Evander Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the total cost. The data for various levels of production are as follows:

Units Produced	Total Costs
1,650	$189,000
3,400	193,200
4,650	294,000

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

Open spreadsheet

a. Determine the variable cost per unit and the total fixed cost. Variable cost fill in the blank 1 of 2$ Total fixed cost fill in the blank 2 of 2$

b. Based on part (a), estimate the total cost for 2,270 units of production. Total cost for 2,270 units fill in the blank 1 of 1$

par 2

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below.

Open spreadsheet

a. Coastal Company budgets sales of $1,280,000, fixed costs of $72,000, and variable costs of $320,000. What is the contribution margin ratio for Coastal Company? fill in the blank 1 of 1 %

b. If the contribution margin ratio for Bushner Company is 42%, sales were $658,000, and fixed costs were $207,270, what was the operating income? fill in the blank 1 of 1$

par 3

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Break-even sales and sales to realize operating income

For the current year ended March 31, Kadel Company expects fixed costs of $34,200,000, a unit variable cost of $930, and a unit selling price of $1,500.

a. Compute the anticipated break-even sales (units). fill in the blank 1 of 1 units

b. Compute the sales (units) required to realize operating income of $5,700,000. fill in the blank 1 of 1 units

part 4

For the coming year, Loudermilk Inc. anticipates fixed costs of $600,000, a unit variable cost of $75, and a unit selling price of $125. The maximum sales within the relevant range are $2,500,000.

a. Construct a cost-volume-profit chart on a sheet of paper. Indicate whether each of the following levels of sales (units or dollars) is in the operating profit area, operating loss area, or at the break-even point.

Levels of Sales	Classification
4,800 units	Break-Even PointOperating Loss AreaOperating Profit Area
12,000 units	Break-Even PointOperating Loss AreaOperating Profit Area
$1,500,000	Break-Even PointOperating Loss AreaOperating Profit Area
20,000 units	Break-Even PointOperating Loss AreaOperating Profit Area
$2,500,000	Break-Even PointOperating Loss AreaOperating Profit Area

b. Estimate the break-even sales (dollars) by using the cost-volume-profit chart constructed in part (a). $

50,000600,000720,0001,500,000

c. The graphic format permits the user to visually determine the fill in the blank 1 of 3

break-even pointfixed costs per unit

and the fill in the blank 2 of 3

operating profit or lossvariable costs per unit

for any given level of fill in the blank 3 of 3

salesunits

.

part 5

Margin of safety

a. If Kirwan Company, with a break-even point at $2,080,000 of sales, has actual sales of $3,200,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? 1. fill in the blank 1 of 2$ 2. fill in the blank 2 of 2%

b. If the margin of safety for Kirwan Company was 25%, fixed costs were $1,500,000, and variable costs were 60% of sales, what was the amount of actual sales (dollars)? (Hint: Determine the break-even in sales dollars first.) fill in the blank 1 of 1$

part 6

Asha Inc. and Samir Inc. have the following operating data:

Line Item Description	Asha Inc.	Samir Inc.
Sales	$2,500,000	$4,000,000
Variable costs	(1,500,000)	(2,500,000)
Contribution margin	$1,000,000	$1,500,000
Fixed costs	(800,000)	(900,000)
Operating income	$200,000	$600,000

a. Compute the operating leverage for Asha Inc. and Samir Inc. If required, round to one decimal place. Asha Inc. fill in the blank 1 of 2 Samir Inc. fill in the blank 2 of 2

b. How much would operating income increase for each company if the sales of each increased by 30%?

Company	Dollars	Percentage
Asha Inc.	$fill in the blank 3	fill in the blank 4%
Samir Inc.	$fill in the blank 5	fill in the blank 6%

c. The difference in the fill in the blank 1 of 3

increasesdecreases

of operating income is due to the difference in the operating leverages. Asha Inc.'s fill in the blank 2 of 3

higherlower

operating leverage means that its fixed costs are a fill in the blank 3 of 3

largersmaller

percentage of contribution margin than are Samir Inc.'s