Mastery Problem: Cost$-$Volume$-$Profit AnalysisQuestion Content AreaCost BehaviorCover$-$to$-$Cover 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 $(1)$ and $(2)$ that follow.UnitsProducedTotalLumberCostTotalUtilitiesCostTotal MachineDepreciationCost$6,000$ shelves$$66,000$ $$8,400$ $$140,00012,000$ shelves$132,00015,300140,00024,000$ shelves$264,00029,100140,00030,000$ shelves$330,00036,000140,0001.$ Determine whether the costs in the table are variable, fixed, mixed, or none of these.LumberUtilitiesDepreciation$2.$ For each cost, determine the fixed portion of the cost, and the per$-$unit variable cost. If there is no amount or an amount is zero, enter $"0".$ Recall that, for N $=$ Number of Units Produced, Total Costs $=($Variable Cost Per Unit x N$)+$ Fixed Cost. Complete the following table with your answers. Round variable portion of cost $($per unit$)$ answers to two decimal places.CostFixed Portionof CostVariable Portionof Cost $($per Unit$)$Lumber$fill in the blank $09011$dfe$2018$fb$6\_4$$fill in the blank $09011$dfe$2018$fb$6\_5$Utilitiesfill in the blank $09011$dfe$2018$fb$6\_6$fill in the blank $09011$dfe$2018$fb$6\_7$Depreciationfill in the blank $09011$dfe$2018$fb$6\_8$fill in the blank $09011$dfe$2018$fb$6\_9$Feedback AreaFeedbackReview the definitions for fixed, variable, and mixed costs, and the relationships between units produced and total cost for each type of cost$.$ Recall that the high$-$low method may be used to separate a cost into its fixed and variable components.Question Content AreaHigh$-$LowBiblio Files Company is the chief competitor of Cover$-$to$-$Cover 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 $(1)$ through $(3)$ that follow.Units ProducedTotal CostJanuary$4,360$units$$65,600$February$2756,250$March$1,00015,000$April$6,775103,750$May$1,75032,500$June$3,01548,0001.$ From the data previously provided, help Biblio Files Company estimate the fixed and variable portions of its total costs using the high$-$low method. Recall that Total Costs $=($Variable Cost Per Unit x Number of Units Produced$)+$ Fixed Cost. Complete the following table.Total Fixed CostVariable Cost per Unit$fill in the blank e$76$ed$0$ffe$04$b$06$e$\_1$$fill in the blank e$76$ed$0$ffe$04$b$06$e$\_22.$ With your Total Fixed Cost and Variable Cost per Unit from the high$-$low method, compute the total cost for the following values of N $($Number of Units Produced$).$Number ofUnits ProducedTotal Cost$3,500$$fill in the blank e$76$ed$0$ffe$04$b$06$e$\_34,360$fill in the blank e$76$ed$0$ffe$04$b$06$e$\_46,775$fill in the blank e$76$ed$0$ffe$04$b$06$e$\_53.$ Why does the total cost computed for $4,360$ units not match the data for January?a$.$ The high$-$low method is accurate only for months in which production is at full capacity.b$.$ The high$-$low method only gives accurate data when fixed costs are zero.c$.$ The high$-$low method gives a formula for the estimated total cost and may not match levels of production other than the highest and lowest.d$.$ The high$-$low method gives accurate data only for levels of production outside the relevant range.Feedback AreaFeedbackReview the high$-$low method, and use the smallest and largest levels of production in your computation.Question Content AreaContribution MarginReview the contribution margin income statements for Cover$-$to$-$Cover Company and Biblio Files Company on their respective Income Statements. Complete the following table from the data provided on the income statements. Each company sold $84,800$ units during the year.Cover$-$to$-$CoverCompanyBiblio FilesCompanyContribution