@ Integrative Exercise Cont Behavior and cost-Volume-Profit Analysis for Meny Glacier Hotel Using the High-Low Method to estimate Variable and Fixed Costs Located on Swiftcurrent take in Glacier National Park, Many Glacier Hotel was built in 1915 by the Great Northern Railway. In an effort to supplement 165 lodging revenue, the hotel decided in 20x1 to begin manufacturing and selling small wooden canoes decorated with symbols hand painted by Native Americans living near the park. Due to the great success of the canoes, the hotel began manufacturing and selling paddles as well in 20X3. Many hotel guests purchase a cance and paddles for use in self-guided tours at Switcurrent Lake Because production of the two products began in different years, the canons and paddles are produced in separate production facilities and employ different taborers. Each canoe sells for $500, and each padare sells for $50 A 20X3 fire, destroyed the hotel's accounting records, However, a new system put into place before the 20x4shaton provides the following aggregated data for the hotels cance and paddle manufacturing and marketing activises Manufacturing Data Number of Total Cance Canoes Manufacturing Year Manufactured Costs Number of Total Paddle Paddles Manufacturing Year Manufactured Costs JOX 250 5103.000 20x9 900 $38.500 20% 275 128,000 20x8 1,200 49,000 20 240 108,000 20X2 1,000 206 310 114,000 2006 1.100 44,000 45,500 52.000 20x5 350 141.500 20X5 1,400 20X4 400 140,000 20x4 1,700 66,500 Marketing Data Number of Total Canoe Canoes Marketing Year Costs 2000 250 $45,000 Number of Total Paddle Paddles Marketing Year Sold Costs Sold 900 20x9 20x8 $7,500 9,000 2008 275 1,200 43,000 44,000 20% 240 20x7 1,000 8,000 I 20X6 310 20X6 1.100 8.500 51.000 62,000 20X5 350 2005 1,400 10,000 2004 400 60,000 20X4 1,700 11,500 Required: 1. High Low Cost Estimation Method Use the high-low method to estimate the per unit variable costs and tooted costs for the canoe product line Variable cont peut 300 Total 80,000 Variable cost per unit 40 Total fixed cost 10,000 2. Cost-Volume-Profit Analysis, Single Product Setting Use CVP analysis to calculate the break-even point in units for 1. The cance product line only (le,single-product setting) BE units 400 canoes D. The paddle product line only (le, single-product setting) BE units 1,000 paddles 3. Cost-Volume-Profit Analysis, Multiple Product Setting The hotel's accounting system data show an average sales mix of approximately 300 canoes and 1.200 paldies each season. Significantly more paddles are sold relative to cances because some inexperienced canoe guests accidentally break one or more pedales, while other gousts purchase additional padates on presents for friends and relatives. In addition, for this multiple product CVP analysis, assume the existence of an additional $30,000 of common bed costs for a customer service hotline used for both cance and paddle customers. Use CVP analysis to calculate the break-even point in units for both the cage and paddle product lines combined the multiple product setting) Canoe BE units 500 cances Paddle BE units 2,000 paddles 4. Cost Classification 4. Cost Classification a. Classify the manufacturing costs, marketing costs, and customer service hotline costs either as production costs or period costs, All manufacturing costs are product costs. All marketing costs and customer hotine costs are period costs D. For the period costs, further classify them into either selling expenses or generat and administrative expenses. Marketing costs are selling oriented; therefore, the marketing period costs would be further classified as selling expenses relate to the customer service section of the value chain and would be further classified as general and administrative expense v 5. Senutivity Cost Volume-Pront Analysis and Production Versus Period Costs, Multiple Produa setting It both the variable and the production costs (refer to your answer to Requirement) associated with the canoe product in increased by 5% (heyond the estimate from the high-low analysis), now many canoes and paddles would need to be cold in order to com a target income of 596,000? Assume the same sales mix and additionat fixed costs as in Requirement Customer hotline costs ) X cances Canoe target income units Paddle target Income units padoles 6. Margin of safety Calculate the hotel's margin of safety (both in units and in sates dolls of Many Glacier Monsuming the same facts as in Requirements, and assuming that it is 700 canoes and 2.500 paddles next year 700 to MOS units above total units 125.000 Minsales dollars Marketing costs are selling oriented; therefore, the marketing period costs would be further assified as selling expenses Customer hotline costs relate to the customer service section of the value chain and would be further classined as general and administrative expense v 5. Sensitivity Cost-Volume-Profit Analysis and Production Versus Period Costs, Multiple- Product Setting If both the variable and fixed production couts (refer to your answer to Requirement 1 asociated with the canoe product line increased by 5% (beyond the estimate from the high-low analysis), how many canoes and paddles would need to be sold in order to com a target Income of $95,000? Assume the same sales mix and additional Mixed costs as in Requirement 3. Cance target Income units X Canoes Paddle target income units paddies 6. Margin of Safety Calculate the hotel's margin of safety (both in units and in sales dollars) for Male Glacier Hotel, assuming the same facts as in Requirements, and assuming that it sells 700 cances and 2,500 paddles next year 700 total MOS units above total de units 125,000 MOS in sales dollars