Solutions to problems in chapter 7

# Solutions to problems in chapter 7 - Month by Tour Buses...

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DATA INPUT Control Factor Material-Handling Month Units of Activity Department Costs January 1,400 \$11,350 February 1,200 11,350 March 1,100 11,050 April 2,600 12,120 May 1,800 11,400 June 2,000 12,000 July 2,400 12,550 August 2,200 11,100 September 1,000 10,200 October 1,300 11,250 November 1,600 11,300 December 1,800 11,700 SOLUTION 5. Material-handling department's cost behavior using the high-low method: Variable cost per hundred pounds of equipment = High Low Difference costs \$12,120 - \$10,200 \$1,920 control factor 2,600 - 1,000 1,600 costs per control factor = \$1.20 Total cost at: 2,600 units of activity 12,120 Deduct: Variable cost at: 2,600 units of activity x \$1.20 = 3,120 Fixed cost 9,000 Cost equation based on high-low method: Material-handling cost per month= \$9,000 + \$1.20 X X denotes the number of pounds (in hundreds) of equipment loaded or unloaded during the month.

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DATA INPUT Miles Traveled
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Unformatted text preview: Month by Tour Buses Cost November 8,500 11,400 real December 10,600 11,600 January 12,700 11,700 February 15,000 12,000 March 20,000 12,500 April 8,000 11,000 SOLUTION 1. Variable cost per tour mile traveled and fixed cost per month using the high-low method: Variable maintenance cost per tour mile = High Low Difference costs (in real) 12,500 -11,000 1,500 r miles 20,000 -8,000 12,000 costs per mile = 0.125 r Total maintenance cost at: 8,000 miles 11,000 r Variable maintenance cost at: 8,000 miles x 0.125 1,000 r Fixed maintenance cost per month 10,000 r 2. Cost formula: Total maintenance cost per month = 10,000 r + 0.125 X denotes tour miles traveled during the month 3. Cost prediction at the 22,000-mile activity level: Maintenance cost = 10,000 0.125 22,000 = 12,750 r r = r denotes real, Brazil's national currency r X r + r x...
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## This note was uploaded on 02/29/2012 for the course E 101 taught by Professor Sfere during the Spring '12 term at Abilene Christian University.

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Solutions to problems in chapter 7 - Month by Tour Buses...

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