The most recent income statement for the Strongsville Branch of the July

Company is presented below.

Sales $57,000
Variable costs 31,500
Contribution margin $25,500
Fixed costs:
Avoidable 13,500
Unavoidable 20,000
Operating income $(8,000)
The July Company is thinking of eliminating the Strongsville Branch because it is
showing a loss. If the Strongsville Branch is eliminated.
Required: calculate the impact of elimination on July’s operating income .
a. increase $8,000
b. decrease $12,000
c. decrease $31,500
d. not change

Q3. Cochran Corporation has a plant capacity of 100,000 units per month. Unit costs at
capacity are:
Direct materials $4.00
Direct labor 6.00
Variable overhead 3.00
Fixed overhead 1.00
Marketing — fixed 7.00
Marketing/distribution — variable 3.60

Current monthly sales are 95,000 units at $30.00 each. Suzie, Inc., has contacted Cochran
Corporation about purchasing 2,000 units at $24.00 each. Current sales would not be
affected by the one-time-only special order. What is Cochran’s change in operating profits
if the one-time-only special order is accepted?
a. $14,800 increase
b. $17,200 increase
c. $22,000 increase
d. $33,200 increase
Answer: a
Terms to Learn: one-time-only special order
($4.00 + $6.00 + $3.00 + $3.60) = $16.60
($24.00 – $16.60) x 2,000 = $14,800 increase
Q1. The Cyclone Corporation is contemplating the replacement of some old equipment. The
pertinent information is as follows:
Old Replacement
Equipment Equipment
Original cost $93,000 $60,000
Useful life in years 13 6
Current age in years 7 0
Book value $57,000 -
Disposal value now $45,000 -
Disposal value in 6 years 0 0
Annual cash operating costs $15,000 $11,000
Required:
Prepare a cost comparison of all relevant items for the next six years together.
Ignore income taxes. Comment on the best alternative for Cyclone Corporation.

Answer:
Keep Replace Difference

Cash operating costs $90,000 $66,000 $24,000

Disposal value of old
equipment - (45,000) 45,000
New equipment,
acquisition cost -__ 60,000 (60,000)

Total relevant costs $90,000 $81,000 $9,000

The $9,000 cumulative effect over the six years favors replacing the old
equipment.
Q2. Super Cooper Company currently produces a key part at a total cost of $210,000.
Variable costs are $170,000. Of the fixed cost, $10,000 relate specifically to this
part. The remaining fixed costs are unavoidable.

Another manufacturer has offered to supply the part for $190,000. The facilities
currently used to manufacture the part could be used to manufacture a new
product with an expected contribution margin of $30,000. Alternately, the
facilities could be rented out at $60,000. Given all of these alternatives,
________________ is Super Cooper’s lowest net cost for the part.

a. $170,000
b. $180,000
c. $190,000
d. $130,000
 d. $130,000
$190,000 - $60,000 = $130,000 vs.
$210,000 - ($210,000 - $170,000 - $10,000) = $180,000
Q4. The most recent income statement for the Parma Branch of the Dinero Company
is presented below.
Sales $57,000
Variable costs 31,500
Contribution margin $25,500
Fixed costs:
Avoidable 13,500
Unavoidable 18,000
Operating income $(6,000)
If the Parma Branch is eliminated and the space is rented for $24,000, operating
income will be _____.
a. increased by $24,000
b. decreased by $30,000
c. increased by $12,000
d. decreased by $12,000

($31,500 + $13,500 - $57,000) + $24,000 = $12,000

Q6: Grant’s Kitchens is approached by Ms. Tammy Wang, a new customer, to fulfill a large one-
time-only special order for a product similar to one offered to regular customers. The following
per unit data apply for sales to regular customers:
Direct materials $455
Direct labor 300
Variable manufacturing support 45
Fixed manufacturing support 100
Total manufacturing costs 900
Markup (60%) 540
Targeted selling price $1440
Grant’s Kitchens has excess capacity. Ms. Wang wants the cabinets in cherry rather than oak, so
direct material costs will increase by $30 per unit.

For Grant’s Kitchens, what is the minimum acceptable price of this one-time-only special order?
a. $830
b. $930
c. $785
d. $1,440
Answer: a
Terms to Learn: one-time-only special order
$455 + $300 + $45 + $30 = $830
26) Atlanta Senior Center is planning its annual fundraiser. The event committee has developed
the following budget for the event.

