FUNDAMENTALS OF COST ACCOUNTING
6th Edition
ISBN: 9781264192236
Author: LANEN, ANDERSO
Publisher: McGraw Hil
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Question
Chapter 3, Problem 52P
a.
To determine
Calculate the break-even point for Company S.
b.
To determine
Calculate the surplus or deficit, when Company S expects 75,000 rides this year.
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Seattle Transit Ltd. operates a local mass transit system. The transit authority is a state governmental agency. It has an agreement with the state government to provide rides to senior citizens for 63 cents per trip. The government will reimburse Seattle Transit for the “cost” of each trip taken by a senior citizen.
The regular fare is $3.30 per trip. After analyzing its costs, Seattle Transit figured that, with its operating deficit, the full cost of each ride on the transit system is $5.30. Routes, capacity, and operating costs are unaffected by the number of senior citizens on any route.
Required:
b. Which price would Seattle Transit prefer? (Round your answer to 2 decimal places.)
c. Which price would the state government prefer? (Round your answer to 2 decimal places.)
d. If Seattle Transit provides an average of 163,000 trips for senior citizens in a given month, what is the monthly value of the difference between the prices in full capacity?
b.
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Seattle Transit Ltd. operates a local mass transit system. The transit authority is a state governmental agency. It has an agreement with the state government to provide rides to senior citizens for 67 cents per trip. The government will reimburse Seattle Transit for the “cost” of each trip taken by a senior citizen.
The regular fare is $3.70 per trip. After analyzing its costs, Seattle Transit figured that, with its operating deficit, the full cost of each ride on the transit system is $5.70. Routes, capacity, and operating costs are unaffected by the number of senior citizens on any route.
Required:
b. Which price would Seattle Transit prefer? (Round your answer to 2 decimal places.)
c. Which price would the state government prefer? (Round your answer to 2 decimal places.)
d. If Seattle Transit provides an average of 167,000 trips for senior citizens in a given month, what is the monthly value of the difference between the prices in full capacity?
Analyze Star Stream's cost-vol ume-profit relationships
Star Stream is a subscription-based video streaming service. Subscribers pay $120 per year for the service. Star Stream licenses and develops content for its
subscribers. In addition, Star Stream leases servers to hold this content. These costs are not variable to the number of subscribers, but must be incurred
regardless of the subscriber base. In addition, Star Stream compensates telecommunication companies for bandwidth so that Star Stream customers receive
fast streaming services. These costs are variable to the number of subscribers. These and other costs are as follows: Enter your answers in whole dollars.
Server lease costs per year
$100,000,000
Content costs per year
2,000,000,000
Fixed operating costs per year
900.000,000
Bandwidth costs per subscriber per year
15
Variable operating costs per subscriber per year
25
a. Determine the break-even number of subscribers.
subscribers
b. Assume Star Stream planned to increase…
Chapter 3 Solutions
FUNDAMENTALS OF COST ACCOUNTING
Ch. 3 - Write out the profit equation and describe each...Ch. 3 - What are the components of total costs in the...Ch. 3 - How does the total contribution margin differ from...Ch. 3 - Compare cost-volume-profit (CVP) analysis with...Ch. 3 - Fixed costs are often defined as fixed over the...Ch. 3 - Prob. 6RQCh. 3 - What is the margin of safety? Why is this...Ch. 3 - Prob. 8RQCh. 3 - Write out the equation for the target volume (in...Ch. 3 - How do income taxes affect the break-even...
Ch. 3 - Why is it common to assume a fixed sales mix...Ch. 3 - What are some important assumptions commonly made...Ch. 3 - Prob. 13CADQCh. 3 - Prob. 14CADQCh. 3 - The typical cost-volume-profit graph assumes that...Ch. 3 - The assumptions of CVP analysis are so simplistic...Ch. 3 - Prob. 17CADQCh. 3 - Consider a class in a business school where volume...Ch. 3 - Prob. 19CADQCh. 3 - Prob. 20CADQCh. 3 - Consider the Business Application,...Ch. 3 - Consider the Business Application,...Ch. 3 - Prob. 23CADQCh. 3 - Profit Equation Components Identify each of the...Ch. 3 - Profit Equation Components Identify the letter of...Ch. 3 - Basic Decision Analysis Using CVP Anus Amusement...Ch. 3 - Basic CVP Analysis The manager of Dukeys Shoe...Ch. 3 - CVP AnalysisEthical Issues Mark Ting desperately...Ch. 3 - Basic Decision Analysis Using CVP Derby Phones is...Ch. 3 - Prob. 30ECh. 3 - Basic Decision Analysis Using CVP Warner Clothing...Ch. 3 - Basic Decision Analysis Using CVP Refer to the...Ch. 3 - Prob. 33ECh. 3 - Prob. 34ECh. 3 - Analysis of Cost Structure Spring Companys cost...Ch. 3 - CVP and Margin of Safety Bristol Car Service...Ch. 3 - CVP and Margin of Safety Caseys Cases sells cell...Ch. 3 - Prob. 38ECh. 3 - Prob. 39ECh. 3 - Refer to the data for Derby Phones in Exercise...Ch. 3 - Refer to the data for Warner Clothing in Exercise...Ch. 3 - CVP with Income Taxes Hunter Sons sells a single...Ch. 3 - CVP with Income Taxes Hammerhead Charters runs...Ch. 3 - Prob. 44ECh. 3 - Prob. 45ECh. 3 - Prob. 46ECh. 3 - Prob. 47ECh. 3 - CVP Analysis and Price Changes Argentina Partners...Ch. 3 - Prob. 49PCh. 3 - CVP AnalysisMissing Data Breed Products has...Ch. 3 - Prob. 51PCh. 3 - Prob. 52PCh. 3 - CVP AnalysisSensitivity Analysis (spreadsheet...Ch. 3 - Prob. 54PCh. 3 - Prob. 55PCh. 3 - Extensions of the CVP ModelSemifixed (Step) Costs...Ch. 3 - Prob. 57PCh. 3 - Extensions of the CVP ModelTaxes Odd Wallow Drinks...Ch. 3 - Prob. 59PCh. 3 - Prob. 60PCh. 3 - Extensions of the CVP ModelTaxes Toys 4 Us sells...Ch. 3 - Extensions of the CVP AnalysisTaxes Eagle Company...Ch. 3 - Extensions of the CVP ModelMultiple Products...Ch. 3 - Extensions of the CVP ModelMultiple Products...Ch. 3 - Prob. 65PCh. 3 - Prob. 66PCh. 3 - Prob. 67PCh. 3 - Prob. 68PCh. 3 - Extensions of the CVP ModelMultiple Products and...Ch. 3 - Extensions of the CVP ModelTaxes With Graduated...Ch. 3 - Prob. 71PCh. 3 - Financial Modeling Three entrepreneurs were...
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