Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 4E
1.
To determine
Fixed and Variable Cost Behavior: Fixed cost lump-sum amount remains the same for a given period while the variable cost for per unit produced remains same. When cost behavior is discussed, an estimation must be made about operating levels.
To calculate the company’s fixed cost, variable cost, total cost and average cost per cup of coffee at various levels of activity as given.
2.
To determine
Fixed and Variable Cost Behaviour: Fixed cost lump-sum amount remains the same for a given period while the variable cost for per unit produced remains same. When cost behaviour is discussed, an estimation must be made about operating levels.
To determine whether the average cost per cup of coffee served increase, decrease or remain the same as the number of cups coffee served in a week increases.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is
$600 and the variable cost per cup of coffee served is $0.44.
Required:
1. Fill in the following table with your estimates of the company's total cost and average cost per cup of coffee at the indicated levels of
activity.
2. Does the average cost per cup of coffee served increase, decrease, or remain the same as the number of cups of coffee served in a
week increases?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Fill in the following table with your estimates of the company's total cost and average cost per cup of coffee at the indicated
levels of activity. (Round the "Average cost per cup of coffee served" to 3 decimal places.)
Cups of Coffee Served in a Week
2,200
Fixed cost
Variable cost
Total cost
Average cost per cup of coffee served
S
2,100
0 S
2,300
Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is
$900 and the variable cost per cup of coffee served is $0.54.
Required:
1. Fill in the following table with your estimates of the company's total cost and average cost per cup of coffee at the indicated levels of
activity.
2. Does the average cost per cup of coffee served increase, decrease, or remain the same as the number of cups of coffee served in a
week Increases?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Fill in the following table with your estimates of the company's total cost and average cost per cup of coffee at the
indicated levels of activity. (Round the "Average cost per cup of coffee served" to 3 decimal places.)
Fixed cost
Variable cost
Total cost
Average cost per cup of coffee served
1,400 Cups of 1,500 Cups of
Coffee
Coffee
Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is
$600 and the variable cost per cup of coffee served is $0.47.
Required:
1. Fill in the following table with your estimates of the company's total cost and average cost per cup of coffee at the indicated levels of
activity.
2. Does the average cost per cup of coffee served increase, decrease, or remain the same as the number of cups of coffee served in a
week increases?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Fill in the following table with your estimates of the company's total cost and average cost per cup of coffee at the indicated
levels of activity. (Round the "Average cost per cup of coffee served" to 3 decimal places.)
Fixed cost
Variable cost
Total cost
Average cost per cup of coffee served
700 Cups of
Coffee
$
0 $
0
Chapter 1 Solutions
Introduction To Managerial Accounting
Ch. 1 - What are the three major types of product costs in...Ch. 1 - Define the following: (a) Direct materials, (b)...Ch. 1 - Explain the difference between a product cost and...Ch. 1 - Distinguish between (a) a variable cost, (b) a...Ch. 1 - What effect does an increase in the activity level...Ch. 1 - Define the following terms: (a) Costbehavior and...Ch. 1 - What is meant by an activity base when dealing...Ch. 1 - Managers often assume a strictly linear...Ch. 1 - Distinguish between discretionary fixed costs and...Ch. 1 - Does the concept of the relevant range apply to...
Ch. 1 - What is the difference between a traditional...Ch. 1 - Prob. 12QCh. 1 - Define the following terms: differential cost,...Ch. 1 - Only variable costs can be differential costs. Do...Ch. 1 - Prob. 1AECh. 1 - This Excel worksheet form is to be used to...Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Prob. 4F15Ch. 1 - Prob. 5F15Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Prob. 8F15Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Prob. 15F15Ch. 1 - Identifying Direct and Indirect Costs Northwest...Ch. 1 - Prob. 2ECh. 1 - Classifying Costs as Product or Period Costs...Ch. 1 - Prob. 4ECh. 1 - Prob. 5ECh. 1 - Traditional and Contribution Format Income...Ch. 1 - Direct and Indirect CostsKubin Company’s relevant...Ch. 1 - Product Costs and Period Costs; Variable and Fixed...Ch. 1 - Fixed, Variable, and Mixed Costs Refer to the data...Ch. 1 - Differential Costs and Sunk Costs Refer to the...Ch. 1 - Cost Behavior; Contribution Format Income...Ch. 1 - Product and Period Cost Flows The Devon Motor...Ch. 1 - Prob. 13ECh. 1 - Cost Classification Wollogong Group Ltd. of New...Ch. 1 - Traditional and Contribution Format Income...Ch. 1 - Cost Classifications for Decision Making Warner...Ch. 1 - Classifying Variable and Fixed Costs and Product...Ch. 1 - PROBLEM 1—18 Direct and Indirect Costs; Variable...Ch. 1 - Traditional and Contribution Format Income...Ch. 1 - Variable and Fixed Costs; Subtleties of Direct and...Ch. 1 - Traditional and Contribution Format Income...Ch. 1 - Cost Terminology; Contribution Format Income...Ch. 1 - Cost Classification Listed below are costs found...Ch. 1 - Different Cost Classifications for Different...Ch. 1 - Traditional and Contribution Format Income...