Ballroom rental $3,000

Entertainment $2,500
Printing $600 plus $9 per person
Food $30 per person
Decorations $700 plus $5 per person

Required:
A) Determine the cost function.
B) If Atlanta Senior Center charges $100 per person, and 1,000 people attend, how much profit
will be derived by this event?
Answer: A) Fixed cost = $3,000 + $2,500 + $600 + $700 = $6,800
Variable cost = $9 + $30 + $5 = $44 per person
Y = $6,800 + $44X
Where: Y = Total cost of fundraiser
X = Number of attendees
B) ($100 × 1,000) - [$6,800 + ($44 × 1,000)] = $49,200
Diff: 2
LO: 3-2
AACSB: Analytic skills
Learning Outcome: Define and distinguish between variable, fixed and mixed costs

2) Direct labor cost is the primary cost driver of support costs for two products. Product One has
direct labor costs of $8.50 per unit and Product Two has direct labor costs of $130 per unit. The
support costs assigned to each product is the direct labor cost times five. What is the support cost
assigned to Product One and Product Two?
Product One Product Two
A) $8.50 $130
B) $5.00 $76.47
C) $42.50 $650
D) $5.00 $26.00
Answer: C
Diff: 2
LO: 3-3
AACSB: Analytic skills
Learning Outcome: Discuss and use various methods to estimate the variable and fixed costs
portions of a mixed cost

6) The cost of the Maintenance Department at Forest Manufacturing has always been charged to
the production departments based on the number of employees. Recently, an activity analysis of
possible cost drivers was performed which indicated that the square feet of space may also be a
predictor of costs to be assigned to each production department. The Maintenance Department
cost is $500,000. The following data is available:
Production Departments
Dept. A Dept. B Dept. C
Number of Employees 300 25 50
Square Feet of Space 5,000 10,000 25,000

Required:
1. Determine the amount of the maintenance department cost that should be allocated to
Department A and Department B if the cost driver used is: (A) number of employees and (B)
square feet of space.
2. Does the choice of the cost driver affect the costs assigned to each department?
Answer:
1. Department A:
A) 300/375 × $500,000 = $400,000
B) 5/40 × $500,000 = $62,500
Department B:
A) 25/375 × $500,000 = $33,333
B) 10/40 × $500,000 = $125,000
2. Yes, the cost driver does change the cost assigned to each department.
Diff: 2
LO: 3-3
AACSB: Analytic skills
Learning Outcome: Discuss and use various methods to estimate the variable and fixed costs
portions of a mixed cost
4) To estimate the monthly maintenance cost for the maintenance department in a hospital, the
following monthly costs are available:

Monthly Expense Costs

Supervisor Salary Expense $3,000
Depreciation Expense—Maintenance Equipment $5,000
Repairs Expense—Maintenance Equipment $5,000
Supplies Expense $7,000
Wages Expense—Maintenance Workers $10,000

The Supervisor Salary Expense and the Depreciation Expense are fixed costs. The remaining
expenses are variable costs. There are 1,000 patient days in a month, which is the cost driver for
maintenance costs. Estimate the cost function where Y is the monthly maintenance cost and X is
the variable cost per patient day.
A) Y = $8 + $22X
B) Y = $8,000 + $22,000X
C) Y = $8,000 + $22X
D) Y = $30,000 + $22,000X
Answer: C
Diff: 2
LO: 3-4
AACSB: Analytic skills
Learning Outcome: Discuss and use various methods to estimate the variable and fixed costs
portions of a mixed cost

35) The following data has been assembled for John Company. Use the high-low method.

Month Cost Hours

January $24,400 2,000
February $39,000 2,200
March $35,280 2,750
April $36,400 3,500
May $40,000 4,000

The expected total cost at an operating level of 1,900 hours is ________.

A) $23,180
B) $23,620
C) $24,000
D) $24,400
Answer: B
Diff: 2
LO: 3-4
AACSB: Analytic skills0
Learning Outcome: Discuss and use various methods to estimate the variable and fixed costs
portions of a mixed cost

36) Presented below is the production data for six months showing the mixed costs incurred by
Anderson Company.

