Cost Volume Profit Analysis
1. Post Publishers has collected the following data for recent months:
Month Issues published Total cost
May 20,500 $18,100
June 22,300 19,630
July 18,700 16,570
August 21,200 18,695
a.Using the high-low method, find variable cost per unit and total fixed costs.
b.What is the estimated cost for a month in which 22,000 issues are published?
2. One-Connect has fixed costs of $792,625. Selling price per unit is $195 and variable cost per unit is $110.
a. How many units must One-Connect sell in order to break even?
b. How many units must One-Connect sell in order to earn a profit of $178,500?
c. A new employee suggests that One-Connect sponsor a company softball team as a form of advertising. The cost to sponsor the team is $4,250. How many more units must be sold to cover this cost?
3. Bob's Bobcats can make two models of bobcats - the Buck and the Bill. Each Buck sells for $7,500, has $5,000 in variable costs and takes 100 hours to make. Each Bill sells for $14,000, has $9,500 in variable costs, and takes 300 hours to make. Bob's Bobcats can sell all of either unit they can produce. There are only 30,000 labor hours available this month. What model should be produced and how many can be produced to maximize profit?