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Manager Homework 2 - Managerial Accounting ACC116B - Section 50120 Page 1 of 6 Question 1: Score 0.45/1 Your response Exercise 5-1 Fixed and Variable Cost Behavior [LO1] Koffee Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $1,100 and the variable cost per cup of coffee served is $0.26. Requirement 1: Fill in the following table with your estimates of total costs and cost per cup of coffee at the indicated levels of activity for a coffee stand. (Round cost of a cup of coffee to 3 decimal places. Omit the "$" sign in your response.) Cups of Coffee Served in a Week 1,800 1,900 2,000 1100 (8%) $ 1,100 (8%) $ $ 1,100 (8%) 468 (8%) $ 1,568 (8%) $ .871 (8%) $ $ 494 (8%) 1,594 (8%) .838 (0%) $ 520 (8%) $ 1,620 (8%) .81 (8%) Correct response Exercise 5-1 Fixed and Variable Cost Behavior [LO1] Koffee Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $1,100 and the variable cost per cup of coffee served is $0.26. Requirement 1: Fill in the following table with your estimates of total costs and cost per cup of coffee at the indicated levels of activity for a coffee stand. (Round cost of a cup of coffee to 3 decimal places. Omit the "$" sign in your response.) Cups of Coffee Served in a Week 1,800 1,900 2,000 $ 1,100 $ 1100 $ 1,100 468 494 520 $ 1,568 $ .871 $ 1,594 $ 0.839 $ 1,620 $ .81 Fixed cost Variable cost Total cost Cost per cup of coffee served Fixed cost Variable cost Total cost Cost per cup of coffee served Total grade: 1.01/12 + 1.01/12 + 1.01/12 + 1.01/12 + 1.01/12 + 1.01/12 + 1.01/12 + 1.01/12 + 1.01/12 + 1.01/12 + 0.01/12 + 1.01/12 = 8% + 8% + 8% + 8% + 8% + 8% + 8% + 8% + 8% + 8% + 0% + 8% Feedback: Cost per cup of coffee served = Total cost cups of coffee served in a week Requirement 2: Does the cost per cup of coffee served increase, decrease, or remain the same as the number of cups of coffee served in a week increases? Your Answer: Choice Increases Decreases Remains the same Feedback: The average cost of a cup of coffee declines as the number of cups of coffee served increases because the fixed cost is spread over more cups of coffee. Selected Correct Question 2: Score 0.5/1 Your response Exercise 5-3 High-Low Method [LO3] The Edelweiss Hotel in Vail, Colorado, has accumulated records of the total electrical costs of the hotel and the number of occupancy-days over the last year. An occupancy-day represents a room rented out for one day. The hotel's business is highly seasonal, with peaks occurring during the ski season and in the summer. Month January February March April May June July OccupancyDays 2,604 2,856 3,534 1,440 540 1,116 3,162 Electrical Costs $ 6,257 $ 6,550 $ 7,986 $ 4,022 $ 2,289 $ 3,591 $ 7,264 Correct response Exercise 5-3 High-Low Method [LO3] The Edelweiss Hotel in Vail, Colorado, has accumulated records of the total electrical costs of the hotel and the number of occupancy-days over the last year. An occupancy-day represents a room rented out for one day. The hotel's business is highly seasonal, with peaks occurring during the ski season and in the summer. Month January February March April May June OccupancyDays 2,604 2,856 3,534 1,440 540 1,116 Electrical Costs $ 6,257 $ 6,550 $ 7,986 $ 4,022 $ 2,289 $ 3,591 http://mh10.brownstone.net/modules/viewRecord.TestDetails 9/24/2008 Homework Manager 2 - Managerial Accounting ACC116B - Section 50120 Page 2 of 6 August September October November December 3,608 1,260 186 1,080 2,046 $ 8,111 $ 3,707 $ 1,712 $ 3,321 $ 5,196 July August September October November December 3,162 3,608 1,260 186 1,080 2,046 $ 7,264 $ 8,111 $ 3,707 $ 1,712 $ 3,321 $ 5,196 Requirement 1: Using the high-low method, estimate the variable cost of electricity per occupancy-day and the fixed cost of electricity per month. (Round the fixed cost to the nearest whole dollar and the variable cost to the nearest whole cent. Omit the "$" sign in your response.) Requirement 1: Using the high-low method, estimate the variable cost of electricity per occupancy-day and the fixed cost of electricity per month. (Round the fixed