MGT 562-Managerial Accounting Week 1

Exercise 2-3 (Fixed and variable cost behavior)              
Koffee 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:              
1.)    Fill in the following table with your estimates of total cost and average cost per cup of coffee at the identical level of activity for a coffee stand. Round off the cost of a cup of coffee to the nearest tenth of a cent.              
2.)    Does the average cost per cup of coffee served increase, decrease, or remain the same at the number of cups of coffee served in a week increases? Explain              
Redhawk, Inc., is a merchandiser that provided the following information: 
Number of units sold………………………………………… 10,000
Selling price per unit………………………………………… $15
Variable selling expense per unit……………………………. $2
Variable administrative expense per unit……………………. $1
Total fixed selling expense…………………………………… $20,000
Total fixed administrative expense…………………………… $15,000
Merchandise inventory, beginning balance…………………… $12,000
Merchandise inventory, ending balance………………………. $22,000
Merchandise purchases……………………………………… $90,000

Required:
Prepare a traditional income statement
Prepare a contribution format income statement