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1.) CVP / Breakeven: Santa has decided to sell autographed pictures of hisself this summer so he can have a little spare cash to spend on Mrs. Claus and maybe some of the good other little elfies. It is going to cost him \$48,000 to buy framing equipment, plus he has to pay a one time “licensing” fee of \$10,000 to Frosty Da Snowman for protection. Each frame will cost \$2 for the glass, \$6 for the framing material, \$1 for the backing, and \$3 for the other materials. On the off-season Santa pays the elfs \$25 per hour. They make 5 frames an hour. Santa figures he’ll sell the autographed pictures for a whopping \$37 each.

Mrs. Claus thinks he has been eating too many cookies and should forget the whole deal. But good ol’ Santa says “ Hey honeycakes, don’t worry about it all I have to do is sell _________of these pictures and we make back all the investment. Then he says in fact, if we sell _________ pictures we will have made \$24,000.

Required: What are the numbers for the “blanks” above? (Breakeven number of frames to sell and the number to sell to make \$24,000.)

2.) High / Low Cost Estimating: Bing-Bang-Boozle Inc. makes plastic beer cups for tailgating, nice fan decals and all that. They had the following overhead costs:

 Machine Hours Overhead Cost January 100 5400 February 160 7200 March 250 9900 April 110 5700 May 180 7800 June 150 6900 July 120 6000

1. Using the High-Low method calculate the variable cost per unit and fixed costs.

2. If the activity in August was 200 machine hours, what would the high-low method predict the overhead cost would be?