Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function

Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected:

Pizza Vesuvio's controller wants to calculate the fixed and variable costs associated with labor used in the restaurant.

In your calculations, round the variable rate per employee hour to the nearest cent.

Required:

1. Using the high-low method, calculate the fixed cost of labor.
$

2. Using the high-low method, calculate the variable rate.

$ per employee hour

3. Using the high-low method, construct the cost formula for total labor cost.

Total labor cost = $ + [$ × Employee hours]

Discuss how cost allocation or transfer pricing and activity-base cost applies to banking industry and financial institution. Once you have identified the subject of interest, your post should focus on an assessment of the situation. What do you believe are the key issues? If there are problems, what solutions do you see? If this is a post that illustrates a successful resolution of a challenge, how was this success achieved?

Massey Corporation uses a process cost system and the weighted-average cost flow assumption. Production begins in the Fabricating Department where materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. On March 1, the beginning work in process inventory consisted of 20,000 units which were 60% complete and had a cost of $175,000, $145,000 of which were materials costs. During March, the following occurred:

Instructions

Prepare a Process Cost Worksheet.

1. Average Cost for Producing Microwaves

Let the total cost function C(x) be defined as follows.

C(x) = 0.0003x³ − 0.02x² + 103x + 3,600

Find the average cost function C.

C(x) =

Find the marginal average cost function C '.

C '(x) =

2. Marginal Revenue for Producing Loudspeakers

The management of Acrosonic plans to market the ElectroStat, an electrostatic speaker system. The marketing department has determined that the demand for these speakers is represented by the following function, where p denotes the speaker's unit price (in dollars) and x denotes the quantity demanded. Find the following functions (in dollars), find the value (in dollars) and interpret your results.

p = −0.02x + 890      (0 ≤ x ≤ 20,000)

(a)

Find the revenue function R.

R(x) =

(b)

Find the marginal revenue function R'(x).

R'(x) =

(c)

Compute the following value.

R'(8,200) =

Interpret your results.

When the level of production is  units, the production of the next speaker system will bring an additional revenue of  dollars.

3.Marginal Cost, Revenus, and Profit for Producing LCD TVs

A company manufactures a series of 20-in. flat-tube LCD televisions. The quantity x of these sets demanded each week is related to the wholesale unit price p by the following equation.

p = −0.007x + 190

The weekly total cost (in dollars) incurred by Pulsar for producing x sets is represented by the following equation. Find the following functions (in dollars) and compute the following values.

C(x) = 0.000001x³ − 0.02x² + 140x + 75,000

(a)

Find the revenue function R.

R(x) =

Find the profit function P.

P(x) =

(b)

Find the marginal cost function C'.

C'(x) =

Find the marginal revenue function R'.

R'(x) =

Find the marginal profit function P'.

P'(x) =

(c)

Compute the following values. (Round your answers to two decimal places.)

C'(1,500)=R'(1,500)=P'(1,500)=

Manufacturing cost data for Blossom Company, which uses a job order cost system, are presented below.

Indicate the missing amount for each letter. Assume that in all cases manufacturing overhead is applied on the basis of direct labor cost and the rate is the same. (Round overhead rate to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 5,275.)

How would you determine cost-effectiveness or a cost-benefit approach? If I want to purpose a hypothetical proposal to allow a $5,000 tax deduction for expenses incurred by children who take care of their elderly parents?

Product Cost Method of Product Costing

Voice Com, Inc. uses the product cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 5,320 cell phones are as follows:

Voice Com desires a profit equal to a 15% rate of return on invested assets of $601,500.

a. Determine the amount of desired profit from the production and sale of 5,320 cell phones.
$

b. Determine the product cost per unit for the production of 5,320 of cell phones. Round your answer to the nearest whole dollar.
$ per unit

c. Determine the product cost markup percentage for cell phones. Round your answer to two decimal places.
%

d. Determine the selling price of cell phones. Round your answers to the nearest whole dollar.

Explain the relationship of varying output with total fixed cost (TFC), total variable cost (TVC), average fixed cost (AFC), average variable cost (AVC) and average total cost (ATC).