$1)$ High$-$Low Method to find the equation for a mixed cost

$$ XYZ Manufacturing wants to understand its machine costs

Machine Hrs$.$ Machine Costs

January $248$ $ $9,891$

February $49013,200$

March $34010,555$

April $2009,054$

May $37010,662$

June $56812,883$

a$)$ Find the slope of the line $($VC$/$unit$)$

VC$/$unit $=$

b$)$ Find the Y$-$intercept $($total FC$)$

Total FC $=$

c$)$ Write the equation for this mixed cost

Cost equation $=$

d$)$ Use the cost equation to predict total cost if the firm expects to use a total

of $480$ MH next period

Predicted total cost at $480$ MH $=$ CVP Analysis

$$ Acme Widgets has the following data for September

o Sales $=$ $$0\mathrm{.}60/$unit

o Variable COGS $=$ $$0\mathrm{.}30/$unit

o Variable selling & admin. $=$ $$0\mathrm{.}06/$unit

o Fixed COGS $=$ $$1,000/$month

o Fixed selling & admin. $=$ $$500/$month

o Units sold $=12,000$

a$)$ What is Acme$$s total CM in September?

Total CM $=$

b$)$ What is Acme$$s unit contribution margin $($CM$/$unit$)$ in September?

CM$/$unit $=$

c$)$ What is Acme$$s break$-$even in units and in dollars?

B$-$E in units $=$ B$-$E in $ $=$

d$)$ Sales in units and in dollars if Acme wants target profit of $$1,800$

Units for target profit $=$ Sales $ for target profit $=$

Sensitivity analysis:

e$)$ Effect on break$-$even if Acme raises its selling price by $6$:

o Old selling price $=$ $$0\mathrm{.}60$

o New selling price $=$ $$0\mathrm{.}66$

Old B$-$E $=$ New B$-$E $=$

Effect

f$)$ Effect on break$-$even if Acme$$s variable costs increase by $3?$

o Old VC $=$ $$0\mathrm{.}36$

o New VC $=$ $$0\mathrm{.}39$

Old B$-$E $=$ New B$-$E $=$ Effect

g$)$ If Acme$$s fixed costs increase by $$150,$ how does break$-$even change? o Old FC $=$ $$1,500$

o New FC $=$ $$1,650$

Old B$-$E $=$ New B$-$E $=$ Effect

Margin of Safety:

h$)$ Acme Widgets$$ current break$-$even is $6,250$ units. The firm expects to sell

$7,000$ units next month

Margin of safety in units $=$

Margin of safety in dollars $=$

Margin of safety ratio $=$

Multi$-$Product Firm:

o Acme Widgets now makes two products: A and B

o The firm sells $9$ units of product A for each unit of product B that it sells

A and B

Price$/$unit $$0\mathrm{.}60$ $$1\mathrm{.}00$

VC$/$Unit $0\mathrm{.}360\mathrm{.}56$

Total VC $$1,820$

i$)$ Break$-$even for the product mix:

A $=$ B $=$