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Chapter 5 Cost-Volume-Profit(FILEminimizer)

# Chapter 5 Cost-Volume-Profit(FILEminimizer) - Exercises Set...

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Exercises: Set B 1 EXERCISES: SET B E5-1B Kozy Enterprises is considering manufacturing a new product. It projects the cost of direct materials and rent for a range of output as shown below. Instructions (a) Diagram the behavior of each cost for output ranging from 1,000 to 12,000 units. (b) Determine the relevant range of activity for this product. (c) Calculate the variable cost per unit within the relevant range. (d) Indicate the fixed cost within the relevant range. E5-2B The controller of Eaton Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs. Output Rent Direct in Units Expense Materials 1,000 \$ 5,000 \$ 6,000 2,000 5,000 9,000 3,000 5,000 11,700 4,000 7,000 12,000 5,000 7,000 15,000 6,000 7,000 18,000 7,000 7,000 21,000 8,000 7,000 24,000 9,000 7,000 27,000 10,000 10,000 34,000 11,000 10,000 42,000 12,000 10,000 54,000 Diagram cost behavior, determine relevant range, and classify costs. (SO 1, 2) Total Total Month Maintenance Costs Machine Hours January \$2,900 300 February 3,000 400 March 3,600 600 April 4,500 790 May 3,200 500 June 4,400 800 Determine fixed and variable costs using the high-low method and prepare graph. (SO 1, 3) Total Total Month Maintenance Costs Machine Hours January \$2,500 3,000 February 3,000 4,000 March 3,600 6,000 April 4,500 7,900 May 3,200 5,000 June 5,000 8,000 Determine fixed and variable costs using the high-low method and prepare graph. (SO 1, 3) Instructions (a) Determine the fixed and variable cost components using the high-low method. (b) Prepare a graph showing the behavior of maintenance costs, and identify the fixed and vari- able cost elements. Use 2,000-hour increments and \$1,000 cost increments. Instructions (a) Determine the fixed and variable cost components using the high-low method. (b) Prepare a graph showing the behavior of maintenance costs, and identify the fixed and vari- able cost elements. Use 200 unit increments and \$1,000 cost increments. E5-3B The controller of Hernandez Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs.

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E5-4B Mozena Corporation manufactures a single product. Monthly production costs in- curred in the manufacturing process are shown below for the production of 3,000 units.The util- ities and maintenance costs are mixed costs.The fixed portions of these costs are \$300 and \$200, respectively. 2 Chapter 5 Cost-Volume-Profit Production in Units 3,000 Production Costs Direct materials \$ 7,500 Direct labor 15,000 Utilities 2,100 Property taxes 1,000 Indirect labor 4,500 Supervisory salaries 1,800 Maintenance 1,400 Depreciation 2,400 Compute break-even point in units and dollars. (SO 5, 6) Determine fixed, variable, and mixed costs. (SO 1, 3) Instructions Determine the inn’s break-even point in (1) number of rented rooms per month and (2) dollars. E5-7B In the month of March, Girard Spa services 550 clients at an average price of \$120. During the month, fixed costs were \$22,800 and variable costs were 60% of sales. Instructions (a) Determine the contribution margin in dollars, per unit, and as a ratio.
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