cost to the nearest whole dollar and the variable cost to the nearest whole cent. Omit the "$" sign in your response.) Variable cost Fixed cost $ $ 1.87 (50%) 1364.04 per occupancy day (0%) per month Variable cost Fixed cost $ 1.87 per occupancy day $ 1,364 per month Total grade: 1.01/2 + 0.01/2 = 50% + 0% Feedback: Month High activity level (August) Low activity level (October) Change Variable cost OccupancyDays 3,608 186 3,422 = Change in cost Change in activity = $6,399 3,422 occupancy-days = $1.87 per occupancy-day Electrical Costs $ 8,111 1,712 $ 6,399 Total cost (August) Variable cost element ($1.87 per occupancy-day 3,608 occupancy-days) Fixed cost element $ 8,111 6,747 $ 1,364 Requirement 2: Which of the following statement(s) is true? (Select all that apply.) Choice Less systematic factors such as frugality of individual guests may also affect electrical costs Electrical cost may reflect seasonal factors other than just the variation in occupancy days Fixed cost will not be affected by the number of days in a month Total correct answers: 2 Partial Grading Explained Selected Yes Yes Yes Points +1 +1 -1 Feedback: Electrical costs may reflect seasonal factors other than just the variation in occupancy days. For example, common areas such as the reception area must be lighted for longer periods during the winter. This will result in seasonal effects on the fixed electrical costs. Additionally, fixed costs will be affected by how many days are in a month. In other words, costs like the costs of lighting common areas are variable with respect to the number of days in the month, but are fixed with respect to how many rooms are occupied during the month. Other, less systematic, factors may also affect electrical costs such as the frugality of individual guests. Some guests will turn off lights when they leave a room. Others will not. http://mh10.brownstone.net/modules/viewRecord.TestDetails 9/24/2008 Homework Manager 2 - Managerial Accounting ACC116B - Section 50120 Page 3 of 6 Question 3: Score 1/1 Your response Exercise 5-4 Contribution Format Income Statement [LO4] Haaki Shop, Inc., is a large retailer of water sports equipment. An income statement for the company's surfboard department for a recent quarter is presented below: The Haaki Shop, Inc. Income StatementSurfboard Department For the Quarter Ended May 31 Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses. Net operating income $ 800,000 300,000 500,000 $ 250,000 160,000 Correct response Exercise 5-4 Contribution Format Income Statement [LO4] Haaki Shop, Inc., is a large retailer of water sports equipment. An income statement for the company's surfboard department for a recent quarter is presented below: The Haaki Shop, Inc. Income StatementSurfboard Department For the Quarter Ended May 31 Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses. Net operating income $ 800,000 300,000 500,000 $ 250,000 160,000 410,000 $ 90,000 410,000 $ 90,000 The surfboards sell, on the average, for $400 each. The department's variable selling expenses are $50 per surfboard sold. The remaining selling expenses are fixed. The administrative expenses are 25% variable and 75% fixed. The company purchases its surfboards from a supplier at a cost of $150 per surfboard. Requirement 1: Prepare an income statement for the quarter using the contribution approach. (Omit the "$" sign in your response.) The Haaki Shop, Inc Income StatementSurfboard Department For the Quarter Ended May 31 Sales (6%) Variable expenses: Cost of goods sold (6%) Selling expenses (6%) Administrative expenses (6%) Contribution margin (6%) Fixed expenses: Selling expenses (6%) Administrative expenses (6%) Net operating income (6%) 150,000 (6%) 120,000 (6%) 270,000 (6%) $ 90,000 (6%) $ 300,000 (6%) 100,000 (6%) 40,000 (6%) 440,000 (6%) 360,000 (6%) $ 800,000 (6%) The surfboards sell, on the average, for $400 each. The department's variable selling expenses are $50 per surfboard sold. The remaining selling expenses are fixed. The administrative expenses are 25% variable and 75% fixed. The company purchases