Cost Behavior Cover-to-Cover Company is a manufacturer of shelving for books. The company has compiled the following cost data, and wants your help in determining the cost behavior. After reviewing the data, complete requirements (1) and (2) that follow. Total Units Produced Total Lumber Utilities Depreciation Total Machine Cost Cost Cost 11,000 shelves $110,000 $14,150 $120,000 22,000 shelves 220,000 26,800 120,000 44,000 shelves 440,000 52,100 120,000 55,000 shelves 550,000 64,750 120,000 1. Determine whether the costs in the table are variable, fixed, mixed, or none of these. Lumber Utilities Depreciation Variable Cost Mixed Cost Fixed Cost 2. For each cost, determine the fixed portion of the cost, and the per-unit variable cost. If there is no amount or an amount is zero, enter "0 Recall that, for N-Number of Units Produced, Total Costs (Variable Cost Per Unit x N) + Fixed Cost. Complete the following table with your answers. Round variable portion of cost (per unit) answers to two decimal places. - Fixed Portion Cost of Cost Variable Portion of Cost (per Unit) Lumber 10 Utilities Depreciation High-Low Biblio Files Company is the chief competitor of Cover-to-Cover Company in the bookshelf business. Biblio Files is analyzing its manufacturing costs, and has compiled the following data for the first six months of the year. After reviewing the data, answer questions (1) through (3) that follow. Units Produced Total Cost January 4,360 units $65,600 February 300 6,250 March 1,000 15,000 April 5,800 116,250 May 1,750 June 3,015 32,500 48,000 1. From the data previously provided, help Biblio Files Company estimate the fixed and variable portions of its total costs using the high-low method. Recall that Total Costs (Variable Cost Per Unit x Number of Units Produced) + Fixed Cost. Complete the following table. Variable Cost per Unit Total Fixed Cost 2. With your Total Fixed Cost and Variable Cost per Unit from the high-low method, compute the total cost for the following values of N (Number of Units Produced). Number of Units Produced 3,500 4,360 Total Cost 5,800 3. Why does the total cost computed for 4,360 units not match the data for January? a. The high-low method is accurate only for months in which production is at full capacity. b. The high-low method only gives accurate data when fixed costs are zero. c. The high-low method gives a formula for the estimated total cost and may not match levels of production other than the highest and lowest. d. The high-low method gives accurate data only for levels of production outside the relevant ra Feedback Check My Work Contribution Margin Review the contribution margin income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statements. Complete the following table from the data provided on the income statements. Each company sold 82,800 units during the year. Cover-to-Cover Biblio Files Contribution margin ratio (percent) Unit contribution margin Break-even sales (units) Break-even sales (dollars) Company Company % % 1000 Income Statement Cover-to-Cover Sales Cover-to-Cover Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8 $414,000 Variable costs: Manufacturing expense $248,400 Selling expense 20,700 Administrative expense 62,100 (331,200) Contribution margin $82,800 Fixed costs: Manufacturing expense $5,000 Selling expense 4,000 Administrative expense 11,700 (20,700) Operating income $62,100 Income Statement - Biblio Files Biblio Files Company Contribution Margin Income Statement For the Year Ended December 31, 20YS Sales $414,000 Variable costs: Manufacturing expense $165,600 Selling expense 16,560 Administrative expense 66,240 (248,400) Contribution margin $165.600 Income Statement - Biblio Files Sales Biblio Files Company Contribution Margin Income Statement For the Year Ended December 31, 2018 $414,000 Variable costs: Manufacturing expense) $165,600 Selling expense 16,560 Administrative expense 66,240 (248,400) Contribution margin $165,600 Fixed costs: Manufacturing expense $85,500 Selling expense 8,000 Administrative expense 10,000 (103,500) Operating income $62,100 Sales Mix Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings. Type of Bookshelf Sales Price per Unit Basic Deluxe $5.00 9.00 Variable Cost per Unit $1.75 8.10 The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called "Combined," the unit contribution margin for the Combined product would be $2.31. Fixed costs for the upcoming year are estimated at $344,190. Recall that the totals of all the sales mix percents must be 100%. Determine the amounts to complete the following table. Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings. Type of Sales Price per Unit Bookshelf Basic Deluxe $5.00 9.00 Variable Cost per Unit $1.75 8.10 The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called "Combined," the unit contribution margin for the Combined product would be $2.31. Fixed costs for the upcoming year are estimated at $344,190. Recall that the totals of all the sales mix percents must be 100%. Determine the amounts to complete the following table. Type of Bookshelf Basic Deluxe Percent of Sales Mix Break-Even Sales in Units Break-Even Sales in Dollars % % Target Profit Refer again to the income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statement. Note that both companies have the same sales and net income. Answer questions (1) - (3) that follow, assuming that all data for the coming year is the same as the current year, except for the amount of sales. 1. If Cover-to-Cover Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be? 2. If Biblio Files Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be? 3. What would explain the difference between your answers for (1) and (2)? a. Biblio Files Company has a higher contribution margin ratio, and so more of each sales dollar is available to cover fixed costs and provide operating income. b. Cover-to-Cover Company's contribution margin ratio is lower, meaning that it's more efficient in its operations. The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called "Combined," the unit contribution margin for the Combined product would be $2.31. Fixed costs for the upcoming year are estimated at $344,190. Recall that the totals of all the sales mix percents must be 100%. Determine the amounts to complete the following table. Type of Bookshelf Percent of Sales Mix Break-Even Sales in Units Break-Even Sales in Dollars. Basic % Deluxe % Target Profit Refer again to the income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statement. Note that both companies have the same sales and net income. Answer questions (1) (3) that follow, assuming that all data for the coming year is the same as the current year, except for the amount of sales. 1. If Cover-to-Cover Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be? 2. If Biblio Files Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be? 3. What would explain the difference between your answers for (1) and (2)? a. Biblio Files Company has a higher contribution margin ratio, and so more of each sales dollar is available to cover fixed costs and provide operating income. b. Cover-to-Cover Company's contribution margin ratio is lower, meaning that it's more efficient in its operations. c. The companies have goals that are not in the relevant range. d. The answers are not different; each company has the same required sales amount for the coming year to achieve the desired target profit