Lancer Media produces DVD players that sell for P1,250 each. The document provides quarterly operating expense data for the past 12 months, including expenses for components, supplies, labor, rent, salaries, utilities, shipping, advertising, and administration. It asks to: (1) identify fixed, variable, and semi-variable costs; (2) use least squares to determine the fixed and variable portions of semi-variable costs and calculate total expenses for 200 units; and (3) use the high-low method to determine fixed and variable portions of operating expenses.
Lancer Media produces DVD players that sell for P1,250 each. The document provides quarterly operating expense data for the past 12 months, including expenses for components, supplies, labor, rent, salaries, utilities, shipping, advertising, and administration. It asks to: (1) identify fixed, variable, and semi-variable costs; (2) use least squares to determine the fixed and variable portions of semi-variable costs and calculate total expenses for 200 units; and (3) use the high-low method to determine fixed and variable portions of operating expenses.
Lancer Media produces DVD players that sell for P1,250 each. The document provides quarterly operating expense data for the past 12 months, including expenses for components, supplies, labor, rent, salaries, utilities, shipping, advertising, and administration. It asks to: (1) identify fixed, variable, and semi-variable costs; (2) use least squares to determine the fixed and variable portions of semi-variable costs and calculate total expenses for 200 units; and (3) use the high-low method to determine fixed and variable portions of operating expenses.
Problem 1: Lancer Media produces a DVD player that sells for P1,250.
Total operating expenses for the past 12 months are as
follows: 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Units produced and sold 1,700 1,400 1,900 2,200 Component cost P 76,500.00 P 63,000.00 P 85,500.00 P 99,000.00 Supplies 1,760.00 1,680.00 1,850.00 1,910.00 Assembly labor 24,225.00 19,950.00 27,075.00 31,350.00 Rent 2,200.00 2,200.00 2,200.00 2,200.00 Supervisor salary 5,500.00 5,500.00 5,500.00 5,500.00 Electricity 310.00 250.00 400.00 470.00 Telephone 188.00 180.00 192.00 200.00 Gas 260.00 200.00 340.00 400.00 Shipping 1,615.00 1,330.00 1,805.00 2,090.00 Advertising 2,500.00 2,500.00 2,500.00 2,500.00 Administrative costs 15,200.00 14,500.00 15,750.00 16,100.00 Total 130,258.00 111,290.00 143,112.00 161,720.00 Required a. From the given cost above, identify which among the cost is variable, fixed and semi-variable cost. b. Using method of least square determine how much of the semi-variable cost is fixed and variable and compute for the total operating expenses that would be incurred for 200 units. c. Using High and Low Method determine how much of the operating expense is variable and how much is fixed.