Question :
EXERCISEs
169.Information for three costs incurred at Loranz, Inc. in the : 1302736
EXERCISEs
169.Information for three costs incurred at Loranz, Inc. in the first quarter follows:
MonthCostActivity
Auto expense January $17,60032,000 miles driven
February $16,225 29,500 miles driven
March $17,105 31,100 miles driven
Internet accessJanuary $2,350 12,800 gigs of data
February $2,820 13,400 gigs of data
March $2,390 11,000 gigs of data
Monitoring expense January $2,100 1,600 calls
February $2,100 1,200 calls
March $2,100 2,700 calls
Classify each cost and support your choice with justification of why your choice is considered as either fixed, variable, or mixed.
170.Harrell & Harrell wants to predict cell phone expense for the firm’s two partners at different levels of minutes used per month. The following data have been gathered for the past 6 months:
MonthCell Phone ExpenseMinutes Used
May $330 1,650
June $320 1,450
July $502 2,450
August $456 2,100
September $470 2,340
October $536 2,800
Determine the fixed and variable components of cell phone expense using the high-low method.
171.Winston Company has collected the following sales data for recent months:
MonthUnits SoldTotal Cost
June20,500 $20,960
July22,300 21,428
August18,750 20,505
September21,200 21,395
a.Using the high-low method, find variable cost per unit, total fixed costs, and the total cost equation.
b.What is the estimated cost for a month in which 21,600 units sold?
172.The Ritz Theater is interested in estimating fixed and variable costs. The following data are available:
MonthTotal CostNo. of Tickets Sold
January $172,000 20,000
February $174,000 19,500
March $180,500 25,500
April $170,500 21,500
May $190,000 25,000
June $188,000 26,500
a.Use the high-low method to estimate fixed cost per month and variable costs per ticket sold.
b.The Ritz Theater is considering an advertising campaign that is expected to increase annual sales by 2,000 tickets. Tickets are sold for $11 each. Ignoring the cost of the advertising campaign, what is the expected increase in profit associated with the advertising campaign?
173.Safe Ridge Foods is interested in estimating the cost involved in hiring new employees for its retail stores. The following information is available regarding the additional costs of operating the company’s Human Resource Department in May when there were 6 new hires.
Human Resource Department
Manager salaries $ 3,400
Staff hourly wages 21,600
Supplies 600
Equipment depreciation 1,100
Office rental space 1,800
Total $28,500
a.Use account analysis to determine total fixed cost per month and the variable cost per new hire.
b.The company is planning to hire 4 employees in June. Estimate the total cost of the Human Resources Department for June.
c.What is the expected incremental cost associated with hiring 3 more employee in June than were hired in May?
174.The following monthly data are available for Beach Nail Salon which provides manicures for nursing home patients who are charged $22 per manicure. Its unit variable costs are $16 and its total fixed expenses are $5,400. Revenue during April totaled 1,600 units.
a.How much is the break-even point in sales dollars for Beach Nail Salon?
b.How many manicures must the company provide in order to earn a profit of $3,180?
c.A new employee suggests that Beach Nail Salon sponsor a company softball team as a form of advertising. The cost to sponsor the team is $1,320. How many more manicures must be provided to cover this cost?
175.Dave’s Dogs sells steamed hot dogs for $2.50 each. The company provided the following units and total cost data concerning its hotdog sales for the last six months of 2014:
.
CostUnits
July $3,020 2,400
August 2,795 2,150
September 3,040 2,300
October 2,700 2,250
November 2,750 2,160
December 3,085 2,340
a.Use the high-low method to estimate fixed and variable costs.
b.Estimate total profit in a month when 2,200 hotdogs are sold.
c.Based on these estimates, calculate the number of hotdogs that must be sold to break-even.
d.How does linear regression differ from the high-low method in estimating fixed and variable costs?
or Waypoint 
.
