1. Thomas Train has collected the following information over the last six months.
Month Units produced Total costs
March 10,000 $25,600
April 12,000 26,200
May 18,400 29,200
June 13,000 26,450
July 12,000 26,000
August 15,000 26,500
Using the high-low method, what is the variable cost per unit?
2. Rooter's Cleaning Services provided data concerning the costs incurred to clean hotel rooms for which hotel customers pay $150 per night. Data for the past 7 months are as follows:
|
|
January
|
February
|
March
|
April
|
May
|
June
|
July
|
|
Number of rooms cleaned
|
250
|
160
|
200
|
150
|
270
|
170
|
260
|
|
Cleaning cost
|
$6,450
|
$4,060
|
$5,100
|
$4,100
|
$7,000
|
$4,200
|
$6,530
|
How much are estimated monthly variable costs using the high-low method?
3. Tim Taylor has written a self improvement book that has the following cost characteristics:
Selling Price $16.00 per book
Variable cost per unit:
Production $4.00
Selling & administrative 2.00
Fixed costs:
Production $94,200 per year
Selling & administrative 22,500 per year
How many units must be sold to break-even?
4. Assume Sparkle Co. expects to sell 150 units next month. The unit sales price is $90, unit variable cost is $40, and the fixed costs per month are $5,000. The margin of safety is: