Accounting for Mbas Solution

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MBA 617 Homework Solutions E14-21 a. Fixed costs are easily identified. They are the same at each activity level. Variable and mixed costs can be determined by dividing total costs by monthly sales at two activity levels. The quotients of variable costs will be the same at both levels. The quotients of mixed costs will be lower at the higher activity level. This is because the fixed costs are spread over a larger number of units. Cost Cost of food sold Wages and fringe benefits Fees paid delivery help Rent on building Depreciation on equipment Utilities Supplies (soap, floor wax, etc.) Administrative costs Behavior Variable Mixed Variable Fixed Fixed Mixed Mixed Fixed 1 MBA 617 Homework Solutions b. Fixed Costs V Cost of food sold ($10,000/5,000) M Wages and fringe benefits: [($4,500  $4,250)/(10,000  5,000)] [$4,500  ($0.05  10,000)] V Fees paid delivery help ($1,250/5,000) F Rent on building F Depreciation on equipment M Utilities: [($600  $500)/(10,000  5,000)] [$600  ($0.02  10,000)] M Supplies: [($200  $150)/(10,000  5,000)] [$200  ($0.01  10,000) F Administrative costs Total costs equation Where: X = unit sales Note: The computations can be performed at other activity levels. c. Total costs = $7,600 + $2.33(9,500) = $29,735 Variable Costs $2.00X 0.05X $4,000 0.25X 1,200 600 0.02X 400 0.01X 100 1,300 $7,600 ______ $2.33X 2 MBA 617 Homework Solutions E14-24 a. R-squared values between possible independent variables and shipping expenses are as follows: Units shipped Weight shipped Sales value 0.924 0.606 0.214 Based on the coefficient of determination, units shipped has the closest relationship with shipping expenses. b. Shipping expenses = $2,247.35 + $1.12X where: X = units shipped c. Shipping expenses = $2,247.35 + ($1.12 x 5,000) = $7,847.35 3 MBA 617 Homework Solutions P14-27 a. Chicken (10 bags x $3/bag) Wages (2

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