# ACC 227 ACC227 Module 6 Homework Assignment Solution (AAU Online)

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Part I: Short Response

1.Explain how understanding cost behavior patterns can assist management.

2.What is meant by the relevant range?

3.What is the basic C-V-P equation?  What is a more detailed version of this equation?

4.What is the major advantage of using C-V-P graphs?

5.Why must all mixed costs be segregated into their fixed and variable components?

6.If the level of activity increases during the month, does the fixed cost per unit increase, decrease, or remain constant?

7.Cambridge Company's president receives a \$150,000 base salary and a bonus of 0.5% of sales for the year.  How much will the president earn at a sales level of \$3,000,000 for the year?

8.McIntyre Company pays \$3,000 per month to each of its four production supervisors.  Each supervisor can handle the workload associated with up to 2,400 units of production per month; the current level of production is 9,000 units.  If the company increases its level of production to 12,800 units per month, how much will the company pay, in total, for the salaries of the necessary production supervisors?

9.Chrissy Company sells shovels for \$30.25 each.  The variable cost per shovel is \$14.25.  The company's monthly fixed costs are \$2,400.  Compute the number of shovels the company must sell to break even.

10.Lathrup Company sells riding lawnmowers for \$2,395 each.  The variable cost per lawnmower is \$1,645.  The company’s monthly fixed costs are \$141,000.  Using the C-V-P equation, compute the amount of profit the company will have for a month in which the company sells 275 lawnmowers.

Part II: Application

1.Exercise 21-23 “Variable and Fixed Costs over the Relevant Range” (p. 1104)

2.Exercise 21-28 “High-Low Method of Analyzing Mixed Costs” (p. 1105)

3.Problem 21-43 “High-Low and Scattergraph Methods of Analysis” (p. 1110)

4.Problem 21-46 “Functional and Contribution Margin Income Statements” (pp. 1111-1112)

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