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Solved Problems-chapters5and6

# Solved Problems-chapters5and6 - ACC601/SolvedProblems...

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ACC601/Solved Problems Chapter 5 Problem 5-12  (page 220 of your textbook) 1. Cost of goods sold ................... Variable Advertising expense ................ Fixed Shipping expense .................... Mixed Salaries and commissions ....... Mixed Insurance expense .................. Fixed Depreciation expense .............. Fixed 2. Analysis of the mixed expenses: Units Shipping  Expense Salaries and  Commission  Expense High level of activity ....... 5,000 A\$38,000 A\$90,000 Low level of activity ........ 4,000     34,000         78,000     Change .......................... 1,000 A\$       4,000     A\$12,000 Variable cost element: Change in cost     Variable rate= Change in activity A\$4,000 Shipping expense:  = A\$4 per unit. 1,000 units A\$12,000 Salaries and Commission Expense:  = A\$12 per unit. 1,000 units Fixed cost element: Shipping  Expense Salaries and  Commission  Expense Cost at high level of activity .... A\$38,000 A\$90,000 Less variable cost element: 5,000 units  ×  A\$4 per unit ....   20,000 5,000 units  ×  A\$12 per unit. .                                 60,000

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Fixed cost element .................. A\$18,000 A\$30,000
The cost formulas are: Shipping expense:  A\$18,000 per month plus A\$4 per unit  or  Y = A\$18,000 + A\$4 X. Salaries and Comm. expense: A\$30,000 per month plus A\$12 per unit or Y = A\$30,000 + A\$12 X. 3. Morrisey & Brown, Ltd. Income Statement For the Month Ended September 30 Sales revenue  (5,000 units  ×  A\$100 per unit) ................... A\$500,000 Less variable expenses: Cost of goods sold  (5,000 units  ×   A\$60 per unit) ................. A\$300,000 Shipping expense  (5,000 units  ×  A\$4 per unit) .................... 20,000 Salaries and commissions expense  (5,000 units  ×  A\$12 per unit) ...................           60,000           380,000     Contribution margin ...................................... 120,000 Less fixed expenses: Advertising expense .................................. 21,000 Shipping expense ...................................... 18,000 Salaries and commissions expense .......... 30,000 Insurance expense .................................... 6,000 Depreciation expense ................................           15,000               90,000

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