ACCOUNTING: What the Numbers Mean, 10e

Problem 12.18LO 6

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e cel

Activity level in units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Variable costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fixed costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mixed costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,000

$10,000 30,000 20,000

$60,000

Production level, in units . . . . . . . . . . . . . . . . . . Variable costs . . . . . . . . . . . . . . . . . . . . . . . . . .

Fixed costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mixed costs . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

February

12,000 $21,000

? 18,000

$70,000

August

18,000 $ ?

31,000 ?

$88,000

Required:

1. Calculate the missing costs.
2. Calculate the cost formula for mixed cost using the high-low method.
3. Calculate the total cost that would be incurred for the production of 20,000 units.
4. Identify the two key cost behavior assumptions made in the calculation of your answer to partc.

General Spreadsheet Instructions:

Step 1:

Review General

Spreadsheet

Instructions

Step 2:

Review

Problem 12.18

Worksheet

Step 3:

Complete

Analysis

Worksheet

Step 4:

Respond to

"What the Numbers Mean"

Worksheet