Problem 1

The following information is available for Alba Company's maintenance cost over the last four months.

Required:
Use the high-low method to estimate both the fixed and variable component of its maintenance cost.

Problem 2

For each of the following, determine if the cost is variable or fixed.

Problem 3

Cost Description
1 Cost of renting production equipment on a monthly basis at a surfboard manufacturer
2 Cost of shipping bags of garden mulch to a retail garden store
3 Building rent at a sandwich shop
4 Cost of hard disk installed in a computer
5 Cost of fresh vegetables used at a sandwich shop
6 Janitorial wages at a surfboard manufacturer
7 Cost of advertising at a surfboard company
8 Clinical supplies at a doctor's office
9 Cost of leasing checkout equipment on a monthly basis at an electronics store
10 Cost of heating an electronics store

Required:

For each item above, indicate whether the cost is MAINLY fixed or variable

Problem 4

Shaw Supply Company sells a single product. Last year they sold 15,000 units and had the following average:

Required:

Determine the following amounts at a sales level of 18,000 units:

a. Total variable cost
b. Total fixed cost
c. Variable cost per unit
d. Fixed cost per unit
e. Total cost per unit

Problem 5

Farnor, Inc., would like to estimate the variable and fixed components of its electrical costs and has compiled the following data for the last four months of operations.

Required:

Use the high-low method:

1. Estimate both the fixed and variable component of its electrical cost.
2. If they expect 41 machine hours in May, what is their estimated total cost.