ATG212Chapter5Solutions

ATG212Chapter5Solutions - Brief Exercise 5-3 (30 minutes)...

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Brief Exercise 5-3  (30 minutes) 1. Month Occupancy- Days Electrical  Costs High activity level (August). . 3,608 $8,111 Low activity level (October). .     186       1,712     Change. ............................... 3,422 $6,399 Variable cost = Change in cost ÷ Change in activity  = $6,399 ÷ 3,422 occupancy-days  = $1.87 per occupancy-day Total cost (August). ........................................................ $8,111 Variable cost element  ($1.87 per occupancy-day × 3,608 occupancy-days). .   6,747     Fixed cost element. ........................................................ $1,364 2. 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 results in seasonal effects on the fixed electrical costs. Additionally, fixed costs are affected by the number of days 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 
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ATG212Chapter5Solutions - Brief Exercise 5-3 (30 minutes)...

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