GN_ch5

# GN_ch5 - Exercise 5-1 (45 minutes) 1. Units Shipped 8 2 6...

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Exercise 5-1  (45 minutes) 1. Units Shipped Shipping Expense High activity level 8 \$3,600 Low activity level 2   1,500     Change  6 \$2,100 Variable cost element: Change in cost \$2,100 = =\$350 per unit Change in activity 6 units Fixed cost element: Shipping expense at the high activity level. ................... \$3,600 Less variable cost element (\$350 per unit × 8 units). ....   2,800     Total fixed cost. .............................................................. \$ 800 The cost formula is \$800 per month plus \$350 per unit shipped or Y = \$800 + \$350X, where X is the number of units shipped. 2. a. See the scattergraph on the following page. b. (Note: Students’ answers will vary due to the imprecision and  subjective nature of this method of estimating variable and fixed  costs.) Total cost at 5 units shipped per month [a point  falling on the line in (a)]. ......................................... \$2,600

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## This note was uploaded on 04/11/2009 for the course ACCT 410x taught by Professor Bonner during the Fall '06 term at USC.

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GN_ch5 - Exercise 5-1 (45 minutes) 1. Units Shipped 8 2 6...

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