Question
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.
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