09 Jun Managerial Accounting 4
Question 1: (26 marks)
Dundar Mifflin manufactures and sells three products: X, Y, and Z. Annual fixed costs are $515,250 and data about the three products follow for 2017.
X
Y
Y
Sales
$150,000
$480,000
$790,000
Variable cost
80,000
175,000
290,000
Required:
1) Determine the breakeven point
2) The management expects sales to increase by 9% in 2018. What is the expected operating income in 2018?
Question 2: (24 marks)
Dundar Mifflin makes electronic product for the RCMP. The following data is for the first six months:
Direct Labor Hours
Manufacturing Overhead
January
45,000
$295,000
February
60,000
$320,000
March
57,000
$323,000
April
52,000
$247,250
May
34,000
$178,200
June
25,000
$162,500
Required:
1) Use the high-low method to estimate the cost formula
2) Estimate the total overhead cost at an activity level of 48,000 machine hours, using the separate estimates you obtained for its components.
Question 3: (30 marks)
Costco has recently started to take the customer orders over the web site. Following is the past data for first six month:
Month
Customer Web site costs
Number of Web site hits
January
$8,960
11,600
February
$8,762
11,270
March
$9,032
11,720
April
$8,942
11,570
May
$8,420
10,700
June
$8,492
10,820
Required:
1) Using the high-low method, estimate the variable cost per Web site hit and the monthly fixed costs.
2) Determine the cost equation to estimate the customer Web site expenses for Costco Online.
3) If Costco expects 9,500 Web site hits for July, what are their anticipated costs for July?
Question 4: (20 marks)
Gandalf and Company makes table tennis equipment for the retailers around the world. Below is listed a number of activities and cost at Gandalf Corporation. Please list the activities as one of the following: fixed, mixed, contribution, cost behavior, variable, curvilinear, account analysis, regression analysis.
1
Changes in cost, but not in direct proportion to changes in volume
2
Costs that do not change while changes in volume
3
Sales – Variable Expense
4
Cost changes as volume changes
5
Cost that changes while changes in volume
6
Cost behavior is not linear
7
Equation which expresses how a cost behaves
8
Procedure that uses all the historical data points
9
Utility charges per kilowatt plus monthly fee
10
Monthly rent charges
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