Ziegler Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the total cost. The data for various levels of production are as follows: 

 

a. Determine the variable cost per unit and the total fixed cost. 

b. Based on part (a), estimate the total cost for 1,570 units of production.

Belmain Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows: 

Required:

1. Prepare an estimated income statement for 20Y7.

2. What is the expected contribution margin ratio? Round to the nearest whole percent.  

3. Determine the break-even sales in units and dollars. 

4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales?

Transcribed Image Text:

Units Produced 1,235 2,270 3,135 Total Costs $102,600 136,340 159,600 Units Produced 1,235 2,270 3,135 Total Costs $102,600 136,340 159,600

Answer rating: 100% (QA)

Solution Part a Using the highlow method we first need to determine the variable cost per unit The change in total cost divided by the change in units ... View the full answer