**EXPERT ANSWER**

**Explanation:**

For computations:

6.

Formula:

High-Low method:

Variable cost per unit

= (Highest Cost-Lowest Cost)/(Highest Activity-Lowest Activity)

=(8,520-5,712)/(1,809-912)

=3.13

Variable cost per unit = 3.13

**To compute for the fixed cost: we get the highest activity**

Fixed cost = 8520-1809(3.13)

=8520-5662.17

=2857.83

**Total fixed cost = 2,857.83**

**MAY=870(3.13)+2857.83**

**=2723.10+2857.83**

**=5580.93 OR 5581**

**7.**

Budgeted Overhead Formula for 2020:

Y=1006969+25(Machine Hours)

Monthly formula:

Y=(1006969/12)+25(Machine Hours)

Y=83914+25(MachineHours)

For the month of January:

Let X be equal to Machine Hours:

333,914=83914+25(X)

25X=333914-83914

25X=250000

X=10,000 Machine Hours

To get the number of units produced:

2 Machine Hours is needed to produced 1 unit. So, we get the total number of units produced by dividing the total Machine hours by 2.

Number of units produced= Total Machine Hours/2

=10,000/2

= 5,000 units produced

8.

Formula:

High-Low method:

Variable cost per unit=(Highest Cost-Lowest Cost)/(Highest Activity-Lowest Activity)

=(820000-560000)/(52000-27000)

=10.40

Variable cost per unit = 10.40

To get the total fixed OH per quarter:

We use the highest activity:

Fixed Cost = Total cost – Variable cost

Fixed Cost = 820000 – 52000(10.40)

Fixed Cost = 279,200

Total Fixed Cost for the year= Fixed Cost per quarter * 4 quarters

= 279,200 * 4 quarters

= 1,116,800

To get the total variable cost for the whole year, we get:

Total variable cost = Total units produced * 0.10 Machine Hours * 10.40

Total Variable Cost = 2000000*0.10*10.40

Total Variable Cost= 2080000

To compute for the total costs:

Total cost= total fixed costs + Total variable Costs

= 1,116,800+2,080,000

=3,196,800

11.

To get the total contribution margin:

Total CM= Operating profit + Fixed Costs

= 156000+1500000

= 1656000

To get the CM per unit:

CM per unit= Total CM / Total units produced and sold

= 1656000/150000

= 11.04

To get the VC per unit:

VC per unit= Selling Price – CM per unit

= 30 – 11.04

= 18.96

12.

To get the total units sold:

Units sold= Total revenues/ Selling price

=27M/120

=225,000

To get the FC per unit at this activity level:

FC per unit= Total FC/225,000

=12M/225000

=53.33

13.

High-Low Method:

To get the total variable cost= ((Highest Cost-Lowest cost)/(Highest activity-Lowest Activity))*200000

=(140000-64000)/(200000-85000)*200,000

=132,174

14.

To get the FOH from mixed cost:

We use the highest cost:

FOH from Mixed=140,000-132174

= 7826

To get the total Fixed cost:

Total FC= FC from mixed + Depreciation

=7826+360000

=367,826

15.

To get the Variable cost per unit:

From Mixed Cost: use high low method

=((140,000-64000)/(200000-85000))*2

=1.32

From inspection cost:

=(60,000/200000)*2

=0.60

Total Variable cost per unit.

=1.32+0.60

=1.92

Summary of answers:

1. D. May be costly to use.

2. B. False

3. A

4. D

5. D

6. C

7. C.

8. D.

9.

10.

11. C.

12. C.

13. C.

14. D.

15. D.