Month Cost Units

July $5,890 4,100
August $4,012 3,200
September $7,480 6,300
October $9,000 7,500
November $5,800 5,800
December $7,336 6,600

Anderson Company uses the high-low method to analyze mixed costs. The cost function is
________ where Y= Total Cost and X= Number of units.
A) Y = $440 + $1.12X
B) Y = $300 + $1.16X
C) Y = $440 + $1.20X
D) Y = $7,850 + $0.132X
Answer: B
Diff: 2
LO: 3-4
AACSB: Analytic skills
Learning Outcome: Discuss and use various methods to estimate the variable and fixed costs
portions of a mixed cost
37) Presented below is the production data for six months of the year showing the mixed costs
incurred by Madeline Company.

Month Cost Units

July $6,000 4,000
August $11,250 9,500
September $11,500 9,000
October $11,700 10,500
November $14,000 12,000
December $12,850 10,000

Madeline Company uses the high-low method to analyze mixed costs. The predicted total cost at
an operating level of 10,000 units is ________.
A) $11,725
B) $11,800
C) $12,000
D) $12,850
Answer: C
Diff: 2
LO: 3-4
AACSB: Analytic skills
Learning Outcome: Discuss and use various methods to estimate the variable and fixed costs
portions of a mixed cost

108. A manufacturing company produced the following report:

Required:
(1) How many units would have to be sold to break even?
(2) If fixed overhead were to increase by $1,800 what would breakeven be in units?
(3) What is operating income if sales increase by 25%?
Answer:
(1) Contribution margin: 200 – 145 – 15 = 40
(500 + 4000) / 40 = 112.5 or 113 units
(2) (500 + 4000 + 1800) / 40 = 157.5 or 158 units
(3)

Rainbow Corporation manufactures a single product. The selling price is $120 per unit, and
variable costs amount to $76 per unit. The fixed costs are $28,400 per month.
(a) What is the contribution margin per unit? $_______________ per unit
(b) What is the contribution margin ratio? _______________% (Rounded to 1 decimal place)
(c) What is the monthly sales volume (in dollars) at the break-even point? $________________
(d) How many units must be sold each month to earn a monthly operating income of $40,000?
_______________units
(e) What is the monthly margin of safety (in dollars) if 1,500 units are sold each month?
$_______________
(f) What will be the monthly operating income if 1,500 units are sold each month?
$_______________
Computations

Answer:
(a) $44 per unit (b) 36.7% (c) $77,384 (d) 1,555 units (e) $102,616
(f) $37,660
Computations
101. Cost-volume-profit relationships
Clean-Up, Inc., sells only one product. The sales price per unit is $60, with variable cost per unit
of $50. Fixed costs are $70,000 per month. Maximum capacity is 44,000 units per month.
Answer the following questions:
(a) To break even, how many units must Clean-Up sell per month? _______________ units
(b) If Clean-Up, Inc., sold 25,000 units, what would be its operating income for the month?
$________________
(c) At present capacity, what is the maximum operating income Clean-Up can expect to earn per
month? $________________
(d) Assuming that direct labor cost can be reduced by $2 per unit, what would Clean-Up’s
maximum operating income be per month? $_______________
Computations
Answer:
(a) 7,000 units (b) $180,000 (c) $370,000 (d) $458,000
Computations
(a) $70,000 fixed costs / $10 contribution margin = 7,000 units
(b) $1,500,000 sales revenue - (25,000 units x $50 per unit) variable costs - $70,000 fixed costs =
$180,000 operating income
(c) $2,640,000 sales revenue - (44,000 units x $50 per unit) variable costs - $70,000 fixed costs =
$370,000 operating income
(d) $2,640,000 sales revenue - (44,000 units x $48 per unit) variable costs - $70,000 fixed costs =
$458,000 operating income

102. Using cost-volume-profit formulas

Brian Corporation manufactures a single product. The selling price is $104 per unit, and variable
costs amount to $78 per unit. The fixed costs are $36,000 per month.
(a) What is the contribution margin per unit? $_______________ per unit
(b) What is the contribution margin ratio? _______________%
(c) What is the monthly sales volume (in dollars) at the break-even point? $________________
(d) How many units must be sold each month to earn a monthly operating income of $32,000?
_______________units
(e) What is the monthly margin of safety (in dollars) if 3,000 units are sold each month?
$_______________
(f) What will be the monthly operating income if 3,000 units are sold each month?
$_______________
Computations
Answer:
(a) $26 per unit (b) 25% (c) $144,000 (d) 2,616 units (e) $168,000
(f) $42,000
Computations

