Alexander owns an art gallery. He accepts paintings and sculpture on consignment and then receives 20 percent of the price of each piece as his fee. Space is limited, and there are costs involved, so Alexander is careful about accepting artists. When he does accept one, he arranges for an opening show (usually for three hours on a weekend night) and sends out invitations to his customer list. At the opening, he serves soft drinks and casual munchies to create a comfortable environment for prospective customers to view the new works and chat with the artist. On average, each opening costs P500. Alexander has given as many as 20 opening shows in a year. The total cost of running the gallery, including rent, fumiture and fixtures, utilities, and a part-time assistant, amounts to P80,000 per year. REQUIRED: 1 2. Assume that the cost driver is number of opening shows. Develop the cost formula t. gallery's costs for a year. uyu U 3. Using the formula developed in Requirement 2, what is the total cost for Alexander in a year with 12 opening shows? With 14 opening shows?

Alexander owns an art gallery. He accepts paintings and sculpture on consignment and then receives 20 percent of the price of each piece as his fee. Space is limited, and there are costs involved, so Alexander is careful about accepting artists. When he does accept one, he arranges for an opening show (usually for three hours on a weekend night) and sends out invitations to his customer list. At the opening, he serves soft drinks and casual munchies to create a comfortable environment for prospective customers to view the new works and chat with the artist. On average, each opening costs P500. Alexander has given as many as 20 opening shows in a year. The total cost of running the gallery, including rent, fumiture and fixtures, utilities, and a part-time assistant, amounts to P80,000 per year. REQUIRED: 1 2. Assume that the cost driver is number of opening shows. Develop the cost formula t. gallery's costs for a year. uyu U 3. Using the formula developed in Requirement 2, what is the total cost for Alexander in a year with 12 opening shows? With 14 opening shows?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

A local movie theater owner explains to you that ticket sales on weekends and evenings are strong, but attendance during the weekdays, Monday through Thursday, is poor. The owner proposes to offer a contract to the local grade school to show educational materials at the theater for a set charge per student during school hours. The owner asks your help to prepare a CVP analysis listing the cost and sales projections for the proposal. The owner must propose to the school’s administration a charge per child. At a minimum, the charge per child needs to be sufficient for the theater to break even. Required Your team is to prepare two separate lists of questions that enable you to complete a reliable CVP analysis of this situation. One list is to be answered by the school’s administration, the other by the owner of the movie theater.
Suppose that Alex's benefit to the game is $128. Suppose further that Alex already bought a ticket (price of $80). Finally, suppose his non-refundable ticket has no resale value. Suppose that Alex's boss is considering paying a raise to Alex if he goes to work. Which of the following is true? (select all that apply) If Alex receives a $80 raise, then he will be indifferent between going to work and going to the game. If Alex does not get a raise, then he will definitely go to the game. If Alex receives a $60 raise, then he will NOT go to the game. I Alex receives a $100 raise then he will NOT go to the game.
Austin is going on holiday with his infant daughter and has a first class air ticket. He values being in first class instead of coach at $300. A CEO has the seat adjacent to him and is considering offering to pay Austin to move to one of the empty seats in coach. a. The CEO values quiet at $600. Can Austin and the CEO reach a mutually agreeable price for Austin to move to coach? b. If instead the CEO values quiet at $200, can Austin and the CEO reach a mutually agreeable price for Austin to move to coach?
Data Recovery Services (DRS) specializes in data recovery from crashed hard drives. The price charged varies based on the extent of damage and the amount of data being recovered. DRS offers a 15% discount to students and faculty at educational institutions. Consider the following transactions during the month of June. June 10 Rashid’s hard drive crashes and he sends it to DRS. June 12 After initial evaluation, DRS e-mails Rashid to let him know that full data recovery will cost $2,200. June 13 Rashid informs DRS that he would like them to recover the data and that he is a student at UCLA, qualifying him for a 15% educational discount and reducing the cost by $330 ( = $2,200 × 15%). June 16 DRS performs the work and claims to be successful in recovering all data. DRS asks Rashid to pay within 30 days of today’s date, offering a 4% discount for payment within 10 days. June 19 When Rashid receives the hard drive, he notices that DRS did not successfully recover all data.…
Nicolas has purchased a streaming audio service for $8.00 per month. As he listens to more songs in a month he spread this fixed cost over a larger number of songs, and therefore his cost per song decreases the more songs he listens to. One if his friends says to Nicolas: “The more music you listen to, the less you pay per song so you should spend all your time listening to music.” Please explain what is wrong with the friend’s statement.
