Solutionexhibit1019

Info iconThis preview shows page 1. Sign up to view the full content.

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

Unformatted text preview: teshowacostbehaveswithinthe3,000to8,000relevantrange.  2. Acomparisonatvariouslevelsofprofessionallabour ­‑hoursfollows.The linear cost function is based on the formula of $228,000 per month plus $43.00perprofessionallabour ­‑hour.   Totaloverheadcostbehaviour: 1.  Month1 Professionallabour ­‑hours Month3 Month5 Month6 5,000 6,000 7,000 8,000 $340,000 $400,000 $435,000 $477,000 $529,000 $587,000 Linearapproximation 357,000 400,000 443,000 486,000 529,000 572,000       $0 $15,000 approximation  $(17,000) 4,000 Month4 Actualtotaloverheadcosts Actualminuslinear 3,000 Month2 $0 $(8,000) $(9,000) The data are shown in Solution Exhibit 10 ­‑19. The linear cost function overstatescostsby$8,000atthe5,000 ­‑hourlevelandunderstatescostsby $15,000atthe8,000 ­‑hourlevel.  3.  Linear  Function Contributionbeforedeductingincrementaloverhead Incrementaloverhead Contributionafterincrementaloverhead BasedonBased Actual $38,000 35,000 $3,000 on Cost $38,000 43,000 $(5,000)  Thetotalcontributionmarginactuallyforgoneis$3,000.  SolutionExhibit10 ­‑19  LinearCostFunctionPlotofProfessionalLabour ­‑Hours onTotalOverheadCostsforCalgaryCon...
View Full Document

This document was uploaded on 02/04/2014.

Ask a homework question - tutors are online