Phillips Company manufactures air-conditioning units for commercial buildings and has noticed considerable variation in shipping expenses from month to month as per the data below:

Month Units Shipped Total Shipping Expense

January 4 $2,200

February 4 $3,100

March 5 $2,600

April 2 $1,500

May 3 $2,200

June 6 $3,000

July 8 $3,600

1 Which two months should be used if Phillips wants to estimate the behaviour of shipping expenses using the high-low method?

2 Using the high-low method, what is the variable cost per unit to ship air conditioners?

3 What is the fxed cost of shipping air conditioners?

4 What is the cost formula for shipping expenses?

5 If seven air conditioners are shipped in August, estimate the total shipping expenses. 2 of 3 02/17/21

6 If nine air conditioners are shipped in September, estimate the fxed shipping expenses.

7 If 10 air conditioners are shipped in October, estimate the variable shipping expense.

8 If the air conditioners have an average sales price of $5,000, variable manufacturing costs are $2,500 per unit, variable manufacturing overhead is $500 per unit, and variable selling and administration costs (excluding shipping) are $200 per unit, what is the contribution margin per unit? 9 Given the facts in part 3-8, estimate the total contribution margin for August if seven air conditioners are produced and sold.

10 Given the facts in part 8, if total fxed costs (excluding shipping) are $3,000 per month, estimate operating income for August if seven air conditioners are produced and sold. 1

11 By how much would the total contribution margin decrease in August if Phillips decides to offer its customers a 5% price discount on the seven units?

12 By how much would operating income decrease in August if Phillips decides to offer its customers a 5% price discount on the seven units?

13 Estimate variable shipping expenses to ship 12 air conditioners if the shipping company reduces the variable cost per unit by 10% for each unit shipped in excess of 10 units.

14 Given the facts in part 3-13, estimate total shipping expenses for 12 air conditioners.

15 Given the facts in part 3-13, are variable shipping expenses linear or non-linear? Explain.