Question
art A Silver Metals Ltd has presented the following information for the operations of its production department in the past eight months Month April May
art A
Silver Metals Ltd has presented the following information for the operations of its production
department in the past eight months
Month
April
May
June
July
August
September
October
November
Units
Produced
8.000
6.400
3.800
5.600
7,000
8.400
7,800
6.800
Total
Manufacturing
Overhead Cost
$30.400
$25,800
$18,300
$23.200
$26.000
$29.800
$26.500
$25.700
e
75%
Guestion
Required:
Using the high-low method, develop a cost equation by estimating the fixed cost per month and variable cost per unit, alculate the total overhead costs for a budgeted production of 5,000
units in the neyt month.
marks)
Part b
Explorer Tours Ltd generates average revenue of $5,000 per person on its one-week package tours to wildlife parks in China. Total annual fixed costs are $50,000. The variable costs per
person are:
Airfare
Hotel accommodations
Meals
Ground transportation
Park tickets and other costs
Total
$1,400
1,000
300
200
100
$3.000
@
Question 3
Required:
- Calculate the number of tours that must be sold in order to break even. (4 marks)
- Calculate the amol
F revenue needed to earn a target profit of $90,000. (4 marks)
(c) If fixed costs increase by $30,000, what decrease in variable cost per person must be achieved to maintain the breakeven point calculated in (a) above? (4 marks)
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