Unifying Concepts: High-Low Method, Contribution Margins, and Analysis Press Publishing Corporation has two major magazines: Star Life
Question:
Unifying Concepts: High-Low Method, Contribution Margins, and Analysis Press Publishing Corporation has two major magazines: Star Life and Weekly News. During 2009, Star Life sold 3 million copies at $1.00 each, and Weekly News sold 2.1 million copies at $1.10 each. Press Publishing accumulated the following cost information:
Required:
1. Use the high-low method to estimate the per-unit variable and total fixed manufacturing costs of each magazine. (Round the variable cost rate to three decimal places.)
2. If all selling expenses are fixed and they total $500,000 for Star Life and $400,000 for Weekly News, prepare contribution margin income statements for the two magazines at sales of 3 million copies each.
3. Which magazine is more profitable at sales of 2 million copies?
4. Interpretive Question: If the same total dollar amount spent on either magazine will result in the same number of new subscriptions, which magazine should be advertised?
Step by Step Answer:
Accounting Concepts And Applications
ISBN: 9780324376159
10th Edition
Authors: W. Steve Albrecht, James D. Stice, Earl K. Stice, Monte R. Swain