Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Answers with 2 decimals. A. [The following information applies to the questions displayed below.] Morning Dove Company manufactures one model of birdbath, which is very

Answers with 2 decimals.

A. [The following information applies to the questions displayed below.]

Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells all units it produces each month. The relevant range is 01,500 units, and monthly production costs for the production of 500 units follow. Morning Doves utilities and maintenance costs are mixed with the fixed components shown in parentheses.

Production Costs Total Cost
Direct materials $ 1,500
Direct labor 7,500
Utilities ($100 fixed) 650
Supervisors salary 3,000
Maintenance ($280 fixed) 480
Depreciation 800

Required: 1. Identify each cost as variable, fixed, or mixed, and express each cost as a rate per month or per unit (or combination thereof).

2. Determine the total fixed cost per month and the variable cost per unit for Morning Dove.

3. State Morning Doves linear cost equation for a production level of 01,500 units. Enter answer as an equation in the form of y = a + bx.

4. Calculate Morning Doves expected total cost if production increased to 1,200 units per month. Enter answer as an equation in the form of y = a + bx.

Required information

B. [The following information applies to the questions displayed below.]

Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells all units it produces each month. The relevant range is 01,500 units, and monthly production costs for the production of 500 units follow. Morning Doves utilities and maintenance costs are mixed with the fixed components shown in parentheses.

Production Costs Total Cost
Direct materials $ 1,500
Direct labor 7,500
Utilities ($100 fixed) 650
Supervisors salary 3,000
Maintenance ($280 fixed) 480
Depreciation 800

Suppose it sells each birdbath for $25. Required: 1. Calculate the unit contribution margin and contribution margin ratio for each birdbath sold.

2. Complete the contribution margin income statement assuming that Morning Dove produces and sells 1,400 units.

C. Mountain Dental Services is a specialized dental practice whose only service is filling cavities. Mountain has recorded the following for the past nine months:

Month Number of Cavities Filled Total Cost
January 600 $6,150
February 375 5,250
March 500 5,850
April 675 6,500
May 525 6,100
June 550 5,950
July 625 6,000
August 300 5,000
September 325 5,000

Required:

1. Use the high-low method to estimate total fixed cost and variable cost per cavity filled.

2. Using these estimates, calculate Mountains total cost for filling 750 cavities

D. Riverside Inc. makes one model of wooden canoe. Partial information for it follows:

Number of Canoes Produced and Sold
495 645 795
Total costs
Variable costs $ 72,270 ? ?
Fixed costs 149,200 ? ?
Total costs $ 221,470 ? ?
Cost per unit
Variable cost per unit ? ? ?
Fixed cost per unit ? ? ?
Total cost per unit ? ? ?

Required:

1. Complete the table.

3. Suppose Riverside sells its canoes for $516 each. Calculate the contribution margin per canoe and the contribution margin ratio.

4. Next year Riverside expects to sell 845 canoes. Complete the contribution margin income statement for the company.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Accounting

Authors: Paul Fischer, William Taylor

6th Edition

0538841265, 978-0538841269

More Books

Students also viewed these Accounting questions

Question

Be prepared to address excessive absenteeism

Answered: 1 week ago