EXERCISE 5-12 (30 MINUTES)

2. - SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH05 COST BEHAIVIOR ANALYSSIS AND USE 2. - SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH05 COST BEHAIVIOR ANALYSSIS AND USE
SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH05 COST BEHAIVIOR ANALYSSIS AND USE
2.

Units

Observed

Produced Cost

June—High level of activity ... 9,000 $102,000 March—Low level of activity... 6,000 78,000 Change ... 3,000 $ 24,000 Change in cost $24,000= =$8.00 per unitChange in activity 3,000 unitsTotal cost at the high level of activity ... $102,000 Less variable cost element ($8.00 per unit × 9,000 units) ... 72,000 Fixed cost element ... $ 30,000 Therefore, the cost formula is: $30,000 per month, plus $8.00 per unit produced or Y = $30,000 + $8.00X.

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Solutions Manual, Chapter 5

243

Problem 5-22 (continued)