GN_ch5_1

GN_ch5_1 - Exercise 5-1 (15 minutes) 1 . Fixed cost...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
 (15 minutes) 1. Cups of Coffee Served  in a Week 1,800 1,900 2,000 Fixed cost $1,100 $1,100 $1,100 Variable cost         468             494             520     Total cost $1,568 $1,594 $1,620 Cost per cup of coffee served * $0.871 $0.839 $0.810 * Total cost ÷ cups of coffee served in a week 2. 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. Exercise 5-3  (20 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 will result in seasonal effects on the fixed electrical 
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/11/2009 for the course ACCT 410x taught by Professor Bonner during the Fall '06 term at USC.

Page1 / 6

GN_ch5_1 - Exercise 5-1 (15 minutes) 1 . Fixed cost...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online