Problem 1. Identifying cost behavior

At the various activity levels shown, Jensen Company incurred the following costs.

Units Sold 20 40 60 80 100 Type of cost

a. Total Rent Cost 3,200 3,200 3,200 3,200 3,200

b. Cost per unit of merchandise sold 90 90 90 90 90

c. Total Cost of Shopping bags 2 4 6 8 10

d. Total Insurance Cost 480 480 480 480 480

e. Total salary cost 1,200 1,600 2,000 2,400 2,800

f.Total cost of goods sold 1,800 3,600 5,400 7,200 9,000

g. Depreciation cost per unit 240 120 80 60 48

Required

Identify each of these costs as fixed or variable.

Problem 2. Art on You, Inc. has agreed to pay a well-known artist a $20,000 commission for the right to exhibit his work for one month. Determine the total commission cost and the commission cost per person if 2,000, 3,000, or 5,000 people attend the exhibition. Is the commission cost fixed or variable?

Number of People Attending 2,000 3,000 5,000

Total Commission Cost

Average Commission Cost Per Person

Type of cost:

Problem 3. Determining fixed cost per unit

Kenel Corporation incurs the following annual fixed costs.

ItemCost

Depreciation$60,000

Officers' salaries$135,000

Long-term lease$58,000

Property taxes$11,000

Required

Determine the total fixed cost per unit of production, assuming that Henke produces 5,000, 5,500, or 6,000 units.

Number of units produced 5,000 5,500 6,000

Total fixed cost

Fixed Cost per unit

Problem 4. Determining total variable cost

The following variable production costs apply to goods made by Jefferson Manufacturing

ItemCost

Materials$6.00

Labor$3.00

Variable Overhead$0.75

Total$9.75

Required

Determine the total variable production cost, assuming that Jefferson makes 7,000, 18,000, or 30,000 units.

Number or units produced 7,000 18,000 30,000

Total variable cost

Variable cost per unit

Problem 5. Break-even point

Mendez Corporation sells products for $35 each that have variable costs of $15 per unit. Connor's annual fixed cost is $270,000.

Required

Determine the break-even point in units and dollars.

Break-even point in units=

Break-even point in dollars ($) =

Confirm your response using the model:

Income Statement X Units

Revenues ($____ x_____) $_______ $_35___

Variable Cost ($____ x ______) (_______) __15___

Contribution Margin $________ $_20__

Fixed Cost (_______)

Net Income$________

Problem 6. Desired profit

Nagel Company incurs annual fixed costs of $85,000. Variable costs for Nagel's product are $25 per unit, and the sales price is $40.00 per unit. Nagel desires to earn an annual profit of $39,000.

Required

Determine the sales volume in dollars and units required to earn the desired profit.

Desired Profit=

(Round)

Confirm your response using the model:

Income Statement X Units

Revenues ($____ x_____) $_______ $____

Variable Cost ($____ x ______) (_______) _____

Contribution Margin $________ $____

Fixed Cost (_______)

Net Income $________

Note: By confirming your answer, you can have a $5 to $10 difference.