Cost of sales: Because cost of sales is a variable cost, there are several ways to compute the variable cost per unit. Here is one: Variable cost per unit = Change in cost ÷ Change in activity = ($318,600 - $265,500) ÷ (6,000 units - 5,000 units) = $53,100 ÷ 1,000 units = $53.10 per unit Selling and administrative costs: Variable cost per unit = Change in cost ÷ Change in activity = ($406,800 - $393,500) ÷ (6,000 units - 5,000 units) = $13,300 ÷ 1,000 units = $13.30 per unit Total cost per unit = $53.10 per unit + $13.30 per unit = $66.40 Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 02-05 Analyze a mixed cost using a scattergraph plot and the high-low method. 150. The best estimate of the total contribution margin when 5,300 units are sold is: Contribution margin per unit = Selling price per unit - Variable cost per unit = $141.60 per unit - $66.40 per unit = $75.20 per unit Total contribution margin = Contribution margin per unit × Unit sales = $75.20 per unit × 5,300 units = $398,560 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 02-04 Understand cost classifications used to predict cost behavior: variable costs; fixed costs; and mixed costs. Learning Objective: 02-05 Analyze a mixed cost using a scattergraph plot and the high-low method. Learning Objective: 02-06 Prepare income statements for a merchandising company using the traditional and contribution formats. Bee Company is a wholesaler. An income statement and other data for the second quarter of the year are given below:
Cost of sales: Because cost of sales is a variable cost, there are several ways to compute the variable cost per unit. Here is one: Variable cost per unit = Change in cost ÷ Change in activity = ($318,600 - $265,500) ÷ (6,000 units - 5,000 units) = $53,100 ÷ 1,000 units = $53.10 per unit Selling and administrative costs: Variable cost per unit = Change in cost ÷ Change in activity = ($406,800 - $393,500) ÷ (6,000 units - 5,000 units) = $13,300 ÷ 1,000 units = $13.30 per unit Total cost per unit = $53.10 per unit + $13.30 per unit = $66.40 Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 02-05 Analyze a mixed cost using a scattergraph plot and the high-low method. 150. The best estimate of the total contribution margin when 5,300 units are sold is: Contribution margin per unit = Selling price per unit - Variable cost per unit = $141.60 per unit - $66.40 per unit = $75.20 per unit Total contribution margin = Contribution margin per unit × Unit sales = $75.20 per unit × 5,300 units = $398,560 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 02-04 Understand cost classifications used to predict cost behavior: variable costs; fixed costs; and mixed costs. Learning Objective: 02-05 Analyze a mixed cost using a scattergraph plot and the high-low method. Learning Objective: 02-06 Prepare income statements for a merchandising company using the traditional and contribution formats. Bee Company is a wholesaler. An income statement and other data for the second quarter of the year are given below:
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