(b) Use the high-low method to develop a schedule identifying the amount of each cost that is fixed per month or variable per unit. Total the amounts under each category todevelop an equation for total monthly costs.Round variable cost answers to two decimal places.Fixed Costs Variable CostsCost of food soldWages and fringe benefitsFees paid delivery helpRent on buildingDepreciation on equipmentUtilitiesSupplies (soap, floor wax, etc.)Administrative costsTotal costs equationSCheck05 24,000 XXI0xDU0x0x0x0xox0.X SDXX0xx0XOXОКХOxx0xOXX(c) Predict total costs for a monthly sales volume of 9,900 units.$ 19,800 x Cost Behavior Analysis in a Restaurant: High-Low Cost EstimationAssume a Papa John's restaurant has the following information available regarding costs at representative levels of monthly sales:Cost of food soldWages and fringe benefitsFees paid delivery helpRent on buildingDepreciation on equipmentUtilitiesSupplies (soap, floor wax, etc.)Administrative costsTotalMonthly sales in units5,000 8,000 10,000$15,000 $24,000 $30,0004,350 4,560 4,7001,3002,0802,6001.300 1,3001,3004004004007508409001501802001.500 1.500 1,500$24.750 $34,860 $41,600(a) Identify each cost as being variable, fixed, or mixed.Cost of food soldWages and fringe benefitsFees paid delivery helpRent on buildingDepreciation on equipmentVariable #Mixed●Variable ÷FixedFixed

During the manufacturing or production of a company's goods and services, every expense incurred by…

(b) Use the high-low method to develop a schedule identifying the amount of each cost that is fixed per month or variable per unit. Total the amounts under each category to develop an equation for total monthly costs. Round variable cost answers to two decimal places. Fixed Costs Variable Costs OMS 24,000 XX ox DMX OU ONX ON 0x Ox 0x ON OMX 0x Oxx Ox Ox OXS OMX Cost of food sold Wages and fringe benefits Fees paid delivery help Rent on building Depreciation on equipment Utilities Supplies (soap. floor wax, etc.) Administrative costs Total costs equation S (c) Predict total costs for a monthly sales volume of 9,900 units. $ 19,800 Check

(b) Use the high-low method to develop a schedule identifying the amount of each cost that is fixed per month or variable per unit. Total the amounts under each category to develop an equation for total monthly costs. Round variable cost answers to two decimal places. Fixed Costs Variable Costs OMS 24,000 XX ox DMX OU ONX ON 0x Ox 0x ON OMX 0x Oxx Ox Ox OXS OMX Cost of food sold Wages and fringe benefits Fees paid delivery help Rent on building Depreciation on equipment Utilities Supplies (soap. floor wax, etc.) Administrative costs Total costs equation S (c) Predict total costs for a monthly sales volume of 9,900 units. $ 19,800 Check

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 6PA: Product costing and decision analysis for a service company Pleasant Stay Medical Inc. wishes to...

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Cost Behavior Analysis in a Restaurant: High-Low Cost Estimation Assume a Papa John's restaurant has the following information available regarding costs at representative levels of monthly sales: Monthly sales in units 5,000 8,000 10,000 Cost of food sold $10,000 $16,000 $20,000 Wages and fringe benefits 4,200 4,320 4,400 Fees paid delivery help 1,100 1,760 2,200 Rent on building 1,100 1,100 1,100 Depreciation on equipment 900 900 900 Utilities 800 920 1,000 Supplies (soap, floor wax, etc.) 250 340 400 Administrative costs 1,700 1,700 1,700 Total $20,050 $27,040 $31,700 (a) Identify each cost as being variable, fixed, or mixed. Cost of food sold Wages and fringe benefits Fees paid delivery help
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Identifying Fixed, Variable, Mixed, and Step Costs Consider each of the following independent situations: a. A computer service agreement in which a company pays 150 per month and 15 per hour of technical time b. Fuel cost of the companys fleet of motor vehicles c. The cost of beer for a bar d. The cost of computer printers and copiers at your college e. Rent for a dental office f. The salary of a receptionist in a law firm g. The wages of counter help in a fast-food restaurant h. The salaries of dental hygienists in a three-dentist office. One hygienist can take care of 120 cleanings per month. i. Electricity cost which includes a 15 per month billing charge and an additional amount depending on the number of kilowatt-hours used Required: 1. For each situation, describe the cost as one of the following: fixed cost, variable cost, mixed cost, or step cost. (Hint: First, consider what the driver or output measure is. If additional assumptions are necessary to support your cost type decision, be sure to write them down.) Example: Raw materials used in productionVariable cost 2. CONCEPTUAL CONNECTION Change your assumption(s) for each situation so that the cost type changes to a different cost type. List the new cost type and the changed assumption(s) that gave rise to it. Example: Raw materials used in production. Changed assumptionthe materials are difficult to obtain, and a years worth must be contracted for in advance. Now, this is a fixed cost. (This is the case with diamond sales by DeBeers Inc. to its sightholders. See the following website for information: www.keyguide.net/sightholders/.)
Activity-based costing for a service business Sterling Hotel uses activity-based costing to determine the cost of servicing customers. There are three activity pools: guest check-in, room cleaning, and meal service. The activity rates associated with each activity pool are 8 per guest check-in, 25 per room cleaning, and 4 per served meal (not including food). Ginny Campbell visited the hotel for a three-night stay. Campbell had three meals in the hotel during her visit. Determine the total activity-based cost for Campbells visit.
Customers as a Cost Object Morrisom National Bank has requested an analysis of checking account profitability by customer type. Customers are categorized according to the size of their account: low balances, medium balances, and high balances. The activities associated with the three different customer categories and their associated annual costs are as follows: Additional data concerning the usage of the activities by the various customers are also provided: Required: (Note: Round answers to two decimal places.) 1. Calculate a cost per account per year by dividing the total cost of processing and maintaining checking accounts by the total number of accounts. What is the average fee per month that the bank should charge to cover the costs incurred because of checking accounts? 2. Calculate a cost per account by customer category by using activity rates. 3. Currently, the bank offers free checking to all of its customers. The interest revenues average 90 per account; however, the interest revenues earned per account by category are 80, 100, and 165 for the low-, medium-, and high-balance accounts, respectively. Calculate the average profit per account (average revenue minus average cost from Requirement 1). Then calculate the profit per account by using the revenue per customer type and the unit cost per customer type calculated in Requirement 2. 4. CONCEPTUAL CONNECTION After the analysis in Requirement 3, a vice president recommended eliminating the free checking feature for low-balance customers. The bank president expressed reluctance to do so, arguing that the low-balance customers more than made up for the loss through cross-sales. He presented a survey that showed that 50% of the customers would switch banks if a checking fee were imposed. Explain how you could verify the presidents argument by using ABC.
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Variable Costing Income Statement for a Service Company The actual and planned data for Broadwater Institute & Technical School for the Fall term were as follows: Actual Planned Enrollment Tuition per credit hour Credit hours Line Item Description Revenue Variable costs Registration, records, and marketing costs Registration, records, and marketing costs per enrolled student Instructional costs per credit hour Depreciation on classrooms and equipment $1,875,000 $1,875,000 Registration, records, and marketing costs vary by the number of enrolled students, while instructional costs vary by the number of credit hours. Depreciation is a fixed cost. Prepare a variable costing income statement showing the contribution margin and operating income for the Fall term Broadwater Institute & Technical School Variable Costing Income Statement For the Fall Term Instructional costs Total variable costs Contribution margin Depreciation on classrooms and equipment Operating income Amount 9.200.000 ✓…
Assume a Potbelly's restaurant has the following information available regarding costs at represent- tive levels of monthly sales: Monthly sales in units 5,000 8,000 10,000 Cost of food sold. $10,000 $16,000 $20,000 Wages and fringe benefits.........................4,200 4,320 4,400 Fees paid delivery help...........................1,100 1,760 2,200 Rent on building. 1,100 1,100 1,100 . 900 900 900 Utilities Depreciation on equipment... Supplies (soap, floor wax, etc.).. 1,700 1,700 Total........ .800 920 1,000 ...........1,700. ..250 340 400 Administrative costs..... $20,050 $27,040 $31,700 Required a. Identify each cost as being variable, fixed, or mixed. b. Use the high-low method to develop a schedule identifying the amount of each cost that is mixed or variable per unit. Total the amounts under each category
Allocation of Administrative Costs Wical Rental Management Services manages four apartment buildings, each with a different owner. Wical’s CEO has observed that the apartment buildingswith more expensive rental rates tend to require more of her time and also the time of her staff. Thefour apartment buildings incur a total annual operating expense of $7,345,733, and these operatingexpenses are traced directly to the apartment buildings for the purpose of determining the profitearned by the building owners. The annual management fee that Wical earns is based on a percentageof total annual operating expenses and is negotiated each year. For the current year, the fee rate is 6%,and Wical has the following information for current-year average rental rates and occupancy rates:[LO 18-3]Apartment Complex Number of Units Average Occupancy Average RentCape Point 100 88.0% $1,895Whispering Woods 250 77.0 1,295Hanging Rock 200 72.0 995College Manor 350 82.0 895Total 900For the current year, Wical…
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Activity Rate Travel Deliveries $2 per mile driven. $ 50 per delivery $ 22 per phone call Customer service Two of the company's many customers include Customer A and Customer B. These two customers consumed the company's activities as follows: Total Expected Activity Customer A Customer B 250 5 12 Activity Cost Pool Travel (number of miles driven) Deliveries (number of deliveries) Customer service (number of phone calls) How much cost would be assigned from the Travel activity to Customer A? Multiple Choice $170 $60 $680 340 15 20