The following data are available for product no. CF72, manufactured and sold by Gold
Corporation:

69. Refer to the above information. The contribution margin per unit for product no. CF72 is:
A) $27.
B) $81.
C) $118.
D) $64.
Answer: B
Feedback:
202.50 – 121.50 = 81

70. Refer to the above information. The number of units of CF72 that Gold must sell to break
even is (rounded, if necessary):
A) 30,000.
B) 20,500.
C) 8,200.
D) 12,300.
Answer: D
Feedback:
996,300/81 = 12,300

71. Refer to the above information. The dollar sales volume to produce operating income of
$247,500 is:
A) $2,073,000.
B) $4,146,000.
C) $2,487,600.
D) $3,109,500.
Answer: D
Feedback:
(996,300 + 247,500)/.4 = 3,109,500

138. The Cyclone Corporation is contemplating the replacement of some old

equipment. The pertinent information is as follows:
Old Replacement
Equipment Equipment
Original cost $93,000 $60,000
Useful life in years 13 6
Current age in years 7 0
Book value $57,000 -
Disposal value now $45,000 -
Disposal value in 6 years 0 0
Annual cash operating costs $15,000 $11,000
Required:
Prepare a cost comparison of all relevant items for the next six years together.
Ignore income taxes. Comment on the best alternative for Cyclone Corporation.

Answer:
Keep Replace Difference

Cash operating costs $90,000 $66,000 $24,000

Disposal value of old
equipment - (45,000) 45,000
New equipment,
acquisition cost -__ 60,000 (60,000)
 Total relevant costs $90,000 $81,000 $9,000

The $9,000 cumulative effect over the six years favors replacing the old
equipment.
1. A study has been conducted to determine if one of the departments of Sparrow Company
should be discontinued. The contribution margin in the department is $150,000 per year.
Fixed expenses charged to the department are $130,000 per year. It is estimated that
$120,000 of these fixed expenses could be eliminated if the department is discontinued.
Part (a) If the department is discontinued, what will be the impact on the company’s overall
net operating income?
Part (b) Which costs are irrelevant to this decision?

2. Lavender Company produces 2,000 parts per year, which are used in the assembly of one of
its products. The unit product cost of these parts is:
Variable manufacturing cost $64
Fixed manufacturing cost 36
Unit product cost $100
The part can be purchased from an outside supplier at $80 per unit. If the part is purchased
from the outside supplier, two-thirds of the fixed manufacturing costs can be eliminated.
Part (a) What costs are irrelevant to this decision?
Part (b) What would the annual impact on the company’s net operating income be as a result
of buying the part from the outside supplier?

3. Golden Company sells its product for $42 per unit. The company’s unit product cost based
on the full capacity of 400,000 units is as follows:
Direct materials $8
Direct labor 10
Manufacturing overhead 12
Unit product cost $30

A special order offering to buy 40,000 units has been received from a foreign distributor. The
only selling costs that would be incurred on this order would be $6 per unit for shipping. The
 company has sufficient idle capacity to manufacture the additional units. Two-thirds of the
manufacturing overhead is fixed and would not be affected by this order. Assume that direct
labor is an avoidable cost in this decision. In negotiating a price for the special order, what is
the minimum acceptable selling price per unit?

29) Whitney Company has just completed its first year of operations. The company's accountant
has prepared an absorption costing income statement for the year as seen below:

Sales (35,000 units at $25) $875,000

Beginning Inventory 0
Cost of Goods Manufactured (35,000 × $12) + $160,000 = 580,000
Cost of Goods Available 580,000
Ending Inventory 0
Cost of Goods Sold 580,000
Gross Margin 295,000
Selling and Administrative Expenses 280,000
Net Income $15,000

The variable production costs per unit are determined as follows:

Direct materials $5
Direct labor 6
Variable production 1
Total variable production costs $12

The company's fixed production costs are $160,000 per year. The company's selling and
administrative expenses consist of $210,000 per year in fixed expenses and $2 per unit in
variable expenses.

