Reference no: EM13876966

1. Your parents are preparing a special party. They expect to incur the following costs:

Dinner (per person)	$15
Program and favors (per person)	$3
Band	$2,000
Tent rentals	$5,000
Cleaning crew	$1,000

Your parents would like to charge $30 per person. How many tickets would your parents need to sell to break-even?

Assume that only 200 people are expected to attend. What price per ticket must be charged to break-even?

2. The following maintenance hours and maintenance costs were collected for the months of January through June:

                       Hours of maintenance      Maintenance costs

January                625                                         $7,950

February              450                                         $7,400

March                   700                                          $8,275

April                       550                                         $7,625

May                       775                                          $9,100

June                      850                                          $9,800

1) Using the high/low method calculate the variable cost per unit.

2) Using the high/low method calculate the total fixed costs.

3) Using the results above, what is the expected maintenance costs for July if the estimated maintenance hours are 900?

3. Escareno Corporation has provided its contribution format income statement for June.

The company produces and sells a single product

	Sales (8,400 units)	$764,400
	Variable expenses	445,200
	Contribution margin	319,200
	Fixed expenses	250,900
	Net operating income	$ 68,300

If the company sells 8,000 units, what will its contribution margin be?

4. Wilson Company prepared the following preliminary budget assuming no advertising expenditures:

	Selling price	$10 per unit
	Unit sales	100,000
	Variable expenses	$700,000
	Fixed expenses	$200,000

Based on a market study, the company estimated that it could increase the unit selling price by 10% and increase the unit sales volume by 10% if $100,000 were spent on advertising. Assuming that these changes are incorporated in its budget, what should be the budgeted net operating income?

5. Larson Brothers, Inc., used the high-low method to derive its cost formula for electrical power cost. According to the cost formula, the variable cost per unit of activity is $3 per machine-hour. Total electrical power cost at the high level of activity was $7,600 and at the low level of activity was $7,300. If the high level of activity was 1,200 machine hours, then the low level of activity was:

6. The following costs are budgeted for Chana Corp: Total variable costs 350,000 Total fixed costs 240,000. Total costs 590,000. The costs above are based on a level of activity of 10,000 units. Assuming that this activity is within the relevant range, what would total costs be for Ghana if the level of activity was 12,000 units?