Question

Pleasant Pools Inc. has the following shipping costs for the last 6 months. Month Km. cost...

Pleasant Pools Inc. has the following shipping costs for the last 6 months.

Month Km. cost
April. 20,000. $11,000

May. 38,000. $15,000

June 42,000. $20,000

July 40,000 $17,000

August 45,000. $21,000

Sep. 32,000. $18,000

Required:

  1. Using the High Low Method, develop a cost equation for the shipping costs for Pleasant Pools Inc.
  2. Describe what a mixed cost is and explain why this problem demonstrates mixed costs.
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Variable cost per km = (Highest activity cost - Lowest activity cost)/(Highest activity - Lowest activity)

= (21,000-11,000)/(45,000-20,000)

= 10,000/25,000

= 0.4 per km

Fixed cost = Highest activity cost - Highest activity x Variable cost per km

= 21,000- 45,000 x 0.4

= 21,000-18,000

= $3,000

Cost equation = fixed cost + Variable cost per km x Number of km

= 3,000+ 0.4 x Number of km

A mixed cost is a costs in which some portion is fixed and some portion is variable. In the given problem, total shipping cost is a mixed cost since $3,000 of the shipping cost is a fixed cost and remaining cost is variable with respect to the number of kilo meters.

Kindly comment if you need further assistance. Thanks

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A company has the following historic pattern of total manufacturing costs versus total number of products...
A company has the following historic pattern of total manufacturing costs versus total number of products produced: MONTH UNITS TOTAL COSTS PRODUCED January 12,500 $430,000 February 17,000 $490,000 March 19,000 $512,000 April 10,000 $400,000 May 14,000 $434,000 June 9,000 $360,000 July 20,000 $550,000 August 21,000 $525,000 September 24,000 $605,000 October 23,000 $589,000 November 28,000 $702,000 December 18,000 $496,000 2) If I manufacture 35,000 units this month, what are my projected total costs? (10 POINTS) Total Costs =
Decision to Discontinue a Product On the basis of the following data, the general manager of...
Decision to Discontinue a Product On the basis of the following data, the general manager of Foremost Footwear Inc. decided to discontinue Children’s Shoes because it reduced income from operations by $10,000. What is the flaw in this decision if it is assumed that fixed costs would not be materially affected by the discontinuance? Foremost Footwear Inc. Product-Line Income Statement For the Year Ended April 30, 20Y7 Children's Shoes Men's Shoes Women's Shoes Total Sales $165,000 $300,000 $500,000 $965,000 Costs...
Decision to Discontinue a Product On the basis of the following data, the general manager of...
Decision to Discontinue a Product On the basis of the following data, the general manager of Foremost Footwear Inc. decided to discontinue Children’s Shoes because it reduced income from operations by $10,000. What is the flaw in this decision if it is assumed that fixed costs would not be materially affected by the discontinuance? Foremost Footwear Inc. Product-Line Income Statement For the Year Ended April 30, 20Y7 Children's Shoes Men's Shoes Women's Shoes Total Sales $165,000 $300,000 $500,000 $965,000 Costs...
Neptune Inc. uses a standard cost system and has the following information for the most recent...
Neptune Inc. uses a standard cost system and has the following information for the most recent month, April: Actual direct labor hours (DLHs) worked 17,000 Standard DLHs allowed for good output produced this period 18,000 Actual total factory overhead costs incurred $ 45,400 Budgeted fixed factory overhead costs $ 10,800 Denominator activity level, in direct labor hours (DLHs) 15,000 Total factory overhead application rate per standard DLH $ 2.70 The fixed overhead production volume variance in April for Neptune, Inc.,...
Neptune Inc. uses a standard cost system and has the following information for the most recent...
Neptune Inc. uses a standard cost system and has the following information for the most recent month, April: Actual direct labor hours (DLHs) worked 17,000 Standard direct labor hours allowed for good output produced this period 18,000 Actual total factory overhead costs incurred $45,400 Budgeted fixed factory overhead costs $10,800 Denominator activity level, in direct labor hours (DLHs) 15,000 Total factory overhead application rate per standard direct labor hour $2.70 The variable factory overhead efficiency variance for Neptune, Inc. in...
Slonaker Inc. has provided the following data concerning its maintenance costs: Machine-Hours Maintenance Cost   April 5,799...
Slonaker Inc. has provided the following data concerning its maintenance costs: Machine-Hours Maintenance Cost   April 5,799           $30,379           May 5,782           $30,289           June 5,764           $30,237           July 5,761           $30,233           August 5,717           $30,078           September 5,795           $30,360           October 5,809           $30,388           November 5,801           $30,378           December 5,785           $30,318         Management believes that maintenance cost is a mixed cost that depends on machine-hours. Required: Estimate the variable cost per machine-hour and...
Uptop Mining has compiled the following data to analyze utility costs: Month Machine Hours Utility Cost...
Uptop Mining has compiled the following data to analyze utility costs: Month Machine Hours Utility Cost January 200 300 February 325 440 March 400 480 April 410 490 May 525 620 June 680 790 July 820 840 August 900 900 Use the least square method to develop a formula for budgeting utility cost. *Don't us excel or any other software to solve this problem.
Croy Inc. has the following projected sales for the next five months: Month Sales in Units...
Croy Inc. has the following projected sales for the next five months: Month Sales in Units April 3,580 May 3,890 June 4,540 July 4,110 August 3,990 Croy’s finished goods inventory policy is to have 50 percent of the next month’s sales on hand at the end of each month. Direct materials costs $2.70 per pound, and each unit requires 2 pounds. Direct materials inventory policy is to have 50 percent of the next month’s production needs on hand at the...
Croy Inc. has the following projected sales for the next five months:    Month Sales in...
Croy Inc. has the following projected sales for the next five months:    Month Sales in Units April 3,570 May 3,890 June 4,510 July 4,110 August 4,000 Croy’s finished goods inventory policy is to have 60 percent of the next month’s sales on hand at the end of each month. Direct material costs $2.90 per pound, and each unit requires 2 pounds. Raw materials inventory policy is to have 50 percent of the next month’s production needs on hand at...
Croy Inc. has the following projected sales for the next five months: Month Sales in Units...
Croy Inc. has the following projected sales for the next five months: Month Sales in Units April 3,590 May 3,800 June 4,560 July 4,145 August 3,950 Croy’s finished goods inventory policy is to have 60 percent of the next month’s sales on hand at the end of each month. Direct material costs $2.60 per pound, and each unit requires 2 pounds. Raw materials inventory policy is to have 50 percent of the next month’s production needs on hand at the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT