5-8

The following information applies to the questions displayed below. Caiman Distribution Partners is the Brazilian distribution company of a U.S. consumer products firm. Inflation in Brazil has made bidding and budgeting difficult for marketing managers trying to penetrate some of the country's rural regions. The company expects to distribute 450,000 cases of products in Brazil next month. The controller has classified operating costs (excluding costs of the distributed product) as follows: Account Supplies Supervision Truck expense Bulding leases Utilities Warehouse labor Equipment leases Data processing equipment Operating Cost $1.008,000 Behavior All varlable 207,000 135,000 FIxed 140,000 181,000 Flxed 870,000 555,000 Fixed 227000 124,000 FIxed 852,000 143.000 Fixed 748,000 604,000 FIxed 938,000 855,000 385.000 Flxed All fixed Total $6,845,000 Although overhead costs were related to revenues throughout the company, the experience in Brazil suggested to the managers that they should incorporate information from a published index of Brazilian prices in the distribution sector to forecast overhead in a manner more likely to capture the economics of the business. Following instructions from the corporate offices, the controller's office in Brazil collected the following information for monthly operations from last year Month Cases 258,000 343.000 259,000 415,000 352.000 339,000 410.000 455.000 398,000 408.000 396,000 456.000 Price Index 108 109 115 118 131 112 135 135 Operating Costs $5,699,153 5,806,652 5,849,919 5,927631 5,939149 6,043,378 5.918,509 6,133,882 6,126,144 6,186,639 6,208,813 6,362,269 4 10 136 132 146 These data are considered representative for both past and future operations in Brazil Required Information Following instructions from the corporate offices, the controller's office in Brazil collected the following information for monthly operations from last year: Month Cases 258,000 343,000 259,000 415,000 352,000 339,000 410,000 455,000 398,000 408,000 396,000 456,000 Price Index 108 109 115 118 Operating Costs $5,699,153 5,806,652 5,849,919 5,927631 5,939,149 6,043,378 5,918,509 6,133,882 6,126144 6,186.639 6,208,813 6,362,269 2 3 4 112 135 135 135 136 132 146 7 10 12 These data are considered representative for both past and future operations in Brazil value: 10.00 points Required information Required a-1. Determine the variable cost per case assuming that 450,000 cases will be shipped next month based on the controller's analysis of accounts. (Round your answer to 2 decimal places.) Variable cost per case a-2. Prepare an estimate of operating costs Estimate of operating cost