its surfboards from a supplier at a cost $150 of per surfboard. Requirement 1: Prepare an income statement for the quarter using the contribution approach. (Omit the "$" sign in your response.) The Haaki Shop, Inc Income StatementSurfboard Department For the Quarter Ended May 31 Sales Variable expenses: Cost of goods sold Selling expenses Administrative expenses Contribution margin Fixed expenses: Selling expenses Administrative expenses Net operating income 150,000 120,000 $ $ 300,000 100,000 40,000 $ 800,000 440,000 360,000 270,000 90,000 Feedback: Cost of goods sold ($150 per surfboard 2,000 surfboards*) Selling expenses ($50 per surfboard 2,000 surfboards) Administrative expenses (25% $160,000) *$800,000 sales $400 per surfboard = 2,000 surfboards. $ 300,000 100,000 40,000 Your response Requirement 2: What was the contribution toward fixed expenses and profits from each surfboard sold during the quarter? (State this figure in a single dollar amount per surfboard.) (Omit the "$" sign in your response.) Contribution margin per surfboard $ 180 (100%) Correct response Requirement 2: What was the contribution toward fixed expenses and profits from each surfboard sold during the quarter? (State this figure in a single dollar amount per surfboard.) (Omit the "$" sign in your response.) Contribution margin per surfboard $ 180 http://mh10.brownstone.net/modules/viewRecord.TestDetails 9/24/2008 Homework Manager 2 - Managerial Accounting ACC116B - Section 50120 Page 4 of 6 Feedback: Since 2,000 surfboards were sold and the contribution margin totaled $360,000 for the quarter, the contribution of each surfboard toward fixed expenses and profits was $180 ($360,000 2,000 surfboards = $180 per surfboard). Another way to compute the $180 is: Selling price per surfboard Less variable expenses: Cost per surfboard Selling expenses Administrative expenses ($40,000 2,000 surfboards) Contribution margin per surfboard $ 400 $ 150 50 20 220 $ 180 Question 4: Score 0/1 Your response Exercise 5-6 Cost Behavior; Contribution Format Income Statement [LO1, LO4] Parker Company manufactures and sells a single product. Requirement 1: A partially completed schedule of the company's total and per unit costs over a relevant range of 60,000 to 100,000 units produced and sold each year is given. Complete the schedule of the company's total and unit costs below. (Round the "total costs" to the nearest dollar amount and the "cost per unit" to 2 decimal places. Omit the "$" sign in your response.) Units Produced and Sold 60,000 80,000 100,000 Total costs: Variable costs Fixed costs Total costs Cost per unit: Variable cost Fixed cost Total cost per unit $ $ (0%) (0%) (0%) $ $ (0%) (0%) (0%) $ $ (0%) (0%) (0%) $ $ 150,000 360,000 510,000 $ $ (0%) (0%) (0%) $ $ (0%) (0%) (0%) Total costs: Variable costs Fixed costs Total costs Cost per unit: Variable cost Fixed cost Total cost per unit $ $ $ $ Correct response Exercise 5-6 Cost Behavior; Contribution Format Income Statement [LO1, LO4] Parker Company manufactures and sells a single product. Requirement 1: A partially completed schedule of the company's total and per unit costs over a relevant range of 60,000 to 100,000 units produced and sold each year is given. Complete the schedule of the company's total and unit costs below. (Round the "total costs" to the nearest dollar amount and the "cost per unit" to 2 decimal places. Omit the "$" sign in your response.) Units Produced and Sold 60,000 80,000 100,000 150,000 360,000 510,000 2.5 6 8.5 $ 200,000 360,000 $ 560,000 $ $ 2.5 4.5 7 $ 250,000 360,000 $ 610,000 $ $ 2.5 3.6 6.1 Total grade: 0.01/15 + 0.01/15 + 0.01/15 + 0.01/15 + 0.01/15 + 0.01/15 + 0.01/15 + 0.01/15 + 0.01/15 + 0.01/15 + 0.01/15 + 0.01/15 + 0.01/15 + 0.01/15 + 0.01/15 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% Feedback: The company's variable cost per unit would be: Your response Requirement 2: Assume that the company produces and sells 90,000 units during the year at the selling price of $7.50 per unit. Prepare a contribution format income statement for the year. (Input all amounts as positive values. Omit the "$" sign in your response.) Income Statement For the Year Ended Correct response Requirement 2: Assume that the company produces and sells 90,000 units during the year at the selling price of $7.50 per unit. Prepare a contribution format income statement for the year. (Input all amounts as positive values. Omit the "$" sign in your response.) Income Statement For the Year Ended http://mh10.brownstone.net/modules/viewRecord.TestDetails 9/24/2008 Homework Manager 2 - Managerial Accounting ACC116B - Section 50120 Page 5 of 6 (Click for List) (Click for List) (Click for List) (Click for List) (Click for List) (0%) (0%) (0%) (0%) (0%) $ (0%) (0%) (0%) (0%) Sales Variable expenses Contribution margin Fixed expenses Net operating Income $ 675,000 225,000 450,000 360,000 $ 90,000 $ (0%) Total grade: 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% Feedback: Sales (90,000 units $7.50 per unit) = $675,000 Variable expenses (90,000 units $2.50 per unit) = $225,000 Question 5: Score 0/1 Your response Exercise 5-9 Cost Behavior; High-Low Method [LO1 , LO3] Speedy Parcel Service operates a fleet of delivery trucks in a large metropolitan area. A careful study by the company's cost analyst has determined that if a truck is driven 120,000 miles during a year, the average operating cost is 11.6 cents per mile. If a truck is driven only 80,000 miles during a year, the average operating cost increases to 13.6 cents per mile. Requirement 1: Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. (Round the variable cost per mile to 3 decimal places. Omit the "$" sign in your response.) Correct response Exercise 5-9 Cost Behavior; High-Low Method [LO1 , LO3] Speedy Parcel Service operates a fleet of delivery trucks in a large metropolitan area. A careful study by the company's cost analyst has determined that if a truck is driven 120,000 miles during a year, the average operating cost is 11.6 cents per mile. If a truck is driven only 80,000 miles during a year, the average operating cost increases to 13.6 cents per mile. Requirement 1: Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. (Round the variable cost per mile to 3 decimal places. Omit the "$" sign in your response.) Variable cost per mile Fixed cost per year $ $ 7.60 480,000 (0%) (0%) Variable cost per mile Fixed cost per year $ 0.076 $ 4,800 Total grade: 0.01/2 + 0.01/2 = 0% + 0% Feedback: Miles Driven 120,000 80,000 40,000 Total Annual Cost* $ 13,920 10,880 $ 3,040 High level of activity Low level of activity Change * 120,000 miles $0.116 per mile = $13,920 80,000 miles $0.136 per mile = $10,880 Variable cost per mile: Fixed cost per year: Total cost at 120,000 miles Less Variable cost element: 120,000 miles $ 0.076 per mile Fixed cost per year $ 13,920 9,120 $ 4,800 http://mh10.brownstone.net/modules/viewRecord.TestDetails 9/24/2008 Homework Manager 2 - Managerial Accounting ACC116B - Section 50120 Page 6 of 6 Your response Requirement 2: Express the variable and fixed costs in the form Y = a + bX. (Round the variable cost per mile to 3 decimal places. Omit the "$" sign in your response.) Y= $ 480,000 (0%) + $ 7.6 (0%) X Correct response Requirement 2: Express the variable and fixed costs in the form Y = a + bX. (Round the variable cost per mile to 3 decimal places. Omit the "$" sign in your response.) Y= $ 4,800 + $ 0.076 X Total grade: 0.01/2 + 0.01/2 = 0% + 0% Your response Requirement 3: If a truck were driven 100,000 miles during a year, what total cost would you expect to be incurred? (Omit the "$" sign in your response.) Total annual cost Total grade: 0.01/1 = 0% Feedback: Fixed cost Variable cost: 100,000 miles $0.076 per mile Total annual cost $ 4,800 7,600 $ 12,400 $ 1,240,000 (0%) Correct response Requirement 3: If a truck were driven 100,000 miles during a year, what total cost would you expect to be incurred? (Omit the "$" sign in your response.) Total annual cost $ 12,400 http://mh10.brownstone.net/modules/viewRecord.TestDetails 9/24/2008 ... View Full Document

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