Cover-to-Cover Company is a manufacturer of shelving for books. The company has
ID: 2442931 • Letter: C
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.
1. Determine whether the costs in the table are variable, fixed, mixed, or none of these.
Variable Cost
Fixed Cost
Mixed Cost
None of these
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.
Units Total Total Total Machine Produced Lumber Cost Utilities Cost Depreciation Cost 4,000 shelves $48,000 $5,600 $130,000 8,000 shelves 96,000 10,200 130,000 16,000 shelves 192,000 19,400 130,000 20,000 shelves 240,000 24,000 130,000Explanation / Answer
Variable cost per unit remains same and changes as the level of units changed. Fixed cost does not change as level of units changed. Mixed costs are those costs which are combination of variable cost and fixed cost. 1) Variable cost Fixed Cost Mixed cost None of these Lumber Variable cost Utilities Mixed cost Depreciation Fixed Cost 2) Cost Fixed Portion of Cost Variable Portion of Cost (per Unit) Lumber 0 $ 12.00 Utilities $ 1,000 $ 1.15 Depreciation $ 1,30,000 0 Working: Step-1:Calculation of Variable cost per unit Lumber: Units produced Change in units Total lumber cost Change in cost Variable cost per unit Total Vaiable cos Fixed Cost (a) (b) c) (d) e=(d/b) f=a*e g=c-f 4,000 $ 48,000 8,000 4,000 $ 96,000 $ 48,000 $ 12.00 $ 96,000 0 16,000 8,000 $ 1,92,000 $ 96,000 $ 12.00 $ 1,92,000 0 20,000 4,000 $ 2,40,000 $ 48,000 $ 12.00 $ 2,40,000 0 Utilities: Units produced Change in units Total Utilities cost Change in cost Variable cost per unit Total Variable cost Fixed Cost (a) (b) c) (d) e=(d/b) f=a*e g=c-f 4,000 $ 5,600 8,000 4,000 $ 10,200 $ 4,600 $ 1.15 $ 9,200 $ 1,000 16,000 8,000 $ 19,400 $ 9,200 $ 1.15 $ 18,400 $ 1,000 20,000 4,000 $ 24,000 $ 4,600 $ 1.15 $ 23,000 $ 1,000 Depreciation Cost: Units produced Change in units Total Utilities cost Change in cost Variable cost per unit Total Variable cost Fixed Cost (a) (b) c) (d) e=(d/b) f=a*e g=c-f 4,000 $ 1,30,000 8,000 4,000 $ 1,30,000 0 0 0 $ 1,30,000 16,000 8,000 $ 1,30,000 0 0 0 $ 1,30,000 20,000 4,000 $ 1,30,000 0 0 0 $ 1,30,000