at one of Kantola Corporations factories are listed below El

at one of Kantola Corporation\'s factories are listed below Electrical costs Machine-Hours Electrical Cost $36,405 $36,493 $36,302 3,570 3,580 3,553 3,627 February April May June 7 $36,833 $36,800 3,565 $36,366 $36,237 $36,213 $36,577 July August 3,548 3,542 3,593 October Management believes that electrical cost is a mixed cost that depends on machine-hours. Using the high-low method estimate the variable and fixed components of this cost. Those estimates are closest to: A. $0.14 per machine-hour; $36,336 per month B. $10.19 per machine-hour; $36,470 per month C. $7.48 per machine-hour; $9,708 per month D. $7.29 per machine-hour; $10,392 per month 6. Calip Corporation, a merch andising company, reported the following results for October: Sales $433,000 t of goods sold (all variable) $173,000 Total variable selling expense Total fixed selling expense Total variable administrative expense $10,000 Total fixed administrative expense $25,600 $18,000 $9,900 The gross margin for October is: A. $232,000 B. $260,000 C. $397,500 D. $196,500

Solution

Q5. Answer is D. $ 7.29 per MH and $ 10392 Fixed cost Explanation MH Cost High Activity 3627 36833 Low Activity 3542 36213 Change 85.00 620 Vvariable cost per MH: Change in cost/ Change in MH 620 /85 = $ 7.29 per MH Fixed cost: Total cost of 3627 36833 Less: Variable cost @ 7.29 26441 Fixed cost: 10392 Q6 Answer is B. $ 260000 Explanation: Sales: 433000 Less: Cost of Goods sold 173000 Gross margin 260000