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Chap+02+Cost+Definitions+Ex - in a movie that was shooting...

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Chapter 2 Cost Definitions: Luisa Giovanni is a student at Texas State University. To help pay her way through college, Luisa started a dog walking service. She has 10 client dogs—five are walked on the first shift (6:30 a.m. and 5:00 p.m.), and five are walked on the second shift (7:30 a.m. and 6:00 p.m.). Last month, Luisa noted the following: a. Internet service cost of $40 a month. This enables her to keep in touch with her owners, bill them by e-mail, and so-on. b. Dog treats of $50 to reward each dog at the end of each walk. c. A heavy duty raincoat and hat for $100. d. Partway through the month, Luisa’s friend, Jason, offered her a chance to play a bit role
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Unformatted text preview: in a movie that was shooting on location in Austin. The job paid $100 and would have required Luisa to be on location at 6 A.M. and to remain for 12 hours. Regretfully, Luisa turned it down. e. The owners pay Luisa $200 per month for her services. 1) Which of the above is an indirect cost? 2) Which of the above is a variable cost? 3) Which of the above is a fixed cost? 4) At the end of the month, how would Luisa classify her Internet payment of $40 – as a cost on the balance sheet or as an expense on the income statement? 5) Which of the above is an opportunity cost? Why? 6) What price is charged? What is Luisa’s total revenue for the month?...
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