Chambliss Corporation Has Three Costs: A, Which Is Variable; B

question 11

Essay

Chambliss Corporation has three costs: A, which is variable; B, which is fixed; and C, which is semivariable. The company uses the high-low method and extracted the following data from its accounting records:
• At 180,000 hours of activity, Cost A totaled $2,610,000.
• At 140,000 hours, the low point during the period, Cost C totaled $1,498,000; at 200,000 hours, the high point, Cost C's fixed portion amounted to $1.75 per hour.
• At 160,000 hours of activity, the sum of Costs A, B, and C amounted to $8,162,000.
Required:
A. Compute the variable portion (total) of Cost C at 140,000 hours of activity.
B. Compute Cost C (total) at 160,000 hours of activity.
C. Compute Cost B (total) at 160,000 hours of activity.

---

Definitions:

Units-Of-Activity

A depreciation method that allocates the cost of an asset over its useful life based on its usage or activity levels, rather than time.

Depreciation Expense

Depreciation expense is the allocated portion of the cost of a tangible asset that is expensed over its useful life, reflecting wear and tear, obsolescence, or loss of value.

Double-Declining-Balance

A method of accelerated depreciation which doubles the normal depreciation rate, reducing the value of an asset more quickly in its early years.

Accelerated Depreciation

A depreciation method that allows faster write-off of assets in the initial years of asset life.