Professional Documents
Culture Documents
Variable Costs
Shipping per unit $ 5.00 $ 5.00 $ 5.00
Mixed Costs
Cost of Goods Sold per unit $ 66.25 $ 65.56 $ 65.00
Salaries and Commisions per unit $ 19.50 $ 18.67 $ 18.00
2) Using the high-low method, separate each of the mixed expenses into variable and fixed elements. State the cost equatio
cost. You may have more than one mixed cost.
Salaries/Commissions Cost of goods sold
Variable Rate $ 12.00 $ 60.00
Fixed Cost $ 30,000.00 $ 25,000.00
Cost Formula Y=12x+30,0000 Y=60x+25,000
It's Ok to type the cost formula directly into the cells, although you will not receive cred
not calculated using Excel cell references and formulas.
3. Morrisey and Brown expect to sell 6,000 units in October. Prepare an absorption income statement for October (assume
the same number of units). Do not combine expenses but show each expense separately in the appropriate category.
5) Calculate the contribution margin per unit. Calculate the variable cost ratio.
Contribution margin per/unit $ 23.00
Variable Cost 77%
6) Calculate how many units would need to be sold to generate $75,000 in target income.
Round up to the nearest unit using the Excel Round Up function.
Target Income $ 75,000
Number of Units
7) Give one example of how Morrisey and Brown could increase projected operating income without increasing
Morrisey could have increased operating income by lowering their opporating cost. Two options would be to pay lower salaries
8) Morrisey and Brown are considering a multimedia advertising campaign that should increase sales by $
ad campaign will cost an additional $7,500 per month and will be considered a fixed cost. How will the ad
product cost? How will the increase in fixed costs affect the break-even point? Explain.
The product cost will increase by 7,500 per month because of the campaign. The break even point would be lower because the campaign w
They are having to pay for it.
t the total fixed costs per month for each month. For
h mixed cost per month.
although you will not receive credit if the variable rate and fixed costs are
.