Question
Buxton Office Supply Company has the following information available regarding costs and revenues for two recent months. Selling price is $20. March April Sales revenue
- Buxton Office Supply Company has the following information available regarding costs and revenues for two recent months. Selling price is $20.
| March | April |
Sales revenue | $60,000 | $100,000 |
Cost of goods sold | -36,000 | - 60,000 |
Gross profit | $24,000 | $ 40,000 |
Less other expenses: |
|
|
Advertising | $ 600 | $ 600 |
Utilities | 4,200 | 5,600 |
Salaries and commissions | 3,200 | 4,000 |
Supplies (bags, cleaning supplies etc.) | 320 | 400 |
Depreciation | 2,300 | 2,300 |
Administrative costs | 1,900 | 1,900 |
Total | -12,520 | -14,800 |
Net income | $11,480 | $25,200 |
Required:
a. | Identify each of the company's expenses (including cost of goods sold) as being either variable, fixed, or mixed. |
b. | By use of the high-low method, separate each mixed expense into variable and fixed elements. State the cost formula for each mixed expense. |
c. | What is the total cost equation? |
d. | Estimate total cost if sales = $75,000. |
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