Knowledge Booster
Similar questions
- Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekdy expense of a coffee stand is $1.400 and the variable cost per cup of coffee served is $0.54. Required: 1. Fill in the following table with your estimates of the company's total cost and average cost per cup of coffee at the indicated levels of activity 2. Does the average cost per cup of coffee served increase, decrease, or remain the same as the number of cups of coffee served in a week increases? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Fill in the following table with your estimates of the company's total cost and average cost per cup of coffee at the indicated levels of activity. (Round the "Average cost per cup of coffee served" to 3 decimal places.) Cups of Coffee Served in a Week 700 800 900 Fixed cost Variable cost Total cost Average cost per cup of coffee served Required 2 >arrow_forwardEspresso Express operates a number of espresso coffee stands in busy suburban maills. The fixed weekly expense of a coffee stand is $700 and the variable cost per cup of coffee served is $0.40 Required: 1. Fill in the following table with your estimates of the company's total cost and average cost per cup of coffee at the indicated levels of activity. 2. Does the average cost per cup of coffee served increase, decrease, or remain the same as the number of cups of coffee served in a week increases? increase Complete this question by entering your answers in the tabs below. Required 1 Required 2 Fill in the following table with your estimates of the company's total cost and average cost per cup of coffee at the indicated levels of activity. (Round the "Average cost per cup of coffee served" to 3 decimal places.) Fixed cost Variable cost Total cost Average cost per cup of coffee served 800 Cups of Coffee Served in a Week 900 $0 $0 $ Required T 1,000 Required 2 > 0arrow_forwardKoffee Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $1,100 and the variable cost per cup of coffee served is $0.26. Required: Fill in the following table with your estimates of total costs and average cost per cup of coffee at the indicated levels of activity for a coffee stand. Round off the cost of a cup of coffee to the nearest tenth of a cent. Cups of Coffee Served in a Week 1,800 1,900 2,000 Fixed cost . . . . . . . . . . . . . . . . . . . . . . . . . . ? ? ? Variable cost . . . . . . . . . . . . . . . . . . . . . . . . ? ? ? Total cost . . . . . . . . . . . . . . . . . . . . . . . . . . . ? ? ? Average cost per cup of coffee served . . . ? ? ? Does the average cost per cup of coffee served increase, decrease, or remain the same as the number…arrow_forward
- Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weeklyexpense of a coffee stand is $1,200 and the variable cost per cup of coffee served is $0.22.Required:1. Fill in the following table with your estimates of total costs and cost per cup of coffee at the indicatedlevels of activity for a coffee stand. Round off the cost of a cup of coffee to the nearest tenth of a cent.Cups of Coffee Served in a Week2,000 2,100 2,200Fixed cost ........................................................ ? ? ?Variable cost ................................................... ? ? ?Total costs ....................................................... ? ? ?Average cost per cup of coffee served ........... ? ? ?2. Does the average cost per cup of coffee served increase, decrease, or remain the same as the numberof cups of coffee served in a week increases? Explain.arrow_forwardAble Transport operates a tour bus that they lease with terms that involve a fixed fee each month plus a charge for each mile driven. Able Transport drove the tour bus 4,000 miles and paid a total of $1,250 in March. In April, they paid $970 for 3.000 miles. What is the variable cost per mile if Able Transport uses the high-low method to analyze costs?arrow_forwardFast as Lightning is an oil change service drive-through that charges each customer $24.00 for an oil and filter change service. Fast as Lightning has found that it costs its business $15.00 per oil and filter change. Monthly fixed costs are $44,000; current sales are 8,000 services. a. Compute the breakeven sales in units.b. Compute the margin of safety in units and sales dollars.c. Compute the margin of safety as a percentage.d. Compute the operating leverage factor.e. Compute the percentage of operating income decline if sales fall by 18%.arrow_forward
