Question

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 Utilities Cost	Total Machine Depreciation Cost
8,000 shelves	$88,000	$10,200	$120,000
16,000 shelves	176,000	19,400	120,000
32,000 shelves	352,000	37,800	120,000
40,000 shelves	440,000	47,000	120,000

1. Determine whether the costs in the table are variable, fixed, mixed, or none of these.

Lumber, Utilities, Depriciation

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 Costs = (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.

Cost	Fixed Portion of Cost	Variable Portion of Cost (per Unit)
Lumber	$	$
Utilities
Depreciation

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
January	4,360	units	$65,600
February	275		6,250
March	1,000		15,000
April	4,775		96,250
May	1,750		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
4,775

Answer 1

1
Lumber	Variable
Utilities	Mixed
Depreciation	Fixed
2
	Fixed Portion of Cost	Variable Portion of Cost (per Unit)
Lumber	0	11.00	=88000/8000
Utilities	1000	1.15
Depreciation	120000	0.00
Workings for Utilities:
	Utilities Cost	Units
High level	47000	40000
Low level	10200	8000
Change	36800	32000
Variable cost	1.15	=36800/32000
Fixed cost	1000	=47000-(40000*1.15)

Question-2
1
	Total Cost	Units
High level	4775	96250
Low level	275	6250
Change	4500	90000
Variable Cost per Unit	20	=90000/4500
Total Fixed Cost	750	=96250-(4775*20)
2
Number of Units Produced	Total cost
3500	70750	=750+(3500*20)
4360	87950	=750+(4360*20)
4775	96250	=750+(4775*20)