BA 225 Module 3 Exercises

Problem 1

Indentify the costs below as variable, fixed, or mixed. Moctezuma Furniture Corporation incurred the following costs.

1.       Wood used in the production of furniture.

2.       Fuel used in delivery trucks.

3.       Straight-line depreciation on factory building.

4.       Screws used in the production of furniture. 

5.       Sales staff salaries. 

6.       Sales commissions. 

7.       Property taxes.

8.       Insurance on buildings.

9.       Hourly wages of furniture craftsmen. 

10.   Salaries of factory supervisors. 

11.   Utilities expense.

12.   Telephone bill. 

Problem 2

The San Marcos Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at $50 a night. Operating costs are as follows:

(a)    Determine the inn’s break-even point in

1.       Number of rented rooms per month and     

2.       Dollars

2.       The margin of safety ratio

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