Variable costs and Fixed costs: Variable costs are those that increase or decrease with the general volume of work. Some of the examples of variable costs are sales commissions, labor costs, raw material costs etc. Fixed costs are those costs that remain fixed irrespective of the volume of work. Some of the examples of fixed costs are office rent, administrative expenses, depreciation etc. Mixed costs: Mixed costs are those costs which consist of both variable and fixed portions in them. Some of the examples of mixed costs are salaries and commissions, shipping expenses, etc. To classify: The expenses in the income statement of M& B Ltd as either variable fixed or mixed.

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Answer 1

Question

Chapter 2A, Problem 2A.7P

1.

To determine

Introduction:

Variable costs and Fixed costs:

Variable costs are those that increase or decrease with the general volume of work. Some of the examples of variable costs are sales commissions, labor costs, raw material costs etc. Fixed costs are those costs that remain fixed irrespective of the volume of work. Some of the examples of fixed costs are office rent, administrative expenses, depreciation etc.

Mixed costs:

Mixed costs are those costs which consist of both variable and fixed portions in them. Some of the examples of mixed costs are salaries and commissions, shipping expenses, etc.

To classify: The expenses in the income statement of M& B Ltd as either variable fixed or mixed.

2.

To determine

Introduction:

Variable costs and Fixed costs:

Variable costs are those that increase or decrease with the general volume of work. Some of the examples of variable costs are sales commissions, labor costs, raw material costs etc. Fixed costs are those costs that remain fixed irrespective of the volume of work. Some of the examples of fixed costs are office rent, administrative expenses, depreciation etc.

Mixed costs:

Mixed costs are those costs which consist of both variable and fixed portions in them. Some of the examples of mixed costs are salaries and commissions, shipping expenses, etc.

High-low method:

In this method, the highest level of activity and the lowest level of activity is taken and compared to determine the total costs at each level. The high-low method can be expressed as Y = a + bx

Where Y is Total mixed cost

A is the total fixed cost

B is the variable cost

X is the activity level

To separate: Each mixed expense into a variable and fixed elements using the high-low method.

3.

To determine

Introduction:

Income Statement:

A company’s financial statements include income statement, balance sheet and cash flow statement. An income statement shows the revenues, expenses and profit / loss earned over a period of time.

To redo: The M& B Ltd income statement at the 5000 unit activity level using contribution format.

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Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Assuming the sales mix given above, prepare a contribution format income statement showing both dollar and percent columns for e for the company as a whole. $ Island Novelties, Inc., Contribution Income Statement Hawaiian Fantasy Amount % 0 % % 0% $ Total Amount 0 0 % % % 0 %

QUESTION 2 (a) Explain the following terms: (1) margin of safety (ii) contribution margin (b) contribution to sales ratio (ii) (iv) (c) cost behaviour in a linear function (v) (d) break even analysis The Income statement for the year ending 31 December 2020 for Hagemaru Manufacturing is as follows: RM'000 RM'000 Sales (22,000 units) 3,300 Direct materials 726 Direct labour 374 Production overheads 798 (1,898) Gross profit 1,402 Selling overheads (1,042) Net profit 360 The variable production overheads were RM9 per unit while the variable selling overheads were RM11 per unit. Required: (i) Calculate contribution margin per unit. (i) (ii) Calculate breakeven point in units and in RM. (i) Calculate margin of safery in units for the latest financial year. The company has a capacity of 30,000 units per year. Management is not happy with the financial performance for the last year, and two courses of (iv) (v) (vi) action for the coming year were proposed in the recent management meeting:…

Number of units sold. Selling price per unit Unit cost of goods sold Variable selling expense per unit Total fixed selling expense Variable administrative expense per unit Total fixed administrative expense Cost of goods sold is a variable cost in this company. Required: a. Prepare a traditional format income statement for July. b. Prepare a contribution format income statement for July. Complete this question by entering your answers in the tabs below. 6,400 $ 600 $416 $ 56 $ 125,900 $ 24 $ 207,800

Answer 2

Question

Chapter 2A, Problem 2A.7P

1.

To determine

Introduction:

Variable costs and Fixed costs:

Variable costs are those that increase or decrease with the general volume of work. Some of the examples of variable costs are sales commissions, labor costs, raw material costs etc. Fixed costs are those costs that remain fixed irrespective of the volume of work. Some of the examples of fixed costs are office rent, administrative expenses, depreciation etc.

Mixed costs:

Mixed costs are those costs which consist of both variable and fixed portions in them. Some of the examples of mixed costs are salaries and commissions, shipping expenses, etc.

To classify: The expenses in the income statement of M& B Ltd as either variable fixed or mixed.

2.

To determine

Introduction:

Variable costs and Fixed costs:

Variable costs are those that increase or decrease with the general volume of work. Some of the examples of variable costs are sales commissions, labor costs, raw material costs etc. Fixed costs are those costs that remain fixed irrespective of the volume of work. Some of the examples of fixed costs are office rent, administrative expenses, depreciation etc.

Mixed costs:

Mixed costs are those costs which consist of both variable and fixed portions in them. Some of the examples of mixed costs are salaries and commissions, shipping expenses, etc.

