Assignment: hw set #2 – e3.10, e3.19, e16.16, e16.20

Assignment: HW Set #2 – E3.10, E3.19, E16.16, E16.20

1.

Exercise 3.10

Cost Behavior

 

SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that its total annual overhead costs can be represented by the following formula: Overhead cost = $543,000 + $1.34X, where X equals number of smokers. Last year, SmokeCity produced 20,000 smokers. Actual overhead costs for the year were as expected.

 

Required:

1. What is the driver for the overhead activity?

_________________

 

For questions 2-4, Enter the final answers rounded to the nearest dollar.

 

2. What is the total overhead cost incurred by SmokeCity last year?

$ _________________

 

3. What is the total fixed overhead cost incurred by SmokeCity last year?

$ _________________

 

4. What is the total variable overhead cost incurred by SmokeCity last year?

$ _________________

 

For questions 5-8, round your answers to the nearest cent. Use those rounded figures in subsequent computations, if necessary.

5. What is the overhead cost per unit produced?

$ _________________ per unit

6. What is the fixed overhead cost per unit?

$ _________________ per unit

7. What is the variable overhead cost per unit?

$ _________________ per unit

8. Recalculate Requirements 5, 6, and 7 for the following levels of production: (a) 19,500 units and (b) 21,600 units.

19,500 Units 21,600 Units

Unit cost

$

_________________

$

_________________

 

Unit Fixed cost

_________________

_________________

Unit variable cost

_________________

_________________

The reason the unit costs changed in the way they did is because:

_________________

2.

Exercise 3.19

 

High-Low Method, Cost Formulas

 

The controller of the South Charleston plant of Ravinia, Inc., monitored activities associated with materials handling costs. The high and low levels of resource usage occurred in September and March for three different resources associated with materials handling. The number of moves is the driver.

The total costs of the three resources and the activity output, as measured by moves for the two different levels, are presented as follows:

 

 

Forklift depreciation:

 

 

Number of Moves

Total Cost

Low

6,500

$1,800

High

20,000

$1,800

     

Indirect labor

   

 

Number of Moves

Total Cost

Low

6,500

$74,250

High

20,000

$1,35,000

     

Fuel and oil for forklift:

 

 

Number of Moves

Total Cost

Low

6,500

$4,940

High

20,000

$15,200

 

 

 

Required:

If required, round your answers to two decimal places. Enter a “0” if required.

1. Determine the cost behaviour formula of each resource. Use the high-low method to assess the fixed and variable components.

Forklift depreciation:

V $ _________________

F $ _________________

Y $ _________________

Indirect labor:

V $ _________________

F $ _________________

Y $ _________________ + $ _________________ X

Fuel and oil for forklift:

V $ _________________

F $ _________________

Y $ _________________ X

2. Using your knowledge of cost behavior, predict the cost of each item for an activity output level of 9,000 moves. For interim computations, carry amounts out to two decimal places. Round your final answer to the nearest dollar.

Forklift depreciation $ _________________

Indirect labor $ _________________

Fuel and oil for forklift

$ _________________

3. Construct a cost formula that can be used to predict the total cost of the three resources combined. If required, round your answers to two decimal places.

Materials handling cost = $ _________________ + $ _________________ X

Using this formula, predict the total materials handling cost if activity output is 9,000 moves.

Y = $ _________________

 

3.

Exercise 16.16

CVP: Before- and After-Tax Targeted Income

 

Head-Gear Company produces helmets for bicycle racing. Currently, Head-Gear charges a price of $230 per helmet. Variable costs are $80.50 per helmet, and fixed costs are $1,255,800. The tax rate is 25 percent. Last year, 14,000 helmets were sold.

Required:

1. What is Head-Gear’s net income for last year?

$ _________________

2. What is Head-Gear’s break-even revenue? In your computations, round the contribution margin ratio to two decimal places.

$ _________________

 

3. Suppose Head-Gear wants to earn before-tax operating income of $900,000. How many units must be sold? Round to the nearest whole unit.

_________________ units

4. Suppose Head-Gear wants to earn after-tax net income of $650,000. How many units must be sold? Round to the nearest whole unit.

_________________ units

5. Suppose the income tax rate rises to 35 percent. How many units must be sold for Head-Gear to earn after-tax income of $650,000? Round to the nearest whole unit.

_________________ units

 

4.

Exercise 16.20

Contribution Margin, CVP, Net Income, Margin of Safety

Nail Glow, Inc., produces novelty nail polishes. Each bottle sells for $5.90. Variable unit costs are as follows:

Fixed overhead costs are $34,475 per year. Fixed selling and administrative costs are $6,720 per year. Nail Glow sold 35,000 bottles last year.

Required:

1. What is the contribution margin per unit for a bottle of nail polish?

$ _________________ per unit

What is the contribution margin ratio? Round your answer to four decimal places.

_________________

2. How many bottles must be sold to break even?

_________________ bottles

What is the break-even sales revenue? Round your answer to the nearest dollar, if rounding is required.

$ _________________

3. What was Nail Glow’s operating income last year?

$ _________________

4. What was the margin of safety in revenue?

$ _________________

5. Suppose that Nail Glow, Inc., raises the price to $6.50 per bottle, but anticipated sales will drop to 28,750 bottles. What will the new break-even point in units be? Round your answer up to the nearest whole number of units.

_________________

Should Nail Glow raise the price?

 

_________________

Calculate your paper price
Pages (550 words)
Approximate price: -

Why Choose Us

Quality Papers

We value our clients. For this reason, we ensure that each paper is written carefully as per the instructions provided by the client. Our editing team also checks all the papers to ensure that they have been completed as per the expectations.

Professional Academic Writers

Over the years, our Acme Homework has managed to secure the most qualified, reliable and experienced team of writers. The company has also ensured continued training and development of the team members to ensure that it keep up with the rising Academic Trends.

Affordable Prices

Our prices are fairly priced in such a way that ensures affordability. Additionally, you can get a free price quotation by clicking on the "Place Order" button.

On-Time delivery

We pay strict attention on deadlines. For this reason, we ensure that all papers are submitted earlier, even before the deadline indicated by the customer. For this reason, the client can go through the work and review everything.

100% Originality

At Essay USA, all papers are plagiarism-free as they are written from scratch. We have taken strict measures to ensure that there is no similarity on all papers and that citations are included as per the standards set.

Customer Support 24/7

Our support team is readily available to provide any guidance/help on our platform at any time of the day/night. Feel free to contact us via the Chat window or support email: support@acmehomework.com.

Try it now!

Calculate the price of your order

We'll send you the first draft for approval by at
Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

Essay USA has stood as the world’s leading custom essay writing services providers. Once you enter all the details in the order form under the place order button, the rest is up to us.

Essays

Essay Writing Services

At Essay USA, we prioritize on all aspects that bring about a good grade such as impeccable grammar, proper structure, zero-plagiarism and conformance to guidelines. Our experienced team of writers will help you completed your essays and other assignments.

Admissions

Admission and Business Papers

Be assured that you’ll definitely get accepted to the Master’s level program at any university once you enter all the details in the order form. We won’t leave you here; we will also help you secure a good position in your aspired workplace by creating an outstanding resume or portfolio once you place an order.

Editing

Editing and Proofreading

Our skilled editing and writing team will help you restructure you paper, paraphrase, correct grammar and replace plagiarized sections on your paper just on time. The service is geared toward eliminating any mistakes and rather enhancing better quality.

Coursework

Technical papers

We have writers in almost all fields including the most technical fields. You don’t have to worry about the complexity of your paper. Simply enter as much details as possible in the place order section.