15.Assume the local cable companyhas the following information available about fleet miles andoperating costs for its service department: Page 7 of 10
YearFleet MilesOperating Costs2013247,000$228,7002014363,000$286,700Using the high-low method, develop a cost-estimating equation for total annual operating costs. Topic: Contribution Income Statement 16.Elm, Inc. had the following income statement for last period:Sales$50,000Cost of Sales (manufacturing)24,000Selling and General Administrative6,000Net Income$20,000 If costs of sales was 75% variable and 25% fixed, and Selling and General Expense was 60% variableand 40% fixed, prepare a contribution format income statement and calculate its contribution marginpercentage. Topic: Break-Even Calculation 17.ST Cat, Inc. had a contribution margin of $25,400 on sales of $40,000 and had fixed costs of $17,780.Calculate its break-even point in sales dollars. Topic: Break-Even Analysis and Profit Planning 18.Ontario Outdoors is a manufacturer of outdoor items. The company is considering the possibility ofoffering a new sleeping bag that would sell for $150 each. Cost to manufacture these sleeping bags Page 8 of 10
includes $40 in materials and $35 in direct labor for each sleeping bag. Variable marketing and sellingcosts would be $15 each. In order to manufacture these sleeping bags, the company would need toincur $120,000 in fixed costs for new equipment. Required:a. Compute the break-even point of the sleeping bag in units sold.b. What would be the total revenue at the break-even point?c. How many units would Ontario need to sell to earn a profit of $21,000?d. If fixed costs in fact are $150,000 rather than $120,000, how many units would need to be sold inorder to earn $21,000? Answer: Topic: Make or Buy Decision
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