margin ratio $($percent$)$fill in the blank f$053$c$1$f$41$fb$6065\_1\%$fill in the blank f$053$c$1$f$41$fb$6065\_2\%$Unit contribution margin$fill in the blank f$053$c$1$f$41$fb$6065\_3$ $fill in the blank f$053$c$1$f$41$fb$6065\_4$ Break$-$even sales $($units$)$fill in the blank f$053$c$1$f$41$fb$6065\_5$ fill in the blank f$053$c$1$f$41$fb$6065\_6$ Break$-$even sales $($dollars$)$$fill in the blank f$053$c$1$f$41$fb$6065\_7$ $fill in the blank f$053$c$1$f$41$fb$6065\_8$ Feedback AreaFeedbackReview the definitions of contribution margin ratio and unit contribution margin. Also review the formulas for break$-$even in terms of units sold and sales dollars.Question Content AreaIncome Statement $-$ Cover$-$to$-$CoverCover$-$to$-$Cover CompanyContribution Margin Income StatementFor the Year Ended December $31,20$Y$8$Sales$$424,000$ Variable costs: Manufacturing expense$$254,400$ Selling expense$21,200$ Administrative expense$63,600(339,200)$ Contribution margin$$84,800$ Fixed costs: Manufacturing expense$$5,000$ Selling expense$4,000$ Administrative expense$12,200(21,200)$Operating income$$63,600$ Income Statement $-$ Biblio FilesBiblio Files CompanyContribution Margin Income StatementFor the Year Ended December $31,20$Y$8$Sales$$424,000$ Variable costs: Manufacturing expense$$169,600$ Selling expense$16,960$ Administrative expense$67,840(254,400)$ Contribution margin$$169,600$ Fixed costs: Manufacturing expense$$88,000$ Selling expense$8,000$ Administrative expense$10,000(106,000)$Operating income$$63,600$ Sales MixBiblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings.Type ofBookshelfSales Priceper UnitVariable Costper UnitBasic$$5\mathrm{.}00$ $$1\mathrm{.}75$ Deluxe$9\mathrm{.}008\mathrm{.}10$ The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called Combined, the unit contribution margin for the Combined product would be $$2\mathrm{.}31.$ Fixed costs for the upcoming year are estimated at $$337,260.$ Recall that the totals of all the sales mix percents must be $100\%.$ Determine the amounts to complete the following table.Type of BookshelfPercent of Sales MixBreak$-$Even Sales in UnitsBreak$-$Even Sales in DollarsBasicfill in the blank $4$cdc$7$f$068$fdafc$6\_1\%$fill in the blank $4$cdc$7$f$068$fdafc$6\_2$$fill in the blank $4$cdc$7$f$068$fdafc$6\_3$Deluxefill in the blank $4$cdc$7$f$068$fdafc$6\_4\%$fill in the blank $4$cdc$7$f$068$fdafc$6\_5$$fill in the blank $4$cdc$7$f$068$fdafc$6\_6$Feedback AreaFeedbackReview the definition of break$-$even point.Recall that the Combined unit contribution margin is given by $[($Basic unit contribution margin$)$ x $($Basic percent of sales mix$)]+[($Deluxe unit contribution margin$)$ x $($Deluxe percent of sales mix$)].$ Since these percents must add up to $100\%,$ we have the following:$($Basic percent of sales mix$)+($Deluxe percent of sales mix$)=100\%,$ so that$($Deluxe percent of sales mix$)=100\%-($Basic percent of sales mix$)$Question Content AreaTarget ProfitRefer again to the income statements for Cover$-$to$-$Cover Company and Biblio Files Company on their respective Income Statement. Note that both companies have the same sales and net income. Answer questions $(1)-(3)$ that follow, assuming that all data for the coming year is the same as the current year, except for the amount of sales$\mathrm{.}1.$ If Cover$-$to$-$Cover Company wants to increase its profit by $$20,000$ in the coming year, what must their amount of sales be$?$$fill in the blank. If Biblio Files Company wants to increase its profit by $$20,000$ in the coming year, what must their amount of sales be$?$$fill in The blank