[dd3515]

E4-8


Account Analysis [LO 2]

Reef Office Supplies is interested in estimating the cost involved in hiring new employees. The following information is available regarding the costs of operating the Human Resource department at Reef Office Supplies in May when there were 60 new hires.



Human Resource Department

May
Staff salaries $33,000
Manager salary 8,000
Office supplies 300
Depreciation of office equipment 400
Share of building cost (based on square feet occupied
by Human Resources) 2,000

Total $43,700






Use account analysis to determine fixed cost per month and variable cost per new hire.

Variable cost per new hire $
Fixed costs per month $







The company is planning to hire 70 employees in June. Estimate the total cost of Human Resources for June.

$






What is the expected incremental cost associated with hiring 10 more employees than were hired in May?

$

[dd3515]

Scherzo Industrial is interested in estimating fixed and variable manufacturing costs using data from October. Based on judgment, the plant manager classified each manufacturing cost as fixed, variable, or part fixed and part variable.




Units
Produced
Cost


October 1,200 $119,340

Detail of Cost: Cost Behavior
Material $50,400 Variable
Direct labor 19,200 Variable
Depreciation 9,000 Fixed
Phone 300 Fixed
Other utilities 4,200 20% Fixed
Supervisory salaries 25,200 75% Fixed
Equipment repair 7,500 20% Fixed
Indirect materials 540 Variable
Factory maintenance 3,000
80% Fixed
Total $119,340






Use account analysis to estimate fixed cost per month and variable costs per unit produced.

Variable cost per unit $
Fixed costs per month $







Based on your answer to part a, what is your estimate of the incremental cost of producing 300 units?

$

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