Survey Of Accounting
Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Chapter 11, Problem 25P

1)a.

To determine

Whether the cost of instruction is fixed or variable cost

1)a.

Expert Solution
Check Mark

Explanation of Solution

The cost of instruction is fixed cost as the total cost remains constant irrespectively of number of students attends the courses

b.

To determine

Determine the profit

b.

Expert Solution
Check Mark

Explanation of Solution

Given information:

Number of students are 20. The salary of instructor is $6,000 per course taught. The F services offer course of instruction $700 per student to the employees of N incorporation

Survey Of Accounting, Chapter 11, Problem 25P , additional homework tip  1

c.

To determine

Determine the profit with 10% of increase in enrolment and percentage of profitability.

c.

Expert Solution
Check Mark

Explanation of Solution

Given information:

Number of students are 22. The salary of instructor is $6,000 per course taught. The F services offer course of instruction $700 per student to the employees of N incorporation

Excel spreadsheet:

Survey Of Accounting, Chapter 11, Problem 25P , additional homework tip  2

Excel workings:

Survey Of Accounting, Chapter 11, Problem 25P , additional homework tip  3

Percentage change in profits:

Percentage change in profitability=G.P(22students)G.P(20students)G.P. in (20students)=$9,400$8,000$8,000=17.5%

Hence, the percentage change in profitability is 17.5%.

Percentage change in revenue:

Percentage change in revenue=Revenue (22students)Revenue (20students)Revenue (20students)=$15,400$14,000$14,000=10%

Hence, the percentage change in profitability is 10%.

d.

To determine

Determine the profit with 10% of decrease in enrolment and percentage of profitability.

d.

Expert Solution
Check Mark

Explanation of Solution

Given information:

Number of students are 18. The salary of instructor is $6,000 per course taught. The F services offer course of instruction at $700 per student to the employees of N incorporation

Excel spreadsheet:

Survey Of Accounting, Chapter 11, Problem 25P , additional homework tip  4

Excel workings:

Survey Of Accounting, Chapter 11, Problem 25P , additional homework tip  5

Percentage change in revenue and profitability:

Percentage change in profitability=G.P(20students)G.P(18students)G.P. in (20students)=$8,000$6,600$8,000=17.5%

Hence, the percentage change in profitability is 17.5%.

Percentage change in revenue=Revenue (20students)Revenue (18students)Revenue (20students)=$14,000$12,600$14,000=10%

Hence, the percentage change in profitability is 10%.

e.

To determine

The reason for 10% shift in enrollment produces more than 10% shift in profitability and the term identifies this phenomenon.

e.

Expert Solution
Check Mark

Explanation of Solution

The term which identifies these phenomena is operating leverage. This causes the percentage change in profitability to higher than the percentage change in revenue.

This is because that the fixed cost remains same and covered and there is no variable cost. So each additional dollar of revenue pays directly to the profitability.

2)f.

To determine

Whether the cost of instruction is fixed or variable cost

2)f.

Expert Solution
Check Mark

Explanation of Solution

Given information:

The instructor needs $300 per person attending the class. The F services offer course of instruction at $700 per student to the employees of N incorporation

The cost of instruction is variable cost as the total cost varies respectively of number of students attends the courses

g.

To determine

Determine the profit

g.

Expert Solution
Check Mark

Explanation of Solution

Given information:

Number of students are 20. The instructor needs $300 per person attending the class. The F services offer course of instruction at $700 per student to the employees of N incorporation

Survey Of Accounting, Chapter 11, Problem 25P , additional homework tip  6

h.

To determine

Determine the profit with 10% of increase in enrolment and percentage of profitability.

h.

Expert Solution
Check Mark

Explanation of Solution

Given information:

Number of students are 22. The instructor needs $300 per person attending the class. The F services offer course of instruction at $700 per student to the employees of N incorporation

Excel spreadsheet:

Survey Of Accounting, Chapter 11, Problem 25P , additional homework tip  7

Percentage change in revenue and profitability:

Percentage change in profitability=G.P(22students)G.P(20students)G.P. in (20students)=$8,800$8,000$8,000=10%

Hence, the percentage change in profitability is 10%.

Percentage change in revenue=Revenue (22students)Revenue (20students)Revenue (20students)=$15,400$14,000$14,000=10%

Hence, the percentage change in revenue is 10%.

i.

To determine

Determine the profit with 10% of decrease in enrolment and percentage of profitability.

i.

Expert Solution
Check Mark

Explanation of Solution

Given information:

Number of students are 18. The instructor needs $300 per person attending the class. The F services offer course of instruction at $700 per student to the employees of N incorporation

Excel spreadsheet:

Survey Of Accounting, Chapter 11, Problem 25P , additional homework tip  8

Percentage change in revenue and profit:

Percentage change in profitability=G.P(20students)G.P(18students)G.P. in (20students)=$8,000$7,200$8,000=10%

Hence, the percentage change in profitability is 10%.

Percentage change in revenue=Revenue (20students)Revenue (18students)Revenue (20students)=$14,000$12,600$14,000=10%

Hence, the percentage change in revenue is 10%.

j.

To determine

The reason for 10% shift in enrollment produces relative 10% shift in profitability.

j.

Expert Solution
Check Mark

Explanation of Solution

The change in profit is relative to change in revenue because the revenue as well as cost changes relatively to the change in number of students attending the course.

3)k.

To determine

The total cost and the cost per student

3)k.

Expert Solution
Check Mark

Explanation of Solution

Given information:

The cost of the work book is $30 and selling price is $50. The numbers of students are 18, 20, or 22. The company printed 20 copies of books.

The formula to calculate the cost per students:

Cost per students=Total costNumber of students

Compute the total cost:

Survey Of Accounting, Chapter 11, Problem 25P , additional homework tip  9

Compute the cost per student:

Survey Of Accounting, Chapter 11, Problem 25P , additional homework tip  10

l.

To determine

Whether the cost of work book is fixed or variable cost

l.

Expert Solution
Check Mark

Explanation of Solution

The cost of work book is fixed cost as the cost incurred is before the sale of work book. Therefore, sales of number of work book will not affect the total cost.

Thus, it is fixed cost.

m.

To determine

The risk of holding inventory as it applies to workbooks

m.

Expert Solution
Check Mark

Explanation of Solution

The risk faced by the company is that it produces very few or too many books. If the company produces too many books then the expenses will more due to wastage.

When the company produces less numbers then the will not get the opportunity to earn any additional profits.

It will also incur costs like maintenances, interest and storage.

n.

To determine

Whether just in time can reduce the cost and risk of holding inventory

n.

Expert Solution
Check Mark

Explanation of Solution

JIT-Just in time produces only when there is any demand of goods. There will not be any risk on over or under production.

There will not be any stock piling of inventory as it will avoid the cost of storage, interest and maintenance

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