Assign 4-2 practice prob ch-5

Assign 4-2 practice prob ch-5 - Variable Selling 50...

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Brief Exercise 5-1 Part 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 0.87 0.84 0.81 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 doesn’t change Brief Exercise 5-4 (note: I am not sure if I did this right. The example problem didn’t 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 800000 Less: Variable Exp:
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Unformatted text preview: Variable Selling 50 Variable Production 150 Variable Adm 40000 40200 Contribution margin 759800 Less: Fixed exp: Fixed production 299850 fixed selling 249950 fixed adm 120000 669800 Net operating income 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 Month # of x-rays taken Xray cost Highest activity 7000 29000 Lowest activity 3000 17000 change 4000 12000 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...
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This note was uploaded on 10/10/2010 for the course ACCT 225 S taught by Professor Webster during the Spring '10 term at Franklin.

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Assign 4-2 practice prob ch-5 - Variable Selling 50...

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