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. Units Produced Total Lumber Cost Total Utilities Cost Total Machine Depreciation Cost 6,000 shelves $72,000 $8,400 $125,000 12,000 shelves 144,000 15,300 125,000 24,000 shelves 288,000 29,100 125,000 30,000 shelves 360,000 36,000 125,000 1. Determine whether the costs in the table are variable, fixed, mixed, or none of these. Lumber Utilities Depreciation 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. Round variable portion of cost (per unit) answers to two decimal places. Cost Fixed Portion of Cost Variable Portion of Cost (per Unit) Lumber $fill in the blank be9a95feb00a004_4 $fill in the blank be9a95feb00a004_5 Utilities fill in the blank be9a95feb00a004_6 fill in the blank be9a95feb00a004_7 Depreciation fill in the blank be9a95feb00a004_8 fill in the blank be9a95feb00a004_9
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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.
Units Produced |
Total Lumber Cost |
Total Utilities Cost |
Total Machine Cost |
6,000 shelves | $72,000 | $8,400 | $125,000 |
12,000 shelves | 144,000 | 15,300 | 125,000 |
24,000 shelves | 288,000 | 29,100 | 125,000 |
30,000 shelves | 360,000 | 36,000 | 125,000 |
1. Determine whether the costs in the table are variable, fixed, mixed, or none of these.
Lumber |
|
Utilities |
|
Depreciation |
|
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. Round variable portion of cost (per unit) answers to two decimal places.
Cost |
Fixed Portion of Cost |
Variable Portion of Cost (per Unit) |
Lumber | $fill in the blank be9a95feb00a004_4 | $fill in the blank be9a95feb00a004_5 |
Utilities | fill in the blank be9a95feb00a004_6 | fill in the blank be9a95feb00a004_7 |
Depreciation | fill in the blank be9a95feb00a004_8 | fill in the blank be9a95feb00a004_9 |
Question Content Area
High-Low
Biblio Files Company is the chief competitor of Cover-to-Cover Company in the bookshelf business. Biblio Files is analyzing its
Units Produced | Total Cost | ||
January | 4,360 | units | $65,600 |
February | 275 | 6,250 | |
March | 1,000 | 15,000 | |
April | 7,775 | 156,250 | |
May | 1,750 | 32,500 | |
June | 3,015 | 48,000 |
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 Number of Units Produced) + Fixed Cost. Complete the following table.
Total Fixed Cost | Variable Cost per Unit |
$fill in the blank 7a0fe7064f8101e_1 | $fill in the blank 7a0fe7064f8101e_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).
Number of Units Produced |
Total Cost |
3,500 | $fill in the blank 7a0fe7064f8101e_3 |
4,360 | fill in the blank 7a0fe7064f8101e_4 |
7,775 | fill in the blank 7a0fe7064f8101e_5 |
3. Why does the total cost computed for 4,360 units not match the data for January?
a. The high-low method is accurate only for months in which production is at full capacity.
b. The high-low method only gives accurate data when fixed costs are zero.
c. 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.
d. The high-low method gives accurate data only for levels of production outside the relevant range.
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