Assign 4-2 practice prob ch-5

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

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

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:

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

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

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...
View Full Document

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern