Accounting for Decision Makers Homework -
Question 1 -
a) A company estimates that its total cost to send out invoices, receive payments, deposit the payments, and update accounting records was $10 per sale in 2014. In 2014, there were 10,000 sales and fixed costs of $60,000. In 2015, the company expects total fixed costs and variable costs per unit to be the same as in 2014. If the company budgets 10,500 sales in 2015, what are the expected total costs and expected costs per unit for 2015?
b) Assume the same facts as in part a, except the company expects 9,500 sales in 2015. What are the expected total costs and expected costs per unit for 2015?
Question 2 -
a) A company estimates that its total cost to acquire materials, set up machines, and produce products is $25 per unit produced in 2014. In 2014, there were 50,000 units produced and variable costs per unit produced totaled $15. In 2015, the company expects total fixed costs and variable costs per unit to be the same as in 2014. If the company budgets to produce 52,000 units in 2015, what are the expected total costs and expected costs per unit for 2015?
b) Assume the same facts as in part a, except the company expects to produce 49,000 units in 2015. What are the expected total costs and expected costs per unit for 2015?
Question 3 -
The Tiger Company collected the following annual information on total net sales and total operating costs:
|
Year
|
Total Net Sales
|
Total Operating Costs
|
|
2014
|
$8,200,000
|
$4,250,000
|
|
2015
|
$8,700,000
|
$4,450,000
|
In 2016, total net sales are budgeted to be $9,400,000. Using the high-low method, prepare an estimate of total operating costs for 2016, assuming total fixed costs and variable costs as a percentage of total net sales are expected to be the same in 2016 as in 2014 and 2015.