Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Chapter 9, Problem 12E
Working with More Than One Cost Driver
The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers it uses in its budgeting and performance reports−the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 50 students enrolled in those two courses. Data concerning the company’s cost formulas appear below: 
For example, administrative expenses should be 53.270 per month plus S15 per course plus 54 per student. The companys sales should average 5800 per student.
The company planned to run three courses with a total of 45 students: however, it actually ran three courses with a total of only 42 students. The actual operating results for September appear below:
cRequired:
1. Using Exhibit 9-2 as your guide, prepare the company’s planning budget for September.
2. Using Exhibit 9-5 as your guide. prepare the company’s flexible budget for September.
3. Calculate the revenue and spending variances for September. (Hint: Refer to Exhibit 9−6.)
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Cove's Cakes is a local bakery. Price and cost information follows:
Price per cake
Variable cost per cake
Ingredients
Direct labor
Overhead (box, etc.)
Fixed costs per month
Required:
1. Determine Cove's break-even point in units and sales dollars.
2. Determine the bakery's margin of safety in sales dollars if it currently sells 360 cakes per month.
3. Determine the number of cakes that Cove must sell to generate $1,900 in profit.
Required 1 Required 2
$13.81
Complete this question by entering your answers in the tabs below.
2.28
1.07
0.14
3,302.40
Required 3
Break-Even Units
Break-Even Sales Dollars
Determine Cove's break-even point in units and sales dollars.
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Cakes
Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management has identified two cost drivers—the number of cruises and the number of passengers—that it uses in its budgeting and performance reports. The company publishes a schedule of day cruises that it may supplement with special sailings if there is sufficient demand. Up to 88 passengers can be accommodated on the tour boat. Data concerning the company’s cost formulas appear below:
Fixed Cost per Month
Cost per Cruise
Cost per Passenger
Vessel operating costs
$ 6,400
$ 478.00
$ 3.20
Advertising
$ 2,600
Administrative costs
$ 5,000
$ 32.00
$ 1.50
Insurance
$ 3,300
For example, vessel operating costs should be $6,400 per month plus $478.00 per cruise plus $3.20 per passenger. The company’s sales should average $35.00 per passenger. In July, the company provided 51 cruises for a total of 3,000 passengers.
Required:
Prepare the company’s flexible budget for…
Chapter 9 Solutions
Introduction To Managerial Accounting
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