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Ejercicio para entregar como parte del examen Final 1. Dollywood Corporation accumulates the following data concerning a mixed cost, using miles as the activity level.
Ejercicio para entregar como parte del examen Final 1. Dollywood Corporation accumulates the following data concerning a mixed cost, using miles as the activity level. January February Instructions Miles Driven 10,000 Total Cost $15,000 March Miles Driven 9,000 Total Cost $12.500 8,000 $14,500 April 7,500 $12,000 Compute the variable and fixed cost elements using the high-low method. 2. Hurly Co. has fixed costs totaling $132,000. Its contribution margin per unit is $1.50, and the selling price is $5.50 per unit. Instructions Compute the break-even point in units. 3. Bill Braddock is considering opening a Fast 'n Clean Car Service Center. He estimates that the following costs will be incurred during his first year of operations: Rent $9,200. Depreciation on equipment $7,000, Wages $16.400, Motor oil $2.00 per quart. He estimates that each oil change will require 5 quarts of oil. Oil filters will cost $3.00 each. He must also pay The Fast 'n Clean Corporation a franchise fee of $1.10 per oil change, since he will operate the business as a franchise. In addition, utility costs are expected to behave in relation to the number of oil changes as follows: Utility Costs Number of Oil Changes 4,000 6,000 9,000 12,000 14,000 $ 6,000 $ 7,300 $9,600 $12,600 $15,000 Bill Braddock anticipates that he can provide the oil change service with a filter at $25 each. Instructions (a) Using the high-low method, determine variable costs per unit and total fixed costs. (b) Determine the break-even point in number of oil changes and sales dollars. (c) Without regard to your answers in parts (a) and (b), determine the oil changes required to earn net income of $20,000, assuming fixed costs are $32,000 and the contribution margin per unit is $8
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