Question
Voltas Company manufactures air conditioning units for commercial buildings and has noticed considerable variation in shipping expenses from month to month as per the data
Voltas Company manufactures air conditioning units for commercial buildings and has noticed considerable variation in shipping expenses from month to month as per the data below: Months Unit Shipped Total Shipping Expenses Jan 4 $ 2,200 Feb 4 $ 3,100 Mar 5 $ 2,600 Apr 2 $ 1,500 May 3 $ 2,200 Jun 6 $ 3,000 Jul 8 $ 3,600 1. Which two methods should be used if Voltas wants to estimate the behavior of shipping expenses using the high low method? 2. Using he high low method what is the variable cost per unit to ship air conditioners? 3. What is the fixed cost of shipping the air conditioners? 4. What is cost formula for shipping expenses? 5. If seven air conditioners are shipped in August, estimate the total shipping expenses. 6. If nine air conditioners are shipped in September, estimate the fixed shipping expenses. 7. If ten air conditioners are shipped in October, estimate the variable shipping expenses. 8. If the air conditioners have an average sales price of $5,000, variable manufacturing cost are $2,500 per unit, variable manufacturing overhead is $500 per unit, and variable selling & administration costs (excluding shipping) are $200 per unit, what is the contribution margin per unit? 9. Given the fact in Q 8 estimate the contribution margin for August if seven air conditioners are produced and sold. 10. Given the fact in Q 8 , if the total fixed costs (excluding shipping) are $3,000 per month, estimate operating income for August is seven air conditioners are produced and sold.
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