Duncan Shirts sells championship shirts with official sports league logos. Duncan employs five college students who serve
Question:
Duncan Shirts sells championship shirts with official sports league logos. Duncan employs five college students who serve as sales representatives in their spare time. Each sales representative at Duncan earns a salary of $10,000 per year, plus a commission of $5 per each shirt he or she sells. Last year, the company sold a total of 50,000 shirts.
The cost equation for total selling cost is:
Total selling cost = Total Fixed Costs + Variable Rate x Units of Output
| The total selling cost for Duncan Shirts is: |
| If the company expects to sell 75,000 shirts for the coming year, budgeted total selling cost is: |
The High-Low Method
Ginobli Company had the following 10 months of data on materials handling cost and number of parts within its manufacturing plant
Month | Materials Handling Cost | Number of Parts |
January | $61,550 | 450 |
February | 74,500 | 700 |
March | 78,875 | 625 |
April | 65,250 | 550 |
May | 66,375 | 525 |
June | 80,625 | 650 |
July | 79,125 | 675 |
August | 88,000 | 800 |
September | 86,750 | 850 |
October | 82,125 | 775 |
Find the high point and the low point for Ginobli Company.
| High point: |
| Month = |
| Cost = |
| Activity level (# of parts) = |
| Low point: |
| Month = |
| Cost = |
| Activity level (# of parts) = |
Calculate Ginobli Company’s variable rate for materials handling costs based on the number of parts.
Variable rate = per part
Calculate Ginobli Company’s fixed monthly cost of materials handling.
Fixed cost =
Based on the variable rate and fixed monthly cost, provide the following estimated materials handling costs for the coming year if the number of parts expected is 8,000:
| Expected annual fixed cost = |
| Expected annual variable cost = |
| Total annual materials handling cost = |
A Concise Introduction to Logic
ISBN: 978-1305958098
13th edition
Authors: Patrick J. Hurley, Lori Watson