- Jolly Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Bolton Air. Jolly's fixed costs are $25,500 per month. Bolton Air charges passengers $1,300 per round-trip ticket. Read the requirement LOADING... . Begin by selecting the formula to calculate the breakeven points. Breakeven number of units = Fixed costs ÷ Contribution margin per unit Next, select the formula to calculate the number of tickets needed to meet the target operating income. Quantity of units required to be sold = ( Fixed costs + Target operating income ) ÷ Contribution margin per unit Now complete the requirement for each of the cases. Begin with case 1. Case 1: Jolly's variable costs are $44 per ticket. Bolton Air pays Jolly 6% commission on ticket price. Jolly must sell tickets to break even and…arrow_forwardGolden Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Vancouver Air. Golden's fixed costs are $25,500 per month. Vancouver Air charges passengers $1,400 per round-trip ticket. Read the requirement. Begin by selecting the formula to calculate the breakeven points. Breakeven Requirement number of units Fixed costs Contribution margin per unit Next, select the formula to calculate the number of tickets needed to meet the target operating income. Calculate the number of tickets Golden must sell each month to (a) break even and (b) make a target operating income of $15,000 per month in each of the following independent cases. (Round up to the nearest whole number. For example, 10.2 should be rounded up to 11.) Quantity of units required to be sold = ( Fixed costs Target operating income ) + Contribution margin per unit + 1. Golden's variable costs are $40 per ticket. Vancouver Air pays Golden 10% commission on ticket price. 2. Golden's variable…arrow_forwardJolly Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Ottawa Air. Jolly's fixed costs are $28,500 per month. Ottawa Air charges passengers $1,100 per round-trip ticket. Read the requirement. Begin by selecting the formula to calculate the breakeven points. Breakeven number of units Fixed costs Contribution margin per unit = Next, select the formula to calculate the number of tickets needed to meet the target operating income. Quantity of units required to be sold = ( Fixed costs Target operating income ) ÷ Contribution margin per unit + Now complete the requirement for each of the cases. Begin with case 1. Case 1: Jolly's variable costs are $36 per ticket. Ottawa Air pays Jolly 6% commission on ticket price. Jolly must sell tickets to break even and tickets to meet the target operating income. Case 2: Jolly's variable costs are $28 per ticket. Ottawa Air pays Jolly 6% commission on ticket price. Jolly must sell tickets to break even and tickets…arrow_forward
- Speedy Parcel Service operates a fleet of delivery trucks in a large metropolitan area. A careful study by the company's cost analyst has determined that if a truck is driven 120,000 miles during a year, the average operating cost is 11.6 cents per mile. If a truck is driven only 80,000 miles during a year, the average operating cost increases to 13.6 cents per mile. Required: 1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. 2. Express the variable and fixed costs in the form Y = a + bX. 3. If a truck were driven 100,000 miles during a year, what total cost would you expect to be incurred?arrow_forwardHabib transport company Itd, operates a fleet of delivery trucks in Singapore. The Company has determined that if a truck is driven 135,000 kilometers during a year, The average operating cost is 11.8 cent per kilometers. If a truck driven 95,000 kilometers during a year, the average operating cost increases to 13.6 cents per kilometers. Requirement a) Using high-low method estimate the variable and fixed costs elements of the annual cost of truck operators. b) Express the variable and fixed costs in the form y= a +bx e) if a truck were driven to 100,000 kilometers during a year, what total cost would you expect to be incurred?arrow_forwardDeveloping an Equation from Average CostsParadise Pub is a high-end dog hotel located in New York. Assume that in March, when dog-days occupancy was at an annual low of 500 days, the average cost per dog-day was $26. In July, when dog-days were at a capacity level of 4,500, the average cost per dog-day was $10.(a) Develop an equation for monthly operating costs. (Let X = dog-days per month)Total cost = $ _________ + $ _________ * _______ (b) Determine the average cost per dog-day at an annual volume of 28,000 dog-days. (Round to the nearest cent.) $ ___________arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College