Do not round intermediate calculations.)
[The following information applies to the questions displayed below.]
Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year’s plans call for a $290 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $313,200, up to a maximum capacity of 550,000 yards of rope. Forecasted variable costs are $203 per 100 yards of XT rope.
Problem 21-3A Part 2
3. Prepare a contribution margin income statement showing sales, variable costs, and fixed costs for Product XT at the break-even point.
Month Units Sold Total Cost Month Units Sold Total Cost 1 319,500 $ 157,000 7 360,500 $ 281,644 2 164,500 100,750 8 269,500 151,250 3 264,500 205,100 9 76,100 65,500 4 204,500 99,500 10 149,500 130,125 5 289,500 201,000 11 93,500 93,500 6 189,500 111,500 12 99,500 82,150Explanation / Answer
Answer to 21-2A
Answer 2.
Highest unit sold = 360,500
Highest Total cost = $281,644
Lowest unit sold = 76,100
Lowest Total cost = $65,500
Variable Cost per unit = (Highest Total Cost - Lowest Total Cost) / (Highest unit sold - Lowest unit sold)
Variable Cost per unit = ($281,644 - $65,500) / (360,500 - 76,100)
Variable Cost per unit = $0.76
Fixed Cost = Highest Total Cost - Highest unit sold * Variable Cost per unit
Fixed Cost = $281,644 - 360,500 * $0.76
Fixed Cost = $7,664
Answer 3.
Sales Volume = 379,000
Total Cost = $7,664 + $0.76 * 379,000
Total Cost = $295,704
Sales Volume = 419,000
Total Cost = $7,664 + $0.76 * 419,000
Total Cost = $326,104
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