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Chp 5 additional solutions - EXERCISE 5-2(a(b The relevant...

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EXERCISE 5-2 (a) (b) The relevant range is 4,000 – 9,000 units of output since a straight-line relationship exists for both direct materials and rent within this range. (c) Variable cost per unit Within the relevant range = Cost Units (4,000 – 9,000 units) = $10,000 * 5,000* = $2 per unit *Any costs and units within the relevant range could have been used to calculate the same unit cost of $2. (d) Fixed cost within the relevant range = $7,000 (4,000 – 9,000 units)
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EXERCISE 5-3 (a) Maintenance Costs : $4,900 – $2,400 800 – 300 = $2,500 500 = $5 variable cost per machine hour 800 Machine Hours 300 Machine Hours Total costs Less: Variable costs 800 X $5 300 X $5 Total fixed costs $4,900 4,000 $ 900 $2,400 1,500 $ 900 Thus, maintenance costs are $900 per month plus $5 per machine hour. (b) $5,000 COSTS Total Cost Line $4,900 $4,000 $3,000 Variable Cost Element $2,000 $1,000 $ 900 Fixed Cost Element 0 200 400 600 800 Machine Hours
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EXERCISE 5-6 (a) Cost Fixed Variable Mixed Direct materials X Direct labor X Utilities X Property taxes X Indirect labor X Supervisory salaries X Maintenance X Depreciation X (b) Fixed costs= $1,000 + $1,800 + $2,400 + $300 + $200 = $5,700
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