Concept explainers
1.
Find out the total cost of renting space if 100 people and attend and calculate the average cost.
1.

Explanation of Solution
Costs: In accounting terms, costs refer to the monetary value expended to produce a product. Costs are generally classified based on the purpose it is incurred for. Costs are classified based on the necessity for preparation of cost statements for various purposes. Classification of costs based on the nature is known as subjective classification; and classification of costs based on the purpose is known as objective classification.
Calculate the amount of fixed cost:
Calculate the amount of average cost:
Therefore, the amount of fixed cost is $3,000 and average cost is $30 per