ACCT 221 help A Guide to career/Snaptutorial ACCT 221 help A Guide to career/Snaptutorial | Page 12

Jake owns a machine shop. In reviewing the shop’s utility bills for the
past 12 months, he found that the highest bill of $2,800 occurred in
July when the machines worked 1,400 machine hours. The lowest
utility bill of $2,600 occurred in December when the machines
worked 900 machine hours.
Requirements – using the high-low method
a. Calculate the variable rate per machine hour and the total fixed
utility cost.
b. Show the equation for determining the total utility cost for the
machine shop
c. If Jake anticipates using 1,200 machine hours in January, predict
the shop’s total utility bill using the equation from requirement (b).
Question 2
Compute the missing amounts for the following table (show all
computations)
A B C
Number of units 260 units 720 units 1,500 units
Sales price per unit $20 $8 $25
Variable costs per unit $8 $2 $20
Total fixed costs $14,400 $12,000 $5,000
Target profit $36,000 $15,000 $$20,000
Calculate :
Contribution margin per unit
Contribution margin ratio
Required units to achieve target profit
Required units to breakeven
Required sales dollars to breakeven
Question 3