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    marissaann's Avatar
    marissaann Posts: 7, Reputation: 1
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    #1

    Feb 28, 2006, 02:37 PM
    accounting
    I am currently in managerial accounting and if anyone could be of help, I'd really appreciate it... here are some problems I have no clue how to solve:

    Shipping costs at Fisheries Inc. are a mixed cost with a variable and fixed cost components. Records indicate the company shipped 6000 tons of halibut for $5000 in March and 9000 tons for $7400 in April. Assuming that this activity is within the relevant range, the expected shipping cost for shipping 7800 tons would be:

    Thanks so much!
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    Feb 28, 2006, 06:07 PM
    6,000 tons = $5,000
    9,000 tons = $7,400

    Price made up of FC and VC/ton

    3,000 extra tons (9,000tons-6,000tons) cost an ADDITIONAL $2,400 ($7,400-$5,000)

    So, VC on 3,000 tons is $2,400
    VC/ton = $2,400/3,000 = $0.80

    On the 6,000 ton order:
    VC = 6,000 x $0.80 = $4,800
    They chargred $5,000
    So, FC must be $200 (5,000-4,800)

    Check the 9,000 order to be sure
    FC = 200
    VC = 9,000 x 0.80 = $7,200
    Total = 200 + 7,200 = $7,400 (that is what was charged)

    Therefore, this question asks the total cost on an order of 7,800 tons:
    FC = $200
    VC = 7,800 tons x $0.80 = $6,240
    Total Shipping Costs on 7,800 tons = $6,440
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