Cover-to-Cover Company is a manufacturer of shelving for books. The company has
ID: 2569228 • 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
Points:
3 / 3
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.
Points:
0 / 6
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Review the definitions for fixed, variable, and mixed costs, and the relationships between units produced and total cost for each type of cost. Recall that the high-low method may be used to separate a cost into its fixed and variable components.
High-Low
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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.
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 Units Produced) + Fixed Cost. Complete the following table.
Points:
0 / 2
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).
Points:
0 / 3
3. Why does the total cost computed for 4,360 units not match the data for January in the table at the top of this panel?
The High-Low method gives a formula for the estimated total cost and may not match levels of production other than the highest and lowest.
The High-Low method only gives accurate data when fixed costs are zero.
The High-Low method is accurate only for months in which production is at full capacity.
The High-Low method gives accurate data only for levels of production outside the relevant range.
Points:
0 / 1
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Review the High-Low method, and use the smallest and largest levels of production in your computation.
Contribution Margin
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Review the contribution margin income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statements panels. Complete the following table from the data provided in the income statements. Each company sold 84,800 units during the year.
Points:
0 / 8
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Review the definitions of contribution margin ratio and unit contribution margin. Also review the formulas for break-even in terms of units sold and sales dollars.
Sales Mix
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Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings.
The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called “Combined,” the unit contribution margin for the Combined product would be $2.31. Fixed costs for the upcoming year are estimated at $346,962. Recall that the totals of all the sales mix percents must be 100%. Determine the amounts to complete the following table.
Points:
0 / 6
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Review the definition of break-even point.
Recall that the Combined unit contribution margin is given by [(Basic unit contribution margin) x (Basic percent of sales mix)] + [(Deluxe unit contribution margin) x (Deluxe percent of sales mix)]. Since these percents must add up to 100%, we have the following:
(Basic percent of sales mix) + (Deluxe percent of sales mix) = 100%, so that
(Deluxe percent of sales mix) = 100% - (Basic percent of sales mix)
Target Profit
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Refer again to the income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statement panels. Note that both companies have the same sales and net income. Answer questions (1) - (3) that follow, assuming that all data for the coming year is the same as the current year, except for the amount of sales.
1. If Cover-to-Cover Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be?
Units Total Total Total Machine Produced Lumber Cost Utilities Cost Depreciation Cost 12,000 shelves $144,000 $14,800 $140,000 24,000 shelves $288,000 $28,600 $140,000 48,000 shelves $576,000 $56,200 $140,000 60,000 shelves $720,000 $70,000 $140,000Explanation / Answer
Units Total Total Total Machine Produced Lumber Cost Utilities Cost Depreciation Cost 12,000 shelves $144,000 $14,800 $140,000 24,000 shelves $288,000 $28,600 $140,000 48,000 shelves $576,000 $56,200 $140,000 60,000 shelves $720,000 $70,000 $140,000 ans 1 Variable Cost Fixed Cost Mixed Cost None of these Lumber Variable Utilities Mixed Depreciation Fixed ans 2 Cost Fixed Portion of Cost Variable Portion of Cost (per Unit) Lumber 12 (144000/12000) Utilities 1000 1.15 Depreciation 140000 0 Utilities High low method (70000-14800)/(60000-12000) 1.150 Fixed cost 70000-(60000*1.15) 1000 y=1000+1.15x ans Biblo High low method (111250-6250)/(5475-225) 20 Fixed cost 111250-(5475*20) 1750 y=1750+20x Total fixed cost Varaible cost per unit 1750 20 Number of Units Produced Total Costs 3,500 71750 1750+(3500*20) 4,360 88950 1750+(4360*20) 5,475 111250 1750+(5475*20) There are two different question. I have answered the first one and two parts of second question