Beatrice Math offers two tutoring models: individual and group. The individual model provides one-on-one tutoring while the group model consists of groups of no more than four students. The individual model has a budgeted average price of $275. The group model has a budgeted. average price of $75. The manager of the tutoring center believes that 65 percent of the customers will choose the group model. The individual model averages $185 and the group model averages $45 in budgeted variable cost. The manager estimates that about 160 people will purchase tutoring services in any month. For October, the tutoring center served a total of 170 customers, including 110 that chose the group option. Required: a. Compute the sales activity variance for the tutoring center for October. b. Compute the mix and quantity variances for October.

Beatrice Math offers two tutoring models: individual and group. The individual model provides one-on-one tutoring while the group model consists of groups of no more than four students. The individual model has a budgeted average price of $275. The group model has a budgeted. average price of $75. The manager of the tutoring center believes that 65 percent of the customers will choose the group model. The individual model averages $185 and the group model averages $45 in budgeted variable cost. The manager estimates that about 160 people will purchase tutoring services in any month. For October, the tutoring center served a total of 170 customers, including 110 that chose the group option. Required: a. Compute the sales activity variance for the tutoring center for October. b. Compute the mix and quantity variances for October.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 38P: Friendly Bank is attempting to determine the cost behavior of its small business lending operations....

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Using the single-rate method, allocate gift-wrapping costs to different departments in the following way: Q. Calculate the budgeted rate based on the budgeted number of gifts to be wrapped and allocate costs based on the budgeted use (of gift-wrapping services).
Friendly Bank is attempting to determine the cost behavior of its small business lending operations. One of the major activities is the application activity. Two possible activity drivers have been mentioned: application hours (number of hours to complete the application) and number of applications. The bank controller has accumulated the following data for the setup activity: Required: 1. Estimate a regression equation with application hours as the activity driver and the only independent variable. If the bank forecasts 2,600 application hours for the next month, what will be the budgeted application cost? 2. Estimate a regression equation with number of applications as the activity driver and the only independent variable. If the bank forecasts 80 applications for the next month, what will be the budgeted application cost? 3. Which of the two regression equations do you think does a better job of predicting application costs? Explain. 4. Run a multiple regression to determine the cost equation using both activity drivers. What are the budgeted application costs for 2,600 application hours and 80 applications?
Professional University teaches a large range of undergraduate courses. It is interested in determining the cost equation for the facilities cost as a function of student credit hours so that it an more accurately budget its facilities costs as enrollment grows. Information for the high and low cost semesters and volumes for last 5 years appears below Semester Student Cresit Hours Facilities Cost Spring 2007 250,000 $500,000 Fall 2004 300,000 $530,000 Using the high low method, with student credit hours as the activity driver, wht is the equation for facilities cost (FC) as a function of student credit hours?
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The following terms are used to describe various economic characteristics of costs.a. Opportunity costb. Out-of-pocket costc. Sunk costd. Differential coste. Marginal costf. Average costRequired: Choose one of the terms listed above to characterize each of the amounts described below.1. The cost of feeding 500 children in a public school cafeteria is $800 per day, or $1.60 per child per day. What economic term describes this $1.60 cost?2. The cost of including one extra child in a day-care center.3. The cost of merchandise inventory purchased two years ago, which is now obsolete.4. The management of a high-rise office building uses 2,500 square feet of space in the building for its own management functions. This space could be rented for $250,000. What economic term describes this $250,000 in lost rental revenue?5. The cost of building an automated assembly line in a factory is $800,000. The cost of building a manually operated assembly line is $375,000. What economic term is used to…