Game Industries Inc. manfacturers components for computer games within a relevant range of 1,000,000 to 2,000,000 disks per year. Within this range, the following partially completed manfacturing cost schedule has been prepared:
Complete the cost schedule, identifying each cost by the appropriate letter (a) through (o).
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Zeta Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the total cost. The data for various levels of production are as follows:
Units Produced ……. Total Costs
45,000 ……………. $1,535,000
50,000 ……………… 1,650,000
70,000 ……………… 2,110,000
a. Determine the variable cost per unit and the fixed cost.
b. Based on part (a), estimate the total cost for 60,000 units of production.
E11-10
For a recent year, McDonald’s company-owned restaurants had the following sales sales and expenses (in millions)
Sales $24,075
food & packaging $5,300
payroll 4,122
occupancy (rent, depreciation,etc) 5,106
general, selling & admin expenses 2,333
total $16,602
income from operations $7,473
Assume that the variable costs consists of food and packaging, payroll and 60% of the general, selling & admin expenses
a. What is McD’s contribution margin (rounded to nearest mill)
b. What is McD’s contribution margin ratio (round to nearest decimal)
c. How much would income from operations increase if same-store sales increased by $600 million for the coming year, with no change in the contribution margin ratio or fixed costs?
E11-13
Currently, the unit selling price of a product is $80, the unit variable cost is $64, and the total fixed costs are $420,000. A proposal is being evaluated to increase the unit selling price to $84.
a. Compute the current break-even sales (units).
b. Compute the anticipated break-even sales (units), assuming that the unit selling price is increased and all costs remain constant
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