EXERCISE 5-2 (45 MINUTES)

1. - SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH05 COST BEHAIVIOR ANALYSSIS AND USE
SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH05 COST BEHAIVIOR ANALYSSIS AND USE
1.

Units Shipped Shipping Expense

High activity level (June) ... 8 $2,700 Low activity level (July) ... 2 1,200 Change ... 6 $1,500 Variable cost element: Change in expense $1,500= =$250 per unit.Change in activity 6 units Fixed cost element: Shipping expense at high activity level ... $2,700Less variable cost element ($250 per unit × 8 units) .... 2,000Total fixed cost ... $ 700 The cost formula is $700 per month plus $250 per unit shipped or Y = $700 + $250X, where X is the number of units shipped.