Required:
Prepare the company's income statement in the contribution format.
Answer: Sales $875,000
Variable Expenses:
Production Costs(35,000 × $12) $420,000
Selling and Administrative(35,000 × $2) 70,000
Total Variable Expenses 490,000
Contribution Margin 385,000
Fixed Expenses:
Production Costs 160,000
Selling and Administrative 210,000
Total Fixed Expenses 370,000
Net Income $15,000
Diff: 3
LO: 5-3
AACSB: Analytic skills
Learning Outcome: Define basic managerial accounting concepts and prepare an income
statement for different types of organizations
30) Stewart Company has no beginning and ending inventories, and reports the following
information about its only product:

Direct materials used $29,000

Direct labor $17,000
Variable indirect production $13,000
Fixed indirect production $18,000
Variable selling and administrative expenses $22,000
Fixed selling and administrative expenses $11,000

Units produced and sold 10,000

Selling price per unit $25

Required:
A) Prepare an income statement using the contribution approach.
B) Prepare an income statement using the absorption approach.
Answer:
A)
Sales (10,000 × $25) $250,000
Variable expenses:
Direct materials $29,000
Direct labor 17,000
Variable indirect production 13,000
Variable manufacturing cost of goods sold 59,000
Variable selling and admin. expenses 22,000
Total variable expenses 81,000
Contribution margin 169,000
Fixed expenses:
Indirect production 18,000
Selling and admin. 11,000
Total fixed expenses 29,000
Operating income $140,000

B)
Sales $250,000
Manufacturing cost of goods sold:
Direct materials $29,000
Direct labor 17,000
Variable indirect production 13,000
Fixed indirect production 18,000
Manufacturing cost of goods sold 77,000
Gross margin 173,000
Selling and administrative expenses 33,000
Operating income $140,000
Diff: 2
LO: 5-3
AACSB: Analytic skills
Learning Outcome: Define basic managerial accounting concepts and prepare an income
statement for different types of organizations

12) Arkansas Company has no beginning and ending inventories, and has obtained the following
data for its only product:

Selling price per unit $65

Direct materials used $150,000
Direct labor $225,000
Variable factory overhead $140,000
Variable selling and administrative expenses $60,000
Fixed factory overhead $370,000
Fixed selling and administrative expenses $30,000

Units produced and sold 20,000

Assume there is excess capacity. There is a special order outstanding for 1,000 units at $40.00
per unit. If Arkansas Company accepts the special order, net income would ________.
A) increase by $40,000
B) increase by $11,250
C) decrease by $28,750
D) decrease by $10,000
Answer: B
Diff: 2
LO: 5-4
AACSB: Analytic skills
Learning Outcome: Distinguish between relevant and irrelevant costs

18) Texas Company produces and sells 22,000 units of a single product. Costs associated with
this level of production are as follows:

Direct materials $15 per unit

Direct manufacturing labor $45 per unit
Variable manufacturing overhead $25 per unit
Fixed manufacturing overhead $40 per unit
Variable selling costs $10 per unit

The product normally sells for $160 per unit. Texas Company has received a special order to sell
2,000 units at $120 per unit. With the special order, variable selling costs will increase by $5 per
unit to $15 per unit. Texas Company has excess production capacity.
Required:
Compute the amount by which the operating income of Texas Company would change if the
special order was accepted.
Answer: Additional sales (2,000 × $120) $240,000
Variable costs:
Direct materials (2,000 × $15) $30,000
Direct labor (2,000 × $45) $90,000
Variable selling (2,000 × $15) $30,000
Variable manuf. overhead (2,000 × $25) $50,000
Additional operating income $40,000
Diff: 2
LO: 5-4
AACSB: Analytic skills
Learning Outcome: Distinguish between relevant and irrelevant costs
19) Stangle Company manufactures ties. When 28,000 ties are produced, the costs per unit are:

Direct materials $0.60

Direct manufacturing labor $3.00
Variable manufacturing overhead $1.20
Fixed manufacturing overhead $1.60
Variable selling $0.80
Fixed selling $1.13

The ties normally sell for $22 each. The company has received a special order for 2,000 ties at
$8.00 per tie. The company will incur an additional variable selling cost of $1.50 per unit with
the special order. The company has excess capacity.

Required:
Compute the amount by which the operating income would change if the order were accepted.
Answer: Additional sales (2,000 × $8.00) $16,000
Additional expenses:
Direct materials (2,000 × $0.60) $1,200
Direct labor (2,000 × $3.00) 6,000
Variable manuf. overhead (2,000 × $1.20) 2,400
Variable selling (2,000 × $2.30) 4,600 14,200
Additional operating income $1,800
Diff: 2
LO: 5-4
AACSB: Analytic skills
Learning Outcome: Distinguish between relevant and irrelevant costs
2. Por Favor Company provided the following information regarding its one and
only product - skateboards.

