ICBA UOS Question 3: (5 marks) below i a. Presented incurred by Brooklyn Company
ID: 2593590 • Letter: I
Question
ICBA UOS Question 3: (5 marks) below i a. Presented incurred by Brooklyn Company s the production data for the first six months of the year showing the mixed costs July August $7,500 11,250 11,500 11,700 13,500 12,850 4,000 9,500 October 10,500 12,000 10,000 Brooklyn Company uses the high-low method to analyze mixed costs. Calculate the total cost at an operating level of 10,000 units? b. Simba Company makes metal signs for businesses and residences. These signs are made of sheet metal, which the owner paints by hand. The owner has a good sense of his labor and materials cost behavior but he is concerned that he does not have good measure of other support costs. Currently, he predicts support costs to be 40% of the cost of materials Close investigation of the business reveals that $50 per direct labor hour is a more plausible and reliable support cost relationship. Consider estimated support costs of the following two signs that Simba Company makes Small Sign Large Sign $200 $500 Materials cost Direct labor hours Support costs What is the amount of support costs assigned to the Small and Large Sings using direct labor hours as the cost driver?Explanation / Answer
Calculate variable cost per unit :
Variable cost per unit = Change in cost/change in unit
= (13500-7500)/(12000-4000)
Variable cost per unit = 0.75 per unit
Fixed cost = 13500-(12000*.75) = 4500
Total cost for 10000 unit = (10000*.75+4500) = 12000