Week 13 Preparation Questions Solutions

Week 13 Preparation Questions Solutions - c. Y = [($3,000 +...

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ACCT1501 2011S1 Week 13 Preparation Questions Solutions Preparation Questions: Problem 16.4 (ignore cost driver column), 16.11 Problem 16.4 Cost Cost Behaviour a. Disk Drive Variable b. Assistant’s wages Fixed c. Advertising Fixed d. Rental cars Mixed e. Jet fuel Variable f. Depreciation Fixed g. Utilities Mixed h. Surgical gauze Variable i. Indirect labour Mixed j. Amalgam Variable k. Driver’s salary Fixed l. Building lease Fixed m. Receptionist’s salary Fixed n. Commission Variable o. Claim forms Variable Problem 16.11 1. Let Y = cost, and X = number of clients a. Y = $25,000/5,000 = $5X b. Y = $40,000/5,000 = $8X
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Unformatted text preview: c. Y = [($3,000 + $6,000 + $1,000)/5,000] = $2X d. Y = $15,000 e. Y = $15,000 + $5X + $8X + $2X Y = $15,000 + $15X 2. a. Y = $5(6,000) = $30,000 b. Y = $8(6,000) = $48,000 c. Y = $2(6,000) = $12,000 d. Y = $15,000 e. Y = $15,000 + $15(6,000) = $105,000 3. Y = $15,000 + $15(5,000) = $90,000 (total cost) Unit cost = $90,000/5,000 = $18.00 4. Unit cost = $105,000/6,000 = $17.50 The per unit cost decreases because the fixed costs are spread over a larger number of clients. 5. Clearly, the price must be at least equal to the cost of servicing. The price should also include a profit component....
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