Cost Accounting (15th Edition)
15th Edition
ISBN: 9780133428704
Author: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 2, Problem 2.21E
Variable costs, fixed costs, total costs. Bridget Ashton is getting ready to open a small restaurant. She is on a tight budget and must choose between the following long-distance phone plans:
Plan A: Pay 10 cents per minute of long-distance calling.
Plan B: Pay a fixed monthly fee of $15 for up to 240 long-distance minutes and 8 cents per minute thereafter (if she uses fewer than 240 minutes in any month, she still pays $15 for the month).
Plan C: Pay a fixed monthly fee of $22 for up to 510 long-distance minutes and 5 cents per minute thereafter (if she uses fewer than 510 minutes, she still pays $22 for the month).
- 1. Draw a graph of the total monthly costs of the three plans for different levels of monthly long-distance calling.
Required
- 2. Which plan should Ashton choose if she expects to make 100 minutes of long-distance calls? 240 minutes? 540 minutes?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Bridget Cheungis getting ready to open a small restaurant. She is on a tight budget and must choose between the following long-
Plan A:
Pay
$0.07
per minute of long-distance calling.
Plan B:
Pay a fixed monthly fee of
$14
for up to
280
long-distance minutes and
$0.05
per minute thereafter (if she uses fewer than
280
minutes in any month, she still pays
$14
for the month).
Plan C:
Pay a fixed monthly fee of
$23
for up to
440
long-distance minutes and
$0.04
per minute thereafter (if she uses fewer than
440
minutes, she still pays
$23
for the month).
1.
Match the graphs to the total monthly costs of the three plans for different levels of monthly long-distance calling.
2.
Which plan should
Cheung
choose if she expects to make 100 minutes of long-distance calls?
280
minutes?
480
minutes?
Requirement 1. Match the graphs to the total monthly costs of the three plans for different levels of monthly long-distance calling.
Before we…
←
Bridget Logue is getting ready to open a small restaurant. She is on a tight budget and must choose between the
following long-distance phone plans:
(Click the icon to view the long-distance phone plans.)
Read the requirements.
Requirement 1. Match the graphs to the total monthly costs of the three plans for different levels of
monthly long-distance calling.
Before we match the graphs to the plans, complete the following table, calculating the total costs for each plan at
each of the different minute levels. (Round to the nearest cent.)
Plan
A
BC
100 minutes 340 minutes 540 minutes
A cell phone company offers two different plans. Plan A costs $80 per month for unlimited talk and text. Plan B costs $0.20 per minute plus $0.10 per text message sent. You need to purchase a plan for your teenage sister. Your sister currently uses 1,700 minutes and sends 1,600 texts each month. 1. What is your sister’s total cost under each of the two plans? 2. Suppose your sister doubles her monthly usage to 3,400 minutes and sends 3,200 texts. What is your sister’s total cost under each of the two plans?
Chapter 2 Solutions
Cost Accounting (15th Edition)
Ch. 2 - Define cost object and give three examples.Ch. 2 - Define direct costs and indirect costs.Ch. 2 - Prob. 2.3QCh. 2 - Name three factors that will affect the...Ch. 2 - Define variable cost and fixed cost. Give an...Ch. 2 - What is a cost driver? Give one example.Ch. 2 - What is the relevant range? What role does the...Ch. 2 - Explain why unit costs must often be interpreted...Ch. 2 - Prob. 2.9QCh. 2 - What are three different types of inventory that...
