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Question 2: (16 marks) (B1, C2) Part A: (6 marks) Ahlam Corporation accumulates the following data concerning a maintenance cost: Month Miles Driven Maintenance Cost
Question 2: (16 marks) (B1, C2) Part A: (6 marks) Ahlam Corporation accumulates the following data concerning a maintenance cost: Month Miles Driven Maintenance Cost January 10,000 $15,000 February 8,000 $14,500 March 9,000 $12,500 April 7,500 $12,000 May 9,500 $14,900 Instructions: Using the High-Low method of analyzing costs, answer the following questions: (2 marks each) 1. What is the estimated variable portion of maintenance costs per mile driven? 2. What is the estimated fixed maintenance cost each month? 3. If it is estimated that 15,000 miles driven will be run in July, what is the expected total maintenance cost for July? Part B: (10 marks) Manama Company manufactures thrte products. Information about the three product lines for the year is as follows: Galaxy 1 Galaxy 2 9 Galaxy 3 12 6 Product Selling price $ Variable costs $ Budgeted sales (units) 2 6 9 800 1,000 200 Assume that the sales mix is 'fixed' in these proportions. Fixed costs are $8,160. Instructions: 1. What is the breakeven sales volume? (6 marks) 2. What is the breakeven sales revenue? (4 marks)
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