High-low method:

In this method, the highest level of activity and the lowest level of activity is taken and compared to determine the total costs at each level. The high-low method can be expressed as Y = a + bx

Where Y is Total mixed cost

A is the total fixed cost

B is the variable cost

X is the activity level

To separate: Each mixed expense into a variable and fixed elements using the high-low method.

3.

To determine

Introduction:

Income Statement:

A company’s financial statements include income statement, balance sheet and cash flow statement. An income statement shows the revenues, expenses and profit / loss earned over a period of time.

To redo: The M& B Ltd income statement at the 5000 unit activity level using contribution format.

Expert Solution & Answer

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Answer 3

Question

Chapter 2A, Problem 2A.7P

1.

To determine

Introduction:

Variable costs and Fixed costs:

Variable costs are those that increase or decrease with the general volume of work. Some of the examples of variable costs are sales commissions, labor costs, raw material costs etc. Fixed costs are those costs that remain fixed irrespective of the volume of work. Some of the examples of fixed costs are office rent, administrative expenses, depreciation etc.

Mixed costs:

Mixed costs are those costs which consist of both variable and fixed portions in them. Some of the examples of mixed costs are salaries and commissions, shipping expenses, etc.

To classify: The expenses in the income statement of M& B Ltd as either variable fixed or mixed.

2.

To determine

Introduction:

Variable costs and Fixed costs:

Variable costs are those that increase or decrease with the general volume of work. Some of the examples of variable costs are sales commissions, labor costs, raw material costs etc. Fixed costs are those costs that remain fixed irrespective of the volume of work. Some of the examples of fixed costs are office rent, administrative expenses, depreciation etc.

Mixed costs:

Mixed costs are those costs which consist of both variable and fixed portions in them. Some of the examples of mixed costs are salaries and commissions, shipping expenses, etc.

High-low method:

In this method, the highest level of activity and the lowest level of activity is taken and compared to determine the total costs at each level. The high-low method can be expressed as Y = a + bx

Where Y is Total mixed cost

A is the total fixed cost

B is the variable cost

X is the activity level

To separate: Each mixed expense into a variable and fixed elements using the high-low method.

3.

To determine

Introduction:

Income Statement:

A company’s financial statements include income statement, balance sheet and cash flow statement. An income statement shows the revenues, expenses and profit / loss earned over a period of time.

To redo: The M& B Ltd income statement at the 5000 unit activity level using contribution format.

Expert Solution & Answer

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See solution

Answer 4

Question

Chapter 2A, Problem 2A.7P

1.

To determine

Introduction:

Variable costs and Fixed costs:

Variable costs are those that increase or decrease with the general volume of work. Some of the examples of variable costs are sales commissions, labor costs, raw material costs etc. Fixed costs are those costs that remain fixed irrespective of the volume of work. Some of the examples of fixed costs are office rent, administrative expenses, depreciation etc.

Mixed costs:

Mixed costs are those costs which consist of both variable and fixed portions in them. Some of the examples of mixed costs are salaries and commissions, shipping expenses, etc.

To classify: The expenses in the income statement of M& B Ltd as either variable fixed or mixed.

2.

To determine

Introduction:

Variable costs and Fixed costs:

Variable costs are those that increase or decrease with the general volume of work. Some of the examples of variable costs are sales commissions, labor costs, raw material costs etc. Fixed costs are those costs that remain fixed irrespective of the volume of work. Some of the examples of fixed costs are office rent, administrative expenses, depreciation etc.

Mixed costs:

Mixed costs are those costs which consist of both variable and fixed portions in them. Some of the examples of mixed costs are salaries and commissions, shipping expenses, etc.

High-low method:

In this method, the highest level of activity and the lowest level of activity is taken and compared to determine the total costs at each level. The high-low method can be expressed as Y = a + bx

Where Y is Total mixed cost

A is the total fixed cost

B is the variable cost

X is the activity level

To separate: Each mixed expense into a variable and fixed elements using the high-low method.

3.

To determine

Introduction:

Income Statement:

A company’s financial statements include income statement, balance sheet and cash flow statement. An income statement shows the revenues, expenses and profit / loss earned over a period of time.

To redo: The M& B Ltd income statement at the 5000 unit activity level using contribution format.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 2A, Problem 2A.7P

1.

To determine

Introduction:

Variable costs and Fixed costs:

Variable costs are those that increase or decrease with the general volume of work. Some of the examples of variable costs are sales commissions, labor costs, raw material costs etc. Fixed costs are those costs that remain fixed irrespective of the volume of work. Some of the examples of fixed costs are office rent, administrative expenses, depreciation etc.

Mixed costs:

Mixed costs are those costs which consist of both variable and fixed portions in them. Some of the examples of mixed costs are salaries and commissions, shipping expenses, etc.

To classify: The expenses in the income statement of M& B Ltd as either variable fixed or mixed.

2.

To determine

Introduction:

Variable costs and Fixed costs:

Variable costs are those that increase or decrease with the general volume of work. Some of the examples of variable costs are sales commissions, labor costs, raw material costs etc. Fixed costs are those costs that remain fixed irrespective of the volume of work. Some of the examples of fixed costs are office rent, administrative expenses, depreciation etc.