You are the commissioner of a state lottery system that sponsors daily and weekly drawings. Lottery tickets have not been selling well over the past few months. Describe at least two ways you could take advantage of people's use of the availability heuristic to boost sales. Explain why you would judge your tactics to be fair or unfair to your customers. 1. 2. Imagine you have a friend who just last month adopted a set of siblings, a thirteen-month-old and a four-year-old, from an orphanage in a developing country. The orphanage was not a stimulating environment and the four-year-old can only speak a few words in her native language. The thirteen-month-olddoes not seem to speak words in either her native language or in English. Both children appear physically healthy and have started to adjust quite well, emotionally, but your friend is concerned about their language development. Discuss whether their language development is typical of children their age and theextent to which each…
Ivanhoe Magazine Ltd. is a small company run by two enterprising university students. They publish an issue of the magazine once a month from September through April. The magazine reports on various university activities and provides information such as how to get the best concert tickets, where to get the best pizza for the best price, where the good study spots are, and how to get library staff to help with research. The magazine is sold either on a prepaid subscription basis for $12 for all eight issues, or for $2 per issue. During September, 1,650 subscriptions were sold. Up to the end of December, a total of 10,725 single copies were sold. The company also pre-sells advertising space in the magazine to local businesses that focus on the student market. During July and August, the company signed up several businesses and collected $16,500 in advertising revenues. The advertisements are to be included in all eight issues of the magazine. The cost of printing and distributing the…
Bobby Reynolds, a new client of yours, is a self-employed caterer in Santa Fe, New Mexico. Bobby drives his personal van when delivering catered meals to customers. You have asked him to provide the amount of business miles driven using his vehicle. You are planning on using the standard mileage method to calculate Bobby’s deduction for transportation costs. Bobby has responded by saying, “Well, I don’t really keep track of my miles. I guess I drove around 3,000 miles last year for the business.” What would you say to Bobby? Please give a response as if you are a professional tax accountant.
Curley Maple has produced handcrafted tables for wholesale in his woodworking shop for the past year. He worked 6 days a week, 10 hour per day for 49 weeks of the year, leaving 3 weeks for holidays, vacation, and sick days. Curley has used up his savings over the past year, and now he needs to begin to draw an income from the business. Worried he is not pricing his tables correctly, curley decided to analyze the detailed records of his time and expenses that he has kept for the past year. Complete the chart:
> Ahmad is a buyer for Al-Maktabeh a publishing company. His job is to purchase supplies and services for the printing of technical manuals. His brother sets up a printing company, and Ahmad hires him to print most of these manuals for Al-Maktabeh. However, rather than actually printing the manuals, his brother hires another printer to do the work, then sells the printed manuals to Al-Maktabeh at a 50% markup. As a result, his prices are much higher than the other printers who serve Al-Maktabeh. What time of scheme is this explain your answer?
Chris is a financial manager for a small business. Right now, he's working on next year's budget. Money is tight, and each department has requested more money than Chris is able to budget for it. His best friend works in marketing and is pressuring Chris for an extra $5,000.00 for her advertising budget. Chris doesn't want to disappoint her but granting her the favor would mean taking money away from other departments. The decision is up to him, and his boss will trust his judgment. What should Chris do? Is it all right to let a personal relationship influence his budgeting decisions?
During the COVID-19 pandemic, many people decided to start making face masks and selling them on the Internet. Etsy, for example, sold face masks from many different sellers. Suppose that Mary decided to quit her job where she earned $3,600.00 per month. During the month of July 2020, Mary sold 1,100.00 masks at $7.00 per mask. The following table reports information for Mary's costs to make the face masks. Item Material Wages paid to one employee Utilities Internet advertising For the month of July 2020, Mary's revenue was $ Part 2 Mary's accounting profit was $ Part 3 Amount $3,300.00 $550.00 $110.00 $275.00 Mary's economic profit was $ . Make sure you include the negative sign if her profit is less than zero.