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Incremental Analysis: High Low Method and Allocated Cost

** Please see the attached file for the complete problem description **

Problems related to the following: Incremental Analysis; High Low Method; Multi-Product; Allocated Cost; Joint Cost; and Target Costing.

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ANSWERS
Please see attached file for answers.

Worksheet 1 - Finance company
Worksheet 2 - Bike company
Worksheet 3 - Syrup company
Worksheet 4 - Electronics manufacturer
Worksheet 5 - Orange juice
Worksheet 6 - Portable studio

QUESTIONS

1. A finance company charges a $400 processing for each loan it processes. Their costs over the past year associated with processing loans is as follows:

Loans
Processed Cost
January 160 $47,000
February 180 47,900
March 190 48,500
April 201 48,600
May 225 49,900
June 300 54,100
July 275 51,300
August 230 50,450
September 209 49,400
October 175 47,500
November 165 47,200
December 150 47,100

a. Use the high-low method to estimate fixed and variable costs.
b. Based on these estimates, calculate the number of loans that must be made to break even.
c. Estimate total profit in a month when 250 loans are processed.

2. A bike company produces and sells three models:

Model #1 Model #2 Model #3 Total
Units sold 1,000 2,000 2,000 5,000
Sales $100,000 $120,000 $80,000 $300,000
Less variable costs 50,000 48,000 24,000 122,000
Contribution margin $50,000 $72,000 $56,000 178,000
Less common fixed ...

Solution Summary

This solution provides a detailed analysis and explanation of the given accounting assignment.

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