Mixed costs:

Mixed costs are those costs which consist of both variable and fixed portions in them. Some of the examples of mixed costs are salaries and commissions, shipping expenses, etc.

High-low method:

In this method, the highest level of activity and the lowest level of activity is taken and compared to determine the total costs at each level. The high-low method can be expressed as Y = a + bx

Where Y is Total mixed cost

A is the total fixed cost

B is the variable cost

X is the activity level

To separate: Each mixed expense into a variable and fixed elements using the high-low method.

3.

To determine

Introduction:

Income Statement:

A company’s financial statements include income statement, balance sheet and cash flow statement. An income statement shows the revenues, expenses and profit / loss earned over a period of time.

To redo: The M& B Ltd income statement at the 5000 unit activity level using contribution format.

Answer 6

Chapter 2A, Problem 2A.7P

1.

To determine

Introduction:

Variable costs and Fixed costs:

Variable costs are those that increase or decrease with the general volume of work. Some of the examples of variable costs are sales commissions, labor costs, raw material costs etc. Fixed costs are those costs that remain fixed irrespective of the volume of work. Some of the examples of fixed costs are office rent, administrative expenses, depreciation etc.

Mixed costs:

Mixed costs are those costs which consist of both variable and fixed portions in them. Some of the examples of mixed costs are salaries and commissions, shipping expenses, etc.

To classify: The expenses in the income statement of M& B Ltd as either variable fixed or mixed.

Answer 7

Chapter 2A, Problem 2A.7P

1.

To determine

Introduction:

Variable costs and Fixed costs:

Variable costs are those that increase or decrease with the general volume of work. Some of the examples of variable costs are sales commissions, labor costs, raw material costs etc. Fixed costs are those costs that remain fixed irrespective of the volume of work. Some of the examples of fixed costs are office rent, administrative expenses, depreciation etc.

Mixed costs:

Mixed costs are those costs which consist of both variable and fixed portions in them. Some of the examples of mixed costs are salaries and commissions, shipping expenses, etc.

To classify: The expenses in the income statement of M& B Ltd as either variable fixed or mixed.

Answer 8

2.

To determine

Introduction:

Variable costs and Fixed costs:

Variable costs are those that increase or decrease with the general volume of work. Some of the examples of variable costs are sales commissions, labor costs, raw material costs etc. Fixed costs are those costs that remain fixed irrespective of the volume of work. Some of the examples of fixed costs are office rent, administrative expenses, depreciation etc.

Mixed costs:

Mixed costs are those costs which consist of both variable and fixed portions in them. Some of the examples of mixed costs are salaries and commissions, shipping expenses, etc.

High-low method:

In this method, the highest level of activity and the lowest level of activity is taken and compared to determine the total costs at each level. The high-low method can be expressed as Y = a + bx

Where Y is Total mixed cost

A is the total fixed cost

B is the variable cost

X is the activity level

To separate: Each mixed expense into a variable and fixed elements using the high-low method.

Answer 9

2.

To determine

Introduction:

Variable costs and Fixed costs:

Variable costs are those that increase or decrease with the general volume of work. Some of the examples of variable costs are sales commissions, labor costs, raw material costs etc. Fixed costs are those costs that remain fixed irrespective of the volume of work. Some of the examples of fixed costs are office rent, administrative expenses, depreciation etc.

Mixed costs:

Mixed costs are those costs which consist of both variable and fixed portions in them. Some of the examples of mixed costs are salaries and commissions, shipping expenses, etc.

High-low method:

In this method, the highest level of activity and the lowest level of activity is taken and compared to determine the total costs at each level. The high-low method can be expressed as Y = a + bx

Where Y is Total mixed cost

A is the total fixed cost

B is the variable cost

X is the activity level

To separate: Each mixed expense into a variable and fixed elements using the high-low method.

Answer 10

3.

To determine

Introduction:

Income Statement:

A company’s financial statements include income statement, balance sheet and cash flow statement. An income statement shows the revenues, expenses and profit / loss earned over a period of time.

To redo: The M& B Ltd income statement at the 5000 unit activity level using contribution format.

Answer 11

3.

To determine

Introduction:

Income Statement:

A company’s financial statements include income statement, balance sheet and cash flow statement. An income statement shows the revenues, expenses and profit / loss earned over a period of time.

To redo: The M& B Ltd income statement at the 5000 unit activity level using contribution format.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 2A - Prob. 2A.1E Ch. 2A - Prob. 2A.2E Ch. 2A - Prob. 2A.3E Ch. 2A - Prob. 2A.4E Ch. 2A - Least-Squares Regression LO2-11 George Caloz **...Ch. 2A - Prob. 2A.6P Ch. 2A - Prob. 2A.7P Ch. 2A - High-Low Method; Predicting Cost LO2â€”10 Nova...Ch. 2A - Prob. 2A.9P Ch. 2A - Prob. 2A.10P

Solution Summary: The author explains the difference between variable and fixed costs. Variable costs are those that increase or decrease with the general volume of work.

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Chapter 2A Solutions