Question
High-Low Method for a Service Company Boston Railroad decided to use the high-low method and operating data from the past six months to estimate the
High-Low Method for a Service Company Boston Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Boston Railroad is a measure of railroad operating activity, termed gross-ton miles, which is the total number of tons multiplied by the miles moved. Transportation Costs Gross-Ton Miles January $1,044,100 246,000 February 1,164,100 275,000 March 822,700 178,000 April 1,116,100 266,000 May 936,100 214,000 June 1,200,100 289,000 Determine the variable cost per gross-ton mile and the total fixed cost. Variable cost (If required, round to two decimal places.) $fill in the blank 1 per gross-ton mile Total fixed cost $fill in the blank 2
2.
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Break-Even Sales
BeerBev, Inc., reported the following operating information for a recent year:
Net sales $10,944,000 Cost of goods sold $2,736,000 Selling, general, and administrative expenses 570,000 $3,306,000 Income from operations $ 7,638,000* *Before special items
In addition, assume that BeerBev sold 57,000 barrels of beer during the year. Assume that variable costs were 75% of the cost of goods sold and 50% of selling, general, and administration expenses. Assume that the remaining costs are fixed. For the following year, assume that BeerBev expects pricing, variable costs per barrel, and fixed costs to remain constant, except that new distribution and general office facilities are expected to increase fixed costs by $29,100.
When computing the cost per unit amounts for the break-even formula, round to two decimal places. If required, round your final answer to one decimal place.
a. Compute the break-even number of barrels for the current year. fill in the blank 1 barrels
b. Compute the anticipated break-even number of barrels for the following year. fill in the blank 2 barrels
High-Low Method
The manufacturing costs of Kellam Industries for the first three months of the year follow:
Total Costs | Units Produced | |||
January | $410,400 | 2,600 | units | |
February | 534,890 | 4,140 | ||
March | 638,400 | 6,600 |
Using the high-low method, determine (a) the variable cost per unit and (b) the total fixed cost.
a. Variable cost per unit | $fill in the blank 1 |
b. Total fixed cost | $fill in the blank 2 |
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