Accounting – Study Practice
Instant Download After Purchase – Click Here.
Question 1: At the high level of activity in November, 7,000 machine hours were run and power costs were $12,000. In April, a month of low activity, 2,000 machine hours were run and power costs amounted to $6,000. Using the high-low method, the estimated fixed cost element of power costs is?
Variable Cost per machine hour = (12000-6000)/(7000-2000)=$1.2 per Machine Hour
Fixed Cost Element = 12000-(7000*1.2)= $3600
Question 2: Hartley, Inc. has a product with a selling price per unit of $200, the unit variable cost is $75, and the total monthly fixed costs are $300,000. How much is Hartley’s contribution margin ratio?