Ch. 2 - Distinguish between inventoriable costs and period...Ch. 2 - Define the following: direct material costs,...Ch. 2 - Describe the overtime-premium and idle-time...Ch. 2 - Define product cost. Describe three different...Ch. 2 - What are three common features of cost accounting...Ch. 2 - Prob. 2.16ECh. 2 - Prob. 2.17ECh. 2 - Classification of costs, service sector. Market...Ch. 2 - Classification of costs, merchandising sector....Ch. 2 - Prob. 2.20ECh. 2 - Variable costs, fixed costs, total costs. Bridget...Ch. 2 - Prob. 2.22ECh. 2 - Prob. 2.23ECh. 2 - Prob. 2.24ECh. 2 - Cost drivers and functions. The representative...Ch. 2 - Prob. 2.26ECh. 2 - Total and unit cost, decision making. Gayles...Ch. 2 - Prob. 2.28ECh. 2 - Prob. 2.29PCh. 2 - Prob. 2.30PCh. 2 - Prob. 2.31PCh. 2 - Prob. 2.32PCh. 2 - Prob. 2.33PCh. 2 - Prob. 2.34PCh. 2 - Prob. 2.35PCh. 2 - Prob. 2.36PCh. 2 - Prob. 2.37PCh. 2 - Prob. 2.38PCh. 2 - Prob. 2.39PCh. 2 - Prob. 2.40PCh. 2 - Prob. 2.41PCh. 2 - Prob. 2.42P
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Bridget Compo is getting ready to open a small restaurant. She is on a tight budget and must choose between the following long-distance phone plans: (Click the icon to view the long-distance phone plans.) Read the requirements. Requirement 1. Match the graphs to the total monthly costs of the three plans for different levels of monthly long-distance calling. Before we match the graphs to the plans, complete the following table, calculating the total costs for each plan at each of the different minute levels. (Round to the nearest cent.) 100 minutes 340 minutes 540 minutes Plan A B C Barrow_forwardYou have a business selling and delivering pizzas to businesses for lunch. You pay $4,000 per month in rent, $320 for utilities, and $2,000 a month for salaries. You also have delivery cars that cost $1,000 per month. Your variable costs are $8 per pizza for ingredients and $4 per pizza for delivery costs. You sell the pizzas for $20 each. Round up if necessary What is the number of pizzas you need to sell to break even for the month If you want to make a profit of 2,000 per month, how many pizzas do you need to sell? Round up if necessary Go back to the original numbers If the price of cheese goes up and your variable costs go by $3 what is your new break even in pizzas if you increase your price to $21 Round up if necessary Golden Company has a fleet of delivery trucks and has the following Overhead costs per month with the miles driven Miles Driven Total Costs March 50.000 194.000 Aprill 40.000 170.200 this is the low May 60.000 217.600 June 70.000 241.000 Use the High-Low method to…arrow_forwardA cell phone company offers two different plans. Plan A costs $96 per month for unlimited talk and text. Plan B costs $0.20 per minute plus $0.10 per text message sent. You need to purchase a plan for your teenage sister. Your sister currently uses 1,750 minutes and sends 1,700 texts each month. What is the total cost under each of the two plans? Suppose your sister doubles her monthly usage to 3,500 minutes and sends 3,400 texts. What is your sister’s total cost under each of the two plans?arrow_forward
- A local pizza shop owner decides to hire an economic consultant to help him set his prices. Currently, one slice of pizza costs $2 and the store sells about 800 slices per week. The pizza shop's current revenue from sales is equal to $____. The economic consultant estimates that the price elasticity of demand is equal to -0.25, and suggests that the shop owner should increase the price of a slice of pizza by $0.50; that is, the consultant recommends increasing the price of pizza by ____%. The consultant claims that doing so would (a. Increase b. Decrease or C.have no effect on)_____ the number of slices sold by ____% or ____ slices. As a result, the economist predicts that the new revenue would be ____ Thus as a result of the increase in the price there is ____ in revenue. This is due to the fact that the pizza shop owner was operating on the ____ portion of the demand curve. (fill in the blanks)arrow_forwardA cell phone company offers two different plans. Plan A costs $87 per month for unlimited talk and text. Plan B costs $0.20 per minute plus $0.10 per text message sent. You need to purchase a plan for your teenage sister. Your sister currently uses 1,750 minutes and sends 1,700 texts each month. 1. What is your sister’s total cost under each of the two plans?2. Suppose your sister doubles her monthly usage to 3,500 minutes and sends 3,400 texts. What is your sister’s total cost under each of the two plans? Plans Total Cost 1. Plan A Plan B 2. Plan A Plan Barrow_forwardA local Pilates studio recently began offering a monthly subscription servlce for Its patrons. Suppose a particular patron at this studio has the following willingness-to-pay schedule, per sesslon. Session willingness to Pay 1st $77 2nd $66 3rd $55 4th $44 5th $33 6th $22 Suppose this consumer would not demand any more sesslons, even for free. Also assume that the marginal cost to the studlo, per sesslon, is constant at $11. At this price and quantity, consumer surplus At a price of $71.50 per sesslon, the number of sesslons demanded by this consumer would be Is and producer surplus is Suppose the studio has devised a new pricing scheme for consumers who demand more than 1 sesslon. This pricing scheme is a subscription service, whereby consumers can pay a flat fee of $237.60 and can have up to 6 sesslons total. Using this Eubscription pricing model, this consumer would demand sessions. Under this scenarlo, consumer surplus Is and producer surplus is (Hint: For consumer surplus,…arrow_forward
