Question

Cost Behavior 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. Total Total Total Machine Units Lumber Utilities Depreciation Produced Cost Cost Cost 15,000 shelves $180,000 $19,250 $140,000 30,000 shelves 360,000 36,500 140,000 60,000 shelves 720,000 71,000 140,000 75,000 shelves 900,000 88,250 140,000 1. Determine whether the costs in the table are variable, fixed, mixed, or none of these Lumber Variable Cost Utilities Mixed Cost Depreciation Fixed Cost 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 "o". 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. Fixed Portion Variable Portion Cost of Cost of Cost (per unit) Lumber 12 Utilities Depreciation

Answer 1

Cover to Cover Company:

2)

Cost	Fixed portion	Variable portion
Lumbar	0	12
Utilities	2,000 {19250-(15000*1.15)}	1.15 (36500-19250)/15000
Depreciation	140,000	0

Biblio Files Company:

	Total Cost	Units
High level	133750	8800
Low level	6250	300
Difference	127500	8500
Unit variable cost	15	=127500/8500
Fixed cost	1750	=133750-(8800*15)
1
Total Fixed Cost	Variable Cost per Unit
1750	15
2
Number of Units Produced	Total Cost
3500	54250	=1750+(3500*15)
4360	67150	=1750+(4360*15)
8800	133750	=1750+(8800*15)

3

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.

Data is missing for Contribution Margin