This preview shows pages 1–4. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full DocumentThis preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: CHAPTER 5 EXERCISE 51 (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 perunit basis at two different levels of production. Variable Costs Fixed Costs Mixed Costs Vary in total but remain constant on a perunit basis. Remain constant in total but vary inversely with changes in activity on a perunit basis. Contain both a fixed element and a variable element. Vary both in total and on a perunit 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 52 (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 51 EXERCISE 53 (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 52 53 EXERCISE 54...
View
Full
Document
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).
 Spring '08
 Smith

Click to edit the document details