Answered step by step
Verified Expert Solution
Question
1 Approved Answer
M 7 CNOW Critical Thinking ( Ch . 2 0 , 2 1 ) Question Content Area Mastery Problem: Cost - Volume - Profit Analysis
M CNOW Critical Thinking Ch
Question Content Area
Mastery Problem: CostVolumeProfit Analysis
Question Content Area
Cost Behavior
CovertoCover Company is a manufacturer of shelving for books. The company has compiled the following cost data, and wants your help in determining the cost behavior. After reviewing the data, complete requirements and that follow.
Units
Produced Total
Lumber
Cost Total
Utilities
Cost Total Machine
Depreciation
Cost
shelves $ $ $
shelves
shelves
shelves
Determine whether the costs in the table are variable, fixed, mixed, or none of these.
Lumber
Variable Cost
Utilities
Mixed Cost
Depreciation
Fixed Cost
For each cost, determine the fixed portion of the cost, and the perunit variable cost. If there is no amount or an amount is zero, enter Recall that, for N Number of Units Produced, Total Costs Variable Cost Per Unit x N Fixed Cost. Complete the following table with your answers. Round variable portion of cost per unit answers to two decimal places.
Cost Fixed Portion
of Cost Variable Portion
of Cost per Unit
Lumber $fill in the blank fe
$fill in the blank fe
Utilities fill in the blank fe
fill in the blank fe
Depreciation fill in the blank fe
fill in the blank fe
Question Content Area
HighLow
Biblio Files Company is the chief competitor of CovertoCover Company in the bookshelf business. Biblio Files is analyzing its manufacturing costs, and has compiled the following data for the first six months of the year. After reviewing the data, answer questions through that follow.
Units Produced Total Cost
January units $
February
March
April
May
June
From the data previously provided, help Biblio Files Company estimate the fixed and variable portions of its total costs using the highlow method. Recall that Total Costs Variable Cost Per Unit x Number of Units Produced Fixed Cost. Complete the following table.
Total Fixed Cost Variable Cost per Unit
$fill in the blank aefccb
$fill in the blank aefccb
With your Total Fixed Cost and Variable Cost per Unit from the highlow method, compute the total cost for the following values of N Number of Units Produced
Number of
Units Produced
Total Cost
$fill in the blank aefccb
fill in the blank aefccb
fill in the blank aefccb
Why does the total cost computed for units not match the data for January?
a The highlow method is accurate only for months in which production is at full capacity.
b The highlow method only gives accurate data when fixed costs are zero.
c The highlow method gives a formula for the estimated total cost and may not match levels of production other than the highest and lowest.
d The highlow method gives accurate data only for levels of production outside the relevant range.
c
Question Content Area
Contribution Margin
Review the contribution margin income statements for CovertoCover Company and Biblio Files Company on their respective Income Statements. Complete the following table from the data provided on the income statements. Each company sold units during the year.
CovertoCover
Company Biblio Files
Company
Contribution margin ratio percent fill in the blank cafedfafa
fill in the blank cafedfafa
Unit contribution margin $fill in the blank cafedfafa
$fill in the blank cafedfafa
Breakeven sales units fill in the blank cafedfafa
fill in the blank cafedfafa
Breakeven sales dollars $fill in the blank cafedfafa
$fill in the blank cafedfafa
Question Content Are
Income Statement CovertoCover
CovertoCover Company
Contribution Margin Income Statement
For the Year Ended December Y
Sales $
Variable costs:
Manufacturing expense $
Selling expense
Administrative expense
Contribution margin $
Fixed costs:
Manufacturing expense $
Selling expense
Administrative expense
Operating income $
Income Statement Biblio Files
Biblio Files Company
Contribution Margin Income Statement
For the Year Ended December Y
Sales $
Variable costs:
Manufacturing expense $
Selling expense
Administrative expense
Contribution margin $
Fixed costs:
Manufacturing expense $
Selling expense
Administrative expense
Operating income $
Sales Mix
Please help me understand this
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started