Mang ACC 5 - CHAPTER 5 EXERCISE 5-1 (a) The determination...

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Unformatted text preview: CHAPTER 5 EXERCISE 5-1 (a) The determination as to whether a cost is variable, fixed, or mixed can be made by comparing the cost in total and on a per-unit basis at two different levels of production. Variable Costs Fixed Costs Mixed Costs Vary in total but remain constant on a per-unit basis. Remain constant in total but vary inversely with changes in activity on a per-unit basis. Contain both a fixed element and a variable element. Vary both in total and on a per-unit basis. (b) Using these criteria as a guideline, the classification is as follows: Direct materials Direct labor Utilities Variable Variable Mixed Rent Maintenance Supervisory salaries Fixed Mixed Fixed EXERCISE 5-2 (a) $17,800 11,500 14,250 mi. 9,000 mi. = $6,300 5,250 mi. = $1.20 variable cost per mile driven Activity Level High Low Total costs $17,800 $11,500 Less variable costs: 14,250 X $1.20 17,100 9,000 X $1.20 ______ 10,800 Total fixed costs $ 700 $ 700 Monthly operating costs are: $700 per month plus $1.20 per mile driven (b) $14,500 = $700 + ($1.20 X miles driven) $14,500 $700 = $1.20 X miles driven $13,800 = $1.20 X miles driven $13,800 $1.20 = 11,500 miles driven 5-1 EXERCISE 5-3 (a) Maintenance Costs : $5,000 - $2,800 8,000 - 3,000 = $2,200 5,000 = $.44 variable cost per machine hour Activity Level High Low Total cost Less: Variable costs 8,000 X $.44 3,000 X $.44 Total fixed costs $5,000 3,520 00,000 $1,480 $2,800 1,320 $1,480 Thus, maintenance costs are $1,480 per month plus $.44 per machine hour. (b) COSTS $5,000 Total Cost Line $4,000 $3,000 Variable Cost Element $2,000 $1,480 $1,000 Fixed Cost Element 2,000 4,000 6,000 8,000 Machine Hours 5-2 5-3 EXERCISE 5-4...
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This note was uploaded on 07/26/2008 for the course ACC 102 taught by Professor Smith during the Spring '08 term at Siena College (Loudonville).

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Mang ACC 5 - CHAPTER 5 EXERCISE 5-1 (a) The determination...

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