Question

Gumbo Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $138.80 per unit.
  

Sales volume (units)	6,000	7,000
Cost of sales	$369,000	$430,500
Selling and administrative costs	$407,400	$418,600

the cost of sales is a variable cost and selling and administrative costs are mixed costs.

Per unit “cost of sales”=$61.5

The variable cost per unit for “selling and administrative costs” which are mixed cost is $11.20.

True

False

2 points   

QUESTION 8

4. Gumbo Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $138.80 per unit.
  

Sales volume (units)	6,000	7,000
Cost of sales	$369,000	$430,500
Selling and administrative costs	$407,400	$418,600

the "cost of sales" is a variable cost and "selling and administrative costs" are mixed costs.

Per unit “cost of sales”=61.5. and per unit portion of "selling and administrative costs" equal $11.20.

The cost formula for “selling and administrative costs” will be  Y=340,200 +11.20(X)

True

False

Answer 1

ans: TRUE

if mixed cost given then

variable cost per unit=change in cost/change in units

=4,18,600-4,07,400/7000-6000

  =11,200$/1,000

=11.2$

Question 8

Ans:TRUE

given selling and administrative costs are mixed cost is given

in that variable cost per unit=11.2$

fixed cost=Total cost-11.2$*Number of units

=4,07,400-11.2$*6,000units

=3,40,200

so above equation for calculating total mixed cost (fixed+variable)

y=3,40,000+11.2(X) is true

hear Y=Total selling and administrative cost

        x=Number of units