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.

Units	Total	Total	Total Machine
Produced	Lumber Cost	Utilities Cost	Depreciation Cost
12,000 shelves	$144,000	$14,800	$125,000
24,000 shelves	288,000	28,600	125,000
48,000 shelves	576,000	56,200	125,000
60,000 shelves	720,000	70,000	125,000

1. Determine whether the costs in the table are variable, fixed, mixed, or none of these.

	Variable Cost	Fixed Cost	Mixed Cost	None of these
Lumber
Utilities
Depreciation

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.

Cost	Fixed Portion of Cost	Variable Portion of Cost (per Unit)
Lumber
Utilities
Depreciation

X

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.

	Number of Units Produced	Total Cost
January	4,360	$65,600
February	250	6,250
March	1,000	15,000
April	5,250	56,250
May	1,750	32,500
June	3,015	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.

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	Total Cost
3,500
4,360
5,250

3. Why does the total cost computed for 4,360 units not match the data for January in the table at the top of this panel?

The high-low method gives accurate data only for levels of production outside the relevant range.

The high-low method only gives accurate data when fixed costs are zero.

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.

The high-low method is accurate only for months in which production is at full capacity.

Review the contribution margin income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statements panels. Complete the following table from the data provided in 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)