Problem 51A Analyze a mixed cost using high-low method and scatter diagram (L.O. 2)

Hear Right Company has identified certain variable and fixed costs in its production of hearing aids. Management wants you to divide one of its mixed costs into its fixed and variable portions. Here are the data for this cost:

Month

Units

Costs

January

20,800

$57,600

February

20,000

54,000

March

22,000

58,500

April

25,600

57,600

May

28,400

58,500

June

30,000

62,100

July

32,800

63,900

August

35,600

68,400

September

37,600

72,000

October

40,000

77,400

[image] Required

a. Using the high-low method, determine the total amount of fixed costs and the amount of variable cost per unit. Draw the cost line.

b. Prepare a scatter diagram, plot the actual costs, and visually fit a linear cost line to the points. Estimate the amount of total fixed costs and the variable cost per unit.

Problem 53A Compute level of sales needed to break even and earn a specified level of income (L.O. 4)

Jefferson Company has a plant capacity of 100,000 units, at which level variable costs are $720,000. Fixed costs are expected to be $432,000. Each unit of product sells for $12.

[image] Required

a. Determine the companys break-even point in sales dollars and units.

b. At what level of sales dollars would the company earn net income of $144,000?

c. If the selling price were raised to $14.40 per unit, at what level of sales dollars would the company earn $144,000?

Problem 54A Determine break-even point under varying assumptions (L.O. 4)

a. Determine the break-even point in sales dollars and units for Cowboys Company that has fixed costs of $63,000, variable cost of $24.50 per unit, and a selling price of $35.00 per unit.

b. Wildcats Company breaks even when sales are $280,000. In March, sales were $670,000, and variable costs were $536,000. Compute the amount of fixed costs.

c. Hoosiers Company had sales in June of $84,000; variable costs of $46,200; and fixed costs of $50,400. At what level of sales, in dollars, would the company break even?

d. What would the break-even point in sales dollars have been in (c) if variable costs had been 10% higher?

e. What would the break-even point in sales dollars have been in (c) if fixed costs had been 10% higher?

f. Compute the break-even point in sales dollars for Hoosiers Company in (c) under the assumptions of (d) and (e) together.

[image] Required

Answer each of the preceding questions.

Problem 55A Prepare cost-volume- profit chart; compute break-even sales and sales needed to achieve a specified level of income (L.O. 3, 4, 6)

See Right Company makes contact lenses. The company has a plant capacity of 200,000 units. Variable costs are $4,000,000 at 100% capacity. Fixed costs are $2,000,000 per year, but this is true only between 50,000 and 200,000 units.

[image] Required

a. Prepare a cost-volume-profit chart for See Right Company assuming it sells its product for $40 each. Indicate on the chart the relevant range, break-even point, and the areas of net income and losses.

b. Compute the break-even point in units.

c. How many units would have to be sold to earn $200,000 per year?

Problem 56A Compute break-even point in a multiproduct company (L.O. 4)

Mr. Feelds Cookies has fixed costs of $360,000 per year. It sells three types of cookies. The cost and revenue data for these products follow:

Cookies

Cream Cake

Goo Fill

Sweet Tooth

Sales

$64,000

$95,000

$131,000

Variable costs

38,400

55,100

66,000

[image] Required

Compute the break-even point in sales dollars.

Managerial Accounting: A Business Perspective, 9th Edition ISBN- 1930789033 (P5-1A,3,4,5,6) Please help with the problem listed.