- You own a restaurant, your capacity is 100 dinners a day. Your regular price is $30 per dinner. Your variable costs are $10 per dinner. Your fixed costs are $500 per day. On Mondays, business is slow, so you expect to sell only 40 dinners (i.e., you have a lot of unused capacity). Special order: a one-time order that is not considered part of the company's normal ongoing business. A charity organization wants to hold its fundraising dinner in your restaurant on Monday. They offer to pay $15 per dinner, for a total of 50 dinners. Should you take this special order? Why or why not?arrow_forwardRead the selection for questions 6-10. Mark rents a stall in the public market for P5,000.00 a month. He has a helper who helps in his business and he pays him salary of P8,000 a month. He orders fresh chicken from a supplier that cost him P140.00 per kilo. He sells the chicken to his customers at P160.00 per kilo. 6. How you will illustrate the variable cost (VC) when x be the number kilos of chicken sold? VC = 140x VC = 160x vC = 5000x а. b. с. d. vC = 8000x 7. How many kilos of chicken does Mark need to sell to break-even? а. 200 b. 450 с. 650 d. 800 8. Which of the following ordered pairs determines a break-even point? (500, 32000) (650, 104000) (700, 32000) (750, 104000) а. b. с. d. 9. How much profit will he earn if he sells 700 kilos of chicken? a. P1,000.00 b. P2,000.00 с. P3,000.00 d. P4,000.00 10. How many kilos of chicken must be sold to earn a profit of P192,000.00? 10,050 10,150 а. b. с. 10,250 d. 10,300arrow_forwardThe owner of a car wash wants to increase his Revenue. He decides to reduce his price by $2.00. Currently he charges $10.99 for the Deluxe Car wash. In a typical week he sells 70 deluxe car washes. He knows from previous experience his sales will increase to 110 deluxe car washes per week. The other variable costs per car wash are $1.99 which includes all chemicals and labour costs. What percentage must his sales increase by to maintain his current Contribution ? 28.6% 28.2% 30.5% 32% None of these are correct or cannot be determined D View Feedbackarrow_forward
- At Bed Bath and Beyond, the manager, Jill Roe, knows her customers will pay no more than $300 for a bedspread, Jill wants a 35% markup on selling price. What is the most that Jill can pay for a bedspread? Maximum amountarrow_forwardYou run a nail salon. Fixed monthly cost is $5,419.00 for rent and utilities, $5,913.00 is spent in salaries and $1,724.00 in insurance. Also every customer requires approximately $5.00 in supplies. You charge $107.00 on average for each service. You are considering moving the salon to an upscale neighborhood where the rent and utilities will increase to $11,155.00, salaries to $6,372.00 and insurance to $2,220.00 per month. Cost of supplies will increase to $6.00 per service. However you can now charge $171.00 per service. At what point will you be indifferent between your current location and the new location? Submit Answer format: Number: Round to: 2 decimal places. A Restaurant is open only for 25 days in a month. Expenses for the restaurant include raw material for each sandwich at $5.00 per slice, $1,103.00 as monthly rental and $219.00 monthly as insurance. They consider the cost of lost sales as $6.00 per item. They are able to sell any leftover sandwiches for $3. They prepares…arrow_forwardYou run a nail salon. Fixed monthly cost is $5,102.00 for rent and utilities, $5,992.00 is spent in salaries and $1,613.00 in insurance. Also every customer requires approximately $3.00 in supplies. You charge $90.00 on average for each service. You are considering moving the salon to an upscale neighborhood where the rent and utilities will increase to $11,786.00, salaries to $6,735.00 and insurance to $2,228.00 per month. Cost of supplies will increase to $7.00 per service. However you can now charge $167.00 per service. What is the PROFIT or Loss at the crossover point? If a loss include the - Round the quantity to 3 digits when using to calculate the profit Submit Answer format: Number: Round to: 2 decimal places.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
Cost Classifications - Managerial Accounting- Fixed Costs Variable Costs Direct & Indirect Costs; Author: Accounting Instruction, Help, & How To;https://www.youtube.com/watch?v=QQd1_gEF1yM;License: Standard Youtube License