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    Incremental Analysis: High Low Method and Allocated Cost

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    ** 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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    https://brainmass.com/business/accounting/incremental-analysis-high-low-method-allocated-cost-316198

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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

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