suine-Prolit Analysis Cost Behavior Cover-to-Cover Company is a manufacturer of shelving for books. The company has compiled the following cost data, and wants your help in determining the cost behavior. After reviewing the data, complete requirements (1) and (2) that follow. Units Produced Total Lumber Cost Total Total Machine Utilities Depreciation Cost Cost 11,000 shelves $110.000 $13,650 $120,000 220,000 22,000 shelves 44,000 shelves 26,300 120,000 440,000 51,600 120,000 55,000 shelves 550,000 64,250 120,000 1. Determine whether the costs in the table are variable, fixed, mixed, or none of these. Lumber Variable Cost Utilities Mixed cost Depreciation Fixed Cost 2. For each cost, determine the fixed portion of the cost, and the per-unit variable cost. If there is no amount or an amount is zero, enter "0". Recall that, for N - Number of Units Produced, Total Casts - (Variable Cost Per Unit x N) Fixed Cost. Complete the following table with your answers. Round variable portion of cost (per unit) answers to two decimal places. Fixed Portion Variable Portion Cost of Cost of Cost (per Unit) Lumber $ 0 10.00 utilities 1,000 1.15 Depreciation 145,000 x 0.00 My We Review the definitions for fixed, variable, and mixed costs, and the relationships between units produced and total cost for each type of cost. Recall that the high-low method may be used to separate a cost into its fired and variable components Check My Work All work saved. EU Pratite High-Low Biblio Files Company is the chief competitor of Cover-to-Cover Company in the bookshelf business. Biblio Files is analyzing its manufacturing costs, and has compiled the following data for the first six months of the year. After reviewing the data, answer questions (1) through (3) that follow. Units Produced Total Cost 4,360 units $65,600 January February 300 6,250 March 11,000 15,000 April 8,800 133,750 May 1.250 32,500 June 3,015 48,000 1. From the data previously provided, help Biblio Files Company estimate the fixed and variable portions of its total costs using the high-low method. Recall that Total Costs = (variable Cost Per Unit x Number of Units Produced) - Fixed Cost. Complete the following table. Total Fixed Cost Variable Cost per Unit 2. With your Total Fixed Cost and Variable Cost per Unit from the high-low method, compute the total cost for the following values of N (Number of Units Produced). Number of Units Produced Total Cost 3,500 4,360 8,800 3. Why does the total cost computed for 4,360 units not match the data for January? a. The high-low method is accurate only for months in which production is at full capacity. b. The high-low method only gives accurate data when fixed costs are zero. c. The high-low method gives a formula for the estimated total cost and may not match levels of production other than the highest and lowest. d. The high-low method gives accurate data only for levels of production outside the relevant range. Che Vuurk All work saved. Emanu Save and be CSA UMUTUONYM Review the contribution margin income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statements. Complete the following table from the data provided on the income statements. Each company sold 83,800 units during the year. Cover-to-Cover Company Biblio Files Company Contribution margin ratio (percent) % % Unit contribution margin Break-even sales (units) Break-even sales (dollars) Feedback Check My Won Review the definitions of contribution margin ratio and unit contribution margin. Also review the formulas for break-even in terms of units sold and sales dollars. Income Statement - Cover-to-Cover Cover-to-Cover Company Contribution Margin Income Statement For the Year Ended December 31, 2048 Sales $419.000 Variable costs Manufacturing expense $251.400 Selling expense 20,950 62,850 Administrative expense Contribution margin (335,200) $83,800 Fixed costs: Manufacturing expense Selling expense $5,000 4,000 Administrative expense 11,950 (20,950) Check My Work All work saved. Email Instructor Save and E Submit Alert for Grading Administrative expense 11,950 (20,950) Operating income $62,850 Income Statement - Biblio Files Biblio Files Company Contribution Margin Income Statement For the Year Ended December 31, 2018 Sales $419,000 Variable costs: Manufacturing expense $167,600 Selling expense 16,760 Administrative expense 67,040 (251,400) Contribution margin $167,600 Fixed costs: Manufacturing expense $65,750 Selling expense 8,000 Administrative expense 10,000 (104,750) Operating income $62,850 Sales Mix Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves Basic and Deluxe. The company has compiled the following estimates for the new product offerings. Sales Price Variable Cost Type of Bookshelt per Unit per Unit Basic $5.00 $1.75 Deluxe 9.00 8.10 The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called "Combined," the unit contribution margin for the Combined product would be $2.31. Fixed costs for the upcoming year are estimated at $346,500. Recall that the totals of all the sales mix percents must be 100%. Determine the amounts to complete the following table. Type of Percent of Break Even Break-Even Sales Check My Viork All work saved. EmaleTTO Save and E Same The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called "Combined. unit contribution margin for the Combined product would be $2.31. Fixed costs for the upcoming year are estimated at $346,500. Recall that the totals of all the sales mix percents must be 100%. Determine the amounts to complete the following table. Type of Bookshelf Percent of Sales Mix Break-Even Sales in Units Break-Even Sales in Dollars Basic 96 Deluxe % Check My Work Review the definition of break-even point. Recall that the Combined unit contribution margin is given by [(Basic unit contribution margin) x (Basic percent of sales mix)] + [(Deluxe unit contribution margin) x (Deluxe percent of sales mix)]. Since these percents must add up to 100%, we have the following: (Basic percent of sales mix) + (Deluxe percent of sales ix) = 100%, so that (Deluxe percent of sales mix) = 100% - (Basic percent of sales mix) Target Profit Refer again to the income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statement. Note that both companies have the same sales and net income. Answer questions (1) - (3) that follow, assuming that all data for the coming year is the same as the current year, except for the amount of sales. espective 1. If Cover-to-Cover Company wants to increase its profit by $30,000 in the coming year what must their amount of sales be? 2. If Biblio Files Company wants to increase its profit by $30,000 in the coming year, what must their amount of sales be? 3. What would explain the difference between your answers for (1) and (2) a. Biblio Files Company has a higher contribution margin ratio, and so more of each sales dollar is available to cover fixed costs and provide operating income. Check My Work