MGT 562-managerial accounting for Asma only
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mgt_562-week_1_assignment.docxMGT 562-Managerial Accounting Week 1
Exercise 2-3 Fixed and variable Cost Behavior
Koffee Express operates a number of expresso 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
Cups of coffee served in a week
1800 1900 2000
Fixed cost
Variable cost
Total cost
Average cost per cup of coffee served
2. Does the average cost per cup of coffee served increase, decrease, or remain the same as the number of cups of coffee served in a week increases? Explain.
Exercise 2-4 High low method
The Edelweiss Hotel in Vail, Colorado, has accumulated records of the total electrical costs of the hotel and the number of occupancy-days over the last year. An occupancy day represents a room rented out for one day. The hotels business is highly seasonal, with peaks occurring during the ski season and in the summer.
Month Occupancy Days Electrical Cost
Jan 2604 $6257
Feb 2856 $6550
March 3534 $7986
April 1440 $4022
May 540 $2289
June 1116 $3591
July 3162 $7264
August 3608 $8111
September 1260 $3707
October 186 $1712
November 1080 $3321
December 2046 $5196
Required: using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. Round off the fixed cost to the nearest whole dollar and the variable cost to the nearest whole cent.
Exercise 2-5 Traditional and Contribution Format Income statement
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
