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Exercises_exam2a - MGA 202 Exercises for Exam#2 Note These...

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MGA 202 Exercises for Exam #2 Note: These exercises provide additional practices for preparing the exam. They do not cover every topic required and may differ from Exam #2 in format and content. That is, the exercises are not a substitute for your own study. For each question involving calculations, you must show your calculations clearly to receive any credit. Don’t just write the answer in the answer space. I. Cost behavior Andover Company makes weather balloons. The company controller wanted to calculate the fixed and variable costs associated with the maintenance costs incurred by the factory. Data for the past six months were collected. Month Maintenance cost Machine hours January $ 10,120 526 February 9,560 389 March 9,712 412 April 10,460 569 May 10,226 541 June 9,686 399 a. Using the high low method, calculate the fixed cost of maintenance and the variable rate per machine hour. The estimated variable cost per unit of machine hour is $_____________ The estimated total monthly fixed cost is $________________ b. Calculate the budgeted cost for maintenance assuming that 610 hours are worked next month.
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II. CVP analyses Hurst Co. manufacturers and sells a single product. Price and cost data regarding this product are as follows: a. The break-even point in units per year is: b. In the current year, the company sold 43,000 units. What is its margin of safety in dollars? c. In the current year, the company sold 43,000 units. Due to competition, management will be forced to lower the selling price by 10% next year and increase sales promotion cost by 3,000. If so, by how much the company’s income will be affected?
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