Direct materials used $200,000

Direct labor 80,000
Fixed overhead 100,000
 Fixed selling and administrative costs150,000
Variable overhead 20,000
Variable selling and administrative 60,000
Selling unit price 75

Units produced and sold 10,000

________ is the manufacturing cost per unit if the contribution approach is used.

a. $28
b. $30
c. $36
d. $40

($80,000 + $200,000 + $20,000) / 10,000 = $30

2. Scrooge Company produces a part that is used in the manufacture of one of its
products. The costs associated with the production of 11,000 units of this part are
as follows:

Direct materials $25,000

Direct labor 34,000
Variable factory overhead 65,000
Fixed factory overhead 50,000
$174,000

Of the fixed factory overhead costs, $9,000 is avoidable.

Required:

a. Assuming there is no alternative use for the facilities, should Scrooge

Company take advantage of an offer from a supplier who is willing to sell
Scrooge Company 11,000 units of the same part for $12.50 per unit?

b. Would your answer to Part A change if the facilities could be rented for
$10,000 a year?

Answer:
 a. $25,000 + $34,000 + $65,000 + $9,000 = $133,000 to make vs. $12.50 x
11,000 units = $137,500 to buy. Scrooge Company should continue to
make the part.
4) To estimate the monthly maintenance cost for the maintenance department in a hospital, the
following monthly costs are available:

Monthly Expense Costs

Supervisor Salary Expense $3,000
Depreciation Expense—Maintenance Equipment $5,000
Repairs Expense—Maintenance Equipment $5,000
Supplies Expense $7,000
Wages Expense—Maintenance Workers $10,000

The Supervisor Salary Expense and the Depreciation Expense are fixed costs. The remaining expenses are
variable costs. There are 1,000 patient days in a month, which is the cost driver for maintenance costs.
Estimate the cost function where Y is the monthly maintenance cost and X is the variable cost per patient
day.
A) Y = $8 + $22X
B) Y = $8,000 + $22,000X
C) Y = $8,000 + $22X
D) Y = $30,000 + $22,000X
Answer: C
Diff: 2
LO: 3-4
AACSB: Analytic skills
Learning Outcome: Discuss and use various methods to estimate the variable and fixed costs portions of
a mixed cost

b. $137,500 - $10,000 = $127,500 net cost to buy vs. $133,000 to make.

Scrooge Company should buy the part to save the company $5,500.

7. Cocoa Beach Company is considering replacing a machine that is presently used in the
production of its product. The following data are available:

Replacement
Old Machine Machine

Original cost $200,000 $160,000

Useful life in years 10 5
Current age in years 5 0
Book value $100,000 -
Disposal value now $32,000 -
Disposal value in 5 years 0 0
Annual cash operating costs $20,000 $14,000
 Ignoring income taxes, the difference in cost between the old and new machine is
_____.

a. $98,000 in favor of the old machine

b. $98,000 in favor of the new machine
c. $40,000 in favor of the new machine
d. $12,000 in favor of the new machine

1. Days of Our Lives Hospital has total variable costs of 90% of total revenues and fixed costs of
$50 million per year There are 50,000 patient-days estimated for next year. What is the
break-even point expressed in total revenue?

2. Assuming a constant mix of 3 units of Alpha for every 1 unit of Beta, a selling price of $21.60
for Alpha and $28.80 for Beta, variable costs per unit of $14.40 for Alpha and $16.80 for
Beta, and total fixed costs of $53,760, the break-even point in units would be:
a. 4,800 units of Alpha and 1,600 units of Beta
b. 1,200 units of Alpha and 400 units of Beta
c. 1,600 units of Alpha and 4,800 units of Beta
d. 40,320 units of Alpha and 13,440 units of Beta

35) The following data has been assembled for John Company. Use the high-low method.

Month Cost Hours

January $24,400 2,000
February $39,000 2,200
March $35,280 2,750
April $36,400 3,500
May $40,000 4,000

The expected total cost at an operating level of 1,900 hours is ________.

A) $23,180
B) $23,620
C) $24,000
D) $24,400
Answer: B
Diff: 2
LO: 3-4
AACSB: Analytic skills
Learning Outcome: Discuss and use various methods to estimate the variable and fixed costs portions of
a mixed cost