Vargis Corporation Has a Machining Capacity of 200,000 Hours Per

question 85

Essay

Vargis Corporation has a machining capacity of 200,000 hours per year. Utilization of capacity is normally 75%; it has been as low as 40% and as high as 90%. An analysis of the accounting records revealed the following selected costs:

Vargis uses the high-low method to analyze cost behavior.
Required:
A. Classify each of the costs as being either variable, fixed, or semivariable.
B. Calculate amounts for the two unknowns in the preceding table.
C.
C. Calculate the total amount that Vargis would expect at a 75% utilization rate for Cost A, Cost B, and Cost
D. Develop an equation that Vargis can use to predict total cost for any level of hours within its range of operation.

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Definitions:

Cesar Chavez

An American labor leader and civil rights activist who co-founded the National Farm Workers Association, leading struggles for the rights of agricultural workers.

National Farm Workers Association

An organization founded to improve the working and living conditions of farm workers in the United States, known for its activism and association with Cesar Chavez.

Nonviolence

The use of peaceful means, not force, to bring about political or social change.

Young Lords

A radical Puerto Rican activist group founded in the 1960s, focusing on social justice issues concerning Puerto Ricans and other Latinos in urban areas.