AC505 Chap 5 Hmwk Solutions - Chapter5...

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Chapter 5 Cost Behavior: Analysis and Use Exercise   5-1  (15 minutes) 1. Cups of Coffee Served  in a Week 2,000 2,100 2,200 Fixed cost. .................................. $1,200 $1,200 $1,200 Variable cost. .............................         440             462             484     Total cost. ................................... $1,640 $1,662 $1,684 Average cost per cup of coffee  served *. .................................. $0.820 $0.791 $0.765 * Total cost ÷ cups of coffee served in a week 2. The average cost of a cup of coffee declines as the number of  cups of coffee served increases because the fixed cost is spread  over more cups of coffee.
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Exercise 5-3  (20 minutes) 1. Occupancy- Days Electrical  Costs High activity level (August). . 2,406 $5,148 Low activity level (October). .     124       1,588     Change. ............................... 2,282 $3,560 Variable cost = Change in cost ÷ Change in activity = $3,560 ÷ 2,282 occupancy-days = $1.56 per occupancy-day Total cost (August). ........................................................ $5,148
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AC505 Chap 5 Hmwk Solutions - Chapter5...

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