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 Total Total Machine Units Lumber Utilities Depreciation Produced Cost Cost Cost $13,000 $135,000 24,500 135,000 10,000 shelves $110,000 20,000 shelves 220,000 40,000 shelves 440,000 50,000 shelves 550,000 47,500 135,000 59,000 135,000 1. Determine whether the costs in the table are variable, fixed, mixed, or none of these. Lumber Variable Cost Utilities Mixed Cost Depreciation 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 "O". 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 of Cost Cost Variable Portion of Cost (per Unit) () 12 x Lumber 0 Utilities 1.15 x 1,000 x Depreciation Foodback Check My Work Review the definitions for fixed, variable, and mixed costs, and the relationships between units produced and total cost for each type of cost. Recall that the high-low method may be used to separate a cost into its fixed and variable components. 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. Total Cost Units Produced 4,360 units January February $65,600 6,250 300 March 1,000 15,000 April 4,800 73,750 May 1,750 32,500 48,000 June 3,015 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. Total Fixed Cost Variable Cost per Unit 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 Total Cost 4,360 ud 4,800 Check My Work Review the high-low method, and use the smallest and largest levels of production in your computation. 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 84,800 units during the year. Cover-to-Cover Company Biblio Files Company Contribution margin ratio (percent) Unit contribution margin Break-even sales (units) Break-even sales (dollars)
