Quiz 6 Accounting II.docx

# Quiz 6 Accounting II.docx - Review Skill Builder...

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TI6-1  (book/static )     Review Skill  Builder Suppose  Embassy SuitesEmbassy Suites  incurs  \$ 100 comma 000\$100,000  of fixed costs each month. Compute the (a) total fixed cost and (b) fixed cost per guest if the hotel has  16 comma 00016,000  guests next month. Compare the fixed cost per guest at the higher occupancy rate to the fixed cost per  guest when only  2 comma 0002,000  guests stay during the month. (a) Compute the total fixed cost if the hotel has  16 comma 00016,000  guests next month. Total fixed costs  do not react   to wide changes in volume; therefore, total fixed costs will  still be \$100,000   . (b) Compute the fixed cost per guest if the hotel has  16 comma 00016,000  guests next month. First, identify the formula to compute the fixed cost per guest, then compute the fixed cost per guest at (1) 16 comma 00016,000  guests and at (2)  2 comma 0002,000  guests. (Round the fixed cost per guest to the nearest cent.)           Fixed cost     Total fixed cost / Number of guests = per guest   (1) \$100,000 / 16,000 = \$6.25 (2) \$100,000 / 2,000 = \$50.00 If only  2 comma 0002,000  guests stay during the month, the fixed cost per guest is  much higher than   when  16 comma 00016,000  stay during the month.

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Scott EquipmentScott Equipment produces high-quality soccer balls. If the fixed cost per ball is \$ 3\$3 when the company produces 15 comma 00015,000 balls, what is the fixed cost per ball when it produces 22 comma 50022,500 balls? Assume that both volumes are in the same relevant range.

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• Spring '15
• Wilkins
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