2071 ACG Homework Problems
Problem 6
A. TC = VC x + FC
Product FC = $0.60*1,800 = $1,080 at 1800 units.
Period FC = $1.30*1,800 = $2,340 at 1800 units.
Product FC
Period FC
Product VC ($4.00*1,800)
Period VC ($1.10*1,800)
Total cost
B. Sales ($15*1,800)
CGS: VC product
FC product (see part A)
Gross profit
$1,080
2,340
7,200
1,980
$12,600
$27,000
$7,200
1,080
C. Sales ($15*1,800)
VC product
VC period
Contribution margin
8,280
$18,720
$27,000
$7,200
1,980
9,180
$17,820
D. Income before taxes is the same as operating income which is the same regardless
if the full costing or variable costing approach is used.
Sales ($15*1,800)
VC product
VC period
Contribution margin
FC product
FC period
Operating income (income before taxes)
$27,000
$7,200
1,980
1,080
2,340
9,180
$17,820
3,420
$14,400
Problem 7
Utilties:
March
$7,650/5,100 =
$1.50
April
$8,700/5,800 =
$1.50
Utilities cannot be fixed because the total costs differ at the two activity levels. This cost is
variable because the cost per unit is the same at each activity level.
Shipping
March
April
$13,000/2,500 =
$14,000/3,100 =
$5.20
$4.52
Shipping cannot be fixed because the total costs differ at the two activity levels. Cannot be
variable because the cost per unit is not the same at each activity level. So, it defaults to a
mixed cost.
Problem 8
A Account analysis because there is only one level of activity.
B Car wash labor
Soap, cloth, and supplies
Water
Electric power to move conveyor belt
Total variable cost
Variable cost per unit = $292,000/70,000 =
$161,000
32,000
28,000
72,000
$293,000
$4.18571
C FC Total = $64,000 + $46,000 = $110,000
D TC = FC + VC x
y = 110,000 + 4.19x
E
y = 110,000 + $4.18571*74,000
TC =
Problem 9
1.
A High activity = October
Low activity = July
B
$419,743
Cost per unit = VC
y1- y2 / x1 - x2 =VC
[208,000 - 164,000] / [14,000 - 9,000] = $8.80 per unit
To get FC: TC = FC + VC x
$208,000 = 14,000*8.80 + FC
so FC = $84,800
C Equation:
y = 84,800 + 8.80x
D The only cost that will increase is the variable cost: 1 x $8.80 = $8.80
2
$250,000
$200,000
$150,000
$100,000
$250,000
$200,000
$150,000
$100,000
$50,000
$8,000
9,000
10,000 11,000 12,000 13,000 14,000 15,000
Y intercept and slope will vary depending on accuracy of drawing.
This graph looks as if the y-intercept is about $75,000. Rise over run can be used to
determine variable cost per unit.
Miles per month
3
June
July
August
September
October
13,000
9,000
9,500
11,500
14,000
Total cost per
month
$210,000
164,000
160,000
180,000
208,000
SUMMARY OUTPUT
Regression Statistics
Multiple R
R Square
Adjusted R Square
Standard Error
Observations
0.96
0.93
0.9
7385.49
5
ANOVA
df
Regression
Residual
Total
SS
1
###
3
###
4 2243200000
Coefficients
Intercept
X Variable 1
64181.82
10.55
Standard Error
19748.05
1.71
MS
###
###
t Stat
3.25
6.17
A
y = 10.55X + 64,182
B
y = 10.5454545*10,080 + 64,181.82
y=
$170,480 Do not round in the interim.
F
Significance F
38.13
P-value
0.05
0.01
0.01
Lower 95%Upper 95%
###
###
5.11 15.98
. This cost is
ls. Cannot be
defaults to a
.80 per unit
Lower 95.0%
Upper 95.0%
###
###
5.11 15.98