Reference no: EM132084581

Problem 1

The following information is available for Alba Company's maintenance cost over the last four months.

Month	Maintenance hours	Maintenance cost
January	150	$6,000
February	120	$5,100
March	240	$8,100
April	210	$6,900

Required:
Use the high-low method to estimate both the fixed and variable component of its maintenance cost.

Problem 2

For each of the following, determine if the cost is variable or fixed.

		Variable Cost	Fixed Cost
Materials used in production
Production supervisor salary
Production line worker wages
Building rent
Commissions
Advertising costs
Maintenance costs
Real Estate Taxes
Shipping costs
Internet Service

Problem 3

Cost Description
1 Cost of renting production equipment on a monthly basis at a surfboard manufacturer
2 Cost of shipping bags of garden mulch to a retail garden store
3 Building rent at a sandwich shop
4 Cost of hard disk installed in a computer
5 Cost of fresh vegetables used at a sandwich shop
6 Janitorial wages at a surfboard manufacturer
7 Cost of advertising at a surfboard company
8 Clinical supplies at a doctor's office
9 Cost of leasing checkout equipment on a monthly basis at an electronics store
10 Cost of heating an electronics store

Required:

For each item above, indicate whether the cost is MAINLY fixed or variable

Problem 4

Shaw Supply Company sells a single product. Last year they sold 15,000 units and had the following average:

	Variable cost per unit	$2.45
	Fixed cost per unit	4.75
	Total cost per unit	$7.20

Required:

Determine the following amounts at a sales level of 18,000 units:

a. Total variable cost
b. Total fixed cost
c. Variable cost per unit
d. Fixed cost per unit
e. Total cost per unit

Problem 5

Farnor, Inc., would like to estimate the variable and fixed components of its electrical costs and has compiled the following data for the last four months of operations.

		Machine Hours	Electrical Cost
	January	30	$75
	February	42	$90
	March	35	$81
	April	20	$68

Required:

Use the high-low method:

1. Estimate both the fixed and variable component of its electrical cost.
2. If they expect 41 machine hours in May, what is their estimated total cost.