question archive AAA Company accumulates the following data concerning a mixed cost, using miles as the activity level
AAA Company accumulates the following data concerning a mixed cost, using miles as the activity level
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AAA Company accumulates the following data concerning a mixed cost, using miles as the activity level. Miles Driven Total Cost January 10,000 $15,625 February 8,000 13,500 March 9,000 14,400 April 7,500 12,500 Required: Compute the variable and fixed cost elements using the high- low method 2. If it is estimated that 15,000 miles will be driven in May, what is the expected total cost for May? 3. Explain the various methods used to estimate the variable component and the fixed component of the mixed cost and state which method is the most accurate? Why? (12.5 Marks) B-XYZ Manufacturing Company has fixed costs $240,000, it sells its only product at S50 per unit. For every S1 generated by the sale of their product, they have $0.20 that contributes to fixed costs and profit Required 1. Calculate the variable cost per unit. 2. Assume that the company plans to sell 20,000 units this year. In your opinion, would the Company be better off with this plan? Support your answer with necessary calculations 3. How many units the company needs to sell to start making profit? Why? Prove your answer. (12.5 marks) C- The calculation of cost of goods sold does not differ between merchandising companies and manufacturing companies. Discuss this statement and support your answer with a numerical examples. (5 marks)
