Chapter_3_Assignment_Solution

# Chapter_3_Assignment_Solution - Chapter 3 Assignment...

This preview shows pages 1–2. Sign up to view the full content.

Solution PROBLEM I: Lewis Corporation plans to increase its advertising budget by 20% next year. The company currently spends \$15,000 on advertising costs. In addition to advertising, Lewis spends \$50,000 per year for other fixed costs and \$15 per unit for variable costs. Required : If Lewis anticipates producing 25,000 units next year, what will be next year’s estimated total costs? Answer: \$_ 443,000 ______ Total Costs = Fixed Costs + Variable Cost per Unit (x) Total Costs = \$68,000 * + \$15 (25,000) * FC = [15,000 + .20(15,000)] + \$50,000 = \$68,000 PROBLEM II : Reliable Movers Inc. documented the miles driven and total moving van costs for the past five months as follows: Number of Miles Total Vehicle Costs January 3,000 \$ 4,800 February 3,500 5,200 March 5,000 6,100 April 4,000 5,000 May 5,400 6,000 A. Which two months exhibit the high and low activity levels? High: ___ May __________ _ Low: ___ Jan ___________ B. Using the high/low method, what is the variable cost per mile?

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 3

Chapter_3_Assignment_Solution - Chapter 3 Assignment...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online