Exercise Brief 5-1 Part 1.
cups of coffee served in a week 1,800 1,900 2,000 1,100 1,100 1,100 468 494 520 1,568 1,594 1,620 0.87 0.84 0.81
Fixed Cost Variable Cost Total Cost cost per cup of coffee served
Part 2. As # of coffee served increases, the cost per cup decreases because of economies of scale. It is more cost effective to sell more coffee because the fixed cost doesnt change Brief Exercise 5-4 (note: I am not sure if I did this right. The example problem didnt help and I was not sure how to calculate variable expense and fixed expense. From the example problem they said that Net operating income in both approach should be equal. So I used that to
calculate the Fixed production. Is this correct?) sales Variable Less: Exp: Variable Selling Variable Production Variable Adm Contribution margin Less: Fixed exp: Fixed production fixed selling fixed adm Net operating income 800000 50 150 40000
40200 759800
299850 249950 120000
669800 90000
Exercise 5-10 Lowest activity was in June and it was 3,000 and $17,000 Highest activity was in Feb and it was 7,000 and $29,000
# of xrays taken 7000 3000 4000 Xray cost 29000 17000 12000
Month
Highest activity Lowest activity
change
Variable cost = change in cost /change in activity = 12000/4000 = 3
Fixed cost element
= total cost var cost element = 29,000 (3*7,000) = 8,000
Part 2. Y=mx + b Y=3x + 8,000 Y=21,800 If they take 4,600 xrays, it would cost them $21,800