SURVEY OF ACCOUNT.(LL)-W/ACCESS>CUSTOM<
5th Edition
ISBN: 9781260222326
Author: Edmonds
Publisher: MCG CUSTOM
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Chapter 11, Problem 1E
To determine
Identify the cost behavior of Person R’s restaurant as fixed, variable, or mixed.
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Rachael's Restaurant, a fast-food restaurant company, operates a chain of restaurants across the nation. Each restaurant employs eight
people; one is a manager paid a salary plus a bonus equal to 4 percent of sales. Other employees, two cooks, one dishwasher, and
four servers, are paid salaries. Each manager is budgeted $3,000 per month for advertising costs.
Required
Classify each of the following costs incurred by Rachael's Restaurant as fixed, variable, or mixed:
a. Advertising costs relative to the number of customers for a particular restaurant.
Fixed cost
b. Rental costs relative to the number of restaurants.
Variable cost
c. Cooks' salaries at a particular location relative to the number of customers.
Fixed cost
d. Cost of supplies (cups, plates, spoons, etc.) relative to the number of customers.
e. Manager's compensation relative to the number of customers.
Variable cost
Mixed cost
f. Servers' salaries relative to the number of restaurants.
Variable cost
Bobby's Inc. operates a chain of restaurants across North Carolina. Each restaurant employs ten people; one is a manager paid a
salery plus a bonus equal to 2 percent of sales.
Other employees three cooks, one dishwasher, and five servers, are paid salaries.
Each manager is budgeted $4,000 per month for advertising costs.
Required
Classify each of the following costs incurred by Bobby's Inc. as fixed, variable, or mixed:
a Advertising costs relative to the number of customers for a particular restaurant.
b. Rental costs relative to the number of restaurants
c. Cooks' salaries at a particular location relative to the number of customers.
Cost of supplies (cups, plates, spoons, etc.) relative to the number of customers.
Manager's compensation relative to the number of customers.
Servers salaries relative to the number of restaurants.
Seal Financial Advisors provides accounting and finance assistance to customers in the retail business. Seal has four professionals on staff and an office with six clerical staff. Total compensation, including benefits, for the professional staff runs about $573,000 per year, and normal billable hours are 8,300 hours per year. The professional staff keep detailed time sheets organized by client number. The total office and administrative costs for the year are $755,000. Seal allocates office and administrative costs to clients monthly, using a predetermined overhead allocation rate based on billable hours. What is the predetermined overhead allocation rate that Seal will use for office and administrative costs? (Round your answer to the nearest cent.)
A.
$69.04 per hour
B.
$21.93 per hour
C.
$160.00 per hour
D.
$90.96 per hour
Chapter 11 Solutions
SURVEY OF ACCOUNT.(LL)-W/ACCESS>CUSTOM<
Ch. 11 - 1.Define fixed cost and variable cost and give an...Ch. 11 - Prob. 2QCh. 11 - 3.Define the term operating leverage and explain...Ch. 11 - Prob. 4QCh. 11 - Prob. 5QCh. 11 - 6.If volume is increasing, would a company benefit...Ch. 11 - Explain the risk and rewards to a company that...Ch. 11 - 9.Are companies with predominately fixed cost...Ch. 11 - 10.How is the relevant range of activity related...Ch. 11 - Which cost structure has the greater risk?...
Ch. 11 - 14.The president of Bright Corporation tells you...Ch. 11 - Prob. 12QCh. 11 - Prob. 13QCh. 11 - Prob. 14QCh. 11 - Prob. 15QCh. 11 - Prob. 16QCh. 11 - Prob. 17QCh. 11 - Prob. 1ECh. 11 - Prob. 2ECh. 11 - Prob. 3ECh. 11 - Exercise 2-4A Determining total variable cost The...Ch. 11 - Prob. 5ECh. 11 - Prob. 6ECh. 11 - Prob. 7ECh. 11 - Prob. 8ECh. 11 - Prob. 9ECh. 11 - Prob. 10ECh. 11 - Prob. 11ECh. 11 - Prob. 12ECh. 11 - Prepare an income statement using the contribution...Ch. 11 - Prob. 14ECh. 11 - Prob. 15ECh. 11 - Prob. 16ECh. 11 - Prob. 17ECh. 11 - Prob. 18ECh. 11 - Prob. 19ECh. 11 - Prob. 20ECh. 11 - Prob. 21PCh. 11 - Prob. 22PCh. 11 - Problem 2-19A Context-sensitive nature of cost...Ch. 11 - Prob. 24PCh. 11 - Prob. 25PCh. 11 - Prob. 26PCh. 11 - Prob. 27PCh. 11 - Prob. 28PCh. 11 - Prob. 29PCh. 11 - Prob. 1ATCCh. 11 - Prob. 2ATCCh. 11 - Prob. 3ATCCh. 11 - Prob. 4ATCCh. 11 - Prob. 5ATC
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