Finacial Accouting 1-7

There are 7 problems to complete for this chapter. Please complete in Excel complete with formulas and cell references. Problem 1 Classify each cost as being either variable or fixed with respect to the number of units produced and sold. Also classify each cost as either a selling and administrative or a product cost. Prepare your answer sheet as shown below. Place an X in the appropriate columns to show the proper classification of each cost. Cost Behavior Cost Item Variable Fixed Period (Selling and Admin. Cost) Product Cost 1. Hamburger buns at McDonalds 2. Advertising by a dental office 3. Apples processed and canned by Del Monte 4. Shipping canned apples from a Del Monte plant to customers 5. Insurance on a Bausch & Lomb factory producing contact lenses 6. Insurance on IBM's corporate headquarters 7. Salary of a supervisor overseeing production of printers at Hewlett-Packard 8. Commissions paid to automobile salespersons 9. Depreciation of factory lunchroom facilities at a General Electric Plant 10. Steering wheels installed in BMW Page 1 of 4 Problem 2 Johnson Ltd. Is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labor-hours worked in the factory, Total factory overhead costs at high and low levels of activity for years are given below: Level of Activity Low High 50,000 75,000 Direct labor hours Total factory overhead costs $14,250,000 $17,625,000 The factory overhead costs above consist of indirect materials, rent and maintenance. The company has analyzed these costs at the 50,000-hour level of activity as follows: The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 50,000-hour level of activity as follows: Indirect materials (variable) $5,000,000 6,000,000 Rent (fixed) Maintenance (mixed) 3,250,000 $14,250,000 Total factory overhead costs To have data available for planning, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $17,625,000 factory overhead cost at the high level of activity consists of maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $17,625,000 consists of indirect materials and rent. Think about the behavior of variable and fixed costs!) 2. Using the high-low method, estimate a cost formula for maintenance. 3. What total factory overhead costs would you expect the company to incur at an operating level of 70,000 direct labor-hours? Problem 3 Werner Brothers, Inc., used the high-low method to derive its cost formula for electrical power cost. According to the cost formula, the variable cost per unit of activity is $2 per machine-hour. Total electrical power cost at the high level of activity was $9,400 and at the low level of activity was $9,000. If the high level of activity was 2,200 machine hours, then what is the machine hours at the low level of activity? Problem 4 Electrical costs at one of Kantola Corporation's factories are listed below: February March April May June July August September October Machine Hours 3,570 3,580 3,553 3,627 3,625 3,565 3,548 3,542 3,593 Electrical Cost $36,405 $36,493 $36,302 $36,833 $36,800 $36,366 $36,237 $36,213 $36,577 Management believes that electrical cost is a mixed cost that depends on machine-hours. Use the high- low method to estimate the variable and fixed components of this cost. Compute the variable component first, rounding off to the nearest whole cent. Then compute the fixed component, rounding off to the nearest whole dollar. Problem 5 Hadrana Corporation reports that at an activity level of 5,500 units, its total variable cost is $275,330 and its total fixed cost is $86,240. What would be the total variable cost at an activity level of 5,600 units? Assume that this level of activity is within the relevant range. Problem 6 Hadrana Corporation reports that at an activity level of 5,500 units, its total variable cost is $275,330 and its total fixed cost is $86,240. What would be the average fixed cost per unit at an activity level of 5,600 units? Assume that this level of activity is within the relevant range. Problem 7 At a sales volume of 30,000 units, Carne Company's total fixed costs are $30,000 and total variable costs are $45,000. The relevant range is 20,000 to 40,000 units. If Carne Company were to sell 32,000 units, the total expected cost would be how much