Exercise 3-6

Chapter 3 Cost Behaviour Analysis and Use r EXERCISE L Account Analysis Method (LOBI med manufactures des for industrial Most of their c aree ed costs. However, an a n alysis shows the following i s an Account Analysis Production supervision SOS fired 205 fired Sales staff wages ....... 705 fixed Quality control inspections 90 fixed "The 30% variable portion relates to sales commissions based on total sales **SOS of manufactured units are inspected each year 2016 Total Cost $150,000 $ 60,000 $200.000 S40.000 med: 4000 on In 2016 Anand Limited produced and sold 500 drones at $2.000 each. Required: 1. Management expects to sell 700 drones in 2017, does not anticipate any cost increases due to it tion, and plans to maintain the sales price of $2.000 per drone. Estimate total costs for each of the mixed cost items above. Be sure to show the variable and fixed components of the total cost 2. Assuming direct material costs are $500 per unit and direct labour costs are $250 per unit calculate the expected contribution margin for 2017 hased on sales of 700 drones. EXERCISE 3-7 Cost Behaviour: High-Low Method ILO We Deliver operates a fleet of delivery trucks in Halifax. Analysis shows that if a truck is drive 105,000 kilometres during a year, the average operating cost is 11.4 cents (S0114) per kilometre. If a truck is driven only 70,000 kilometres during a year, the average operating cost increases to 134 cm (S0.134) per kilometre. Required: 1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation 2. Express the variable and fixed costs in the formywa+AX 3. If a truck was driven 80,000 kilometres during a year, what total cost would you incurred? to be EXERCISE 3-8 High-Low Method; Predicting Cost 102 The number of blood tests performed and the related costs over the last nine erformed and the related costs over the last nine months in Brentie Hospital are given below: Month Blood Tests Performed Blood Test Casts January February..... March April... 3.125 SCO 2.500 $14.000 $14.500 Slim