Question
Quivers Inc. began operations on January 1 of the current year. The company produces eight-ounce bottles of jet wax called Ophelia Shine. The wax is
Quivers Inc. began operations on January 1 of the current year. The company produces eight-ounce bottles of jet wax called Ophelia Shine. The wax is sold wholesale in 12-bottle cases for $100 per case. There is a selling commission of $20 per case. The January direct materials, direct labor, and factory overhead costs are as follows:
DIRECT MATERIALS
Cost Behavior Units p/Case Cost p/Unit DirectMaterialsCost p/Case Cream base Variable 100 oz $0.02 $2.00
Natural oils Variable 30 oz $0.30 $9.00
Bottle (8 oz) Variable 12 bottles $0.50 $6.00
Total
$17.00
DIRECT LABOR
Dept Cost Behavior Time p/Case Labor Rate p/Hour Direct Labor Cost p/Case Mixing Variable 20 minutes $18.00 $6.00
Filling Variable 5 minutes $14.40 $1.20
Total 25 minutes $7.20
FACTORY OVERHEAD
Cost Behavior Total Cost
Utilities Mixed $600
Facility lease Fixed $14,000
Equipment depreciation Fixed $4300 Supplies Fixed $660
Total $19,560
I need to find the following:
1) Determine the fixed and variable portion of the utility cost using the high-low method
2) Determine the contribution margin per case
3) Determine the fixed costs per month, including the utility fixed cost
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