[The following information applies to the questions displayed below.]
Callander Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $151.60 per unit.
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21.
award:
0 out of
10.00 points
0 out of
10.00 points
The best estimate of the total monthly fixed cost is:
| $846,000 | |
| $886,050 | |
| → | $365,400 |
| $926,100 |
Cost of sales is a variable cost.
Selling and administrative costs:
Variable cost per unit = Change in cost ÷ Change in activity
= ($441,000 - $430,200) ÷ (7,000 units - 6,000 units)
= $10,800 ÷ 1,000 units
= $10.80 per unit
Fixed cost = Total cost - Variable cost element
= $441,000 - ($10.80 per unit × 7,000 units)
= $441,000 - $75,600
= $365,400
Selling and administrative costs:
Variable cost per unit = Change in cost ÷ Change in activity
= ($441,000 - $430,200) ÷ (7,000 units - 6,000 units)
= $10,800 ÷ 1,000 units
= $10.80 per unit
Fixed cost = Total cost - Variable cost element
= $441,000 - ($10.80 per unit × 7,000 units)
= $441,000 - $75,600
= $365,400
| Multiple Choice | Difficulty: Medium | Learning Objective: 02-04 Analyze a mixed cost using a scattergraph plot and the highlow method. |
22.
award:
0 out of
10.00 points
0 out of
10.00 points
The best estimate of the total variable cost per unit is:
| $141.00 | |
| → | $80.10 |
| $69.30 | |
| $132.30 |
Cost of sales:
Because cost of sales is a variable cost, there are several ways to compute the variable cost per unit. Here is one:
Variable cost per unit = Change in cost ÷ Change in activity
= ($485,100 - $415,800) ÷ (7,000 units - 6,000 units)
= $69,300 ÷ 1000 units
= $69.30 per unit
Selling and administrative costs:
Variable cost per unit = Change in cost ÷ Change in activity
= ($441,000 - $430,200) ÷ (7,000 units - 6,000 units)
= $10,800 ÷ 1000 units
= $10.80 per unit
Total cost per unit = $69.30 per unit + $10.80 per unit = $80.10
Because cost of sales is a variable cost, there are several ways to compute the variable cost per unit. Here is one:
Variable cost per unit = Change in cost ÷ Change in activity
= ($485,100 - $415,800) ÷ (7,000 units - 6,000 units)
= $69,300 ÷ 1000 units
= $69.30 per unit
Selling and administrative costs:
Variable cost per unit = Change in cost ÷ Change in activity
= ($441,000 - $430,200) ÷ (7,000 units - 6,000 units)
= $10,800 ÷ 1000 units
= $10.80 per unit
Total cost per unit = $69.30 per unit + $10.80 per unit = $80.10
| Multiple Choice | Difficulty: Medium | Learning Objective: 02-04 Analyze a mixed cost using a scattergraph plot and the highlow method. |
23.
award:
0 out of
10.00 points
0 out of
10.00 points
The best estimate of the total contribution margin when 6,300 units are sold is:
| → | $450,450 |
| $518,490 | |
| $121,590 | |
| $66,780 |
Contribution margin per unit = Selling price per unit - Variable cost per unit
= $151.60 per unit - $80.10 per unit
= $71.50 per unit
Total contribution margin = Contribution margin per unit × Unit sales
= $71.50 per unit × 6,300 units
= $450,450
= $151.60 per unit - $80.10 per unit
= $71.50 per unit
Total contribution margin = Contribution margin per unit × Unit sales
= $71.50 per unit × 6,300 units
= $450,450
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