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PROBLEM 1
The cost accountant of SINGTO CORPORATION determined that material cost is a mixed cost with units produced as the appropriate cost driver for the variable cost within the relevant range of 6,000 to 16,500 units produced. Data for the corporation's six departments are as follows:
Department A
Material Cost=P 357,240.00
Unit Cost=13,200.00
Department B
Material Cost=313,900.00
Units Cost=11,000.00
Department C
Material Cost=390,730.00
Unit Cost=14,900.00
Department D
Material Cost=272,530.00
Unit Cost=8,900.00
Department E
Material Cost=363,150.00
Unit Cost=13,500.00
Department F
Material Cost=412,400.00
Unit Cost=16,000.00
Please help me on these questions:
A. Using high-low method, use a cost formula for Material Cost following the format Y = mx + b, where y is the total material cost and x is the unit produced. =
B. Determine the total variable material cost at 14,500 units. =
C. Determine the total material cost at 15,400 units. =
D. Determine the total material cost at 17,000 units. =
PROBLEM 2
PERAYA Incorporated, which produces and sells a single product, has provided the following contribution format income statement for March:
Sales (5,000 units)=P 720,000
Variable expenses=180,000
Contribution margin=P 540,000
Fixed expenses=104,400
Net operating income=P 435,600
Please help me on these questions:
A. Contribution margin per unit =
B. Contribution margin ratio =
C. Proposed net operating income if sales increased by 1,500 units. =
D. Proposed net operating income is sales decreased by P 20,000.00 and fixed expense increased by P25,200.00 =
Expert Solution
1) Using High-Low Method:
[A]
Y = mx + b
Y = 19.70 x + 97200
[B]
Total Variable cost = 14500 units * 19.7 = 285,650
[C]
Total Material cost = 97200 + (15400 * 19.70) = 400,580
[D]
Total material cost = 97200 + (17000 * 19.70) = 432,100
2)
[A] Computation of Contribution Margin per Unit:
Contribution Margin per Unit = Contribution Margin/Number of Units Sold
= 540,000/5,000 units
= P 108
[B] Computation of Contribution Margin Ratio:
Contribution Margin Ratio = Contribution Margin/Sales
= 540,000/720,000
= 75%
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