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Cost Behavior and Cost-Volume-Profit Analysis for Many Glacier Hotel Chapters Objectives Examples N 2-2 3-2 3-3 7-2 7-1 7-5 7-2 7-7 7-4 7-9 7-5 The purpose of this integrated exercise is to demonstrate the interrelationship between cost estimation techniques and subsequent uses of cost information. In particular, this exercise illustrates how the variable and fixed cost information estimated from a high-low analysis can be used in a single- and multiple-product CVP analysis. Using the High-Low Method to Estimate Variable and Fixed Costs Located on Swiftcurrent Lake in Glacier National Park, Many Glacier Hotel was built in 1915 by the Great Northern Railway. In an effort to supplement its 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 canoe and paddles for use in self-guided tours of Swiftcurrent Lake. Because production of the two products began in different years, the canoes and paddles are produced in separate production facilities and employ different laborers. Each canoe sells for $500, and each paddle sells for $50. A 20X3 fire destroyed the hotel's accounting records. However, a new system put into place before the 20X4 season provides the following aggregated data for the hotel's canoe and paddle manufacturing and marketing activities: Manufacturing Data: Number Total Canoe Number Total Paddle of Canoes Manufacturing of Paddles Manufacturing Year Manufactured Costs Year Manufactured Costs 20X9 250 $103,000 20X9 900 $38,500 20X8 275 128,000 20X8 1,200 49,000 20X7 240 108,000 20X7 1,000 44,000 20X6 310 114,000 20X6 1, 100 45,500 20X5 350 141,500 20X5 1,400 52,000 20X4 400 140,000 20X4 1,700 66,500Making the Connection Cost Behavior and Cost-Volume-Profit Analysis for Many Glacier Hotel Marketing Data: Total Canoe Total Paddle Number of Marketing Number of Marketing Year Canoes Sold Costs Year Paddles Sold Costs 20X9 250 $45,000 20X9 900 $ 7,500 20X8 275 43,000 20X8 1,200 9,000 20X7 240 44,000 20X7 1,000 8,000 20X6 310 51,000 20X6 1,100 8,500 20X5 350 62,000 20X5 1,400 10,000 20X4 400 60,000 20X4 1,700 11,500 Required: 1. High-Low Cost Estimation Method a/ Use the high-low method to estimate the per-unit variable costs and total fixed costs for the canoe product line. byUse the high-low method to estimate the per-unit variable costs and total fixed costs for the paddle product line. 2. Cost-Volume-Profit Analysis, Single-Product Setting Use CVP analysis to calculate the break-even point in units for 2. The canoe product line only (i.e., single-product setting) b. The paddle product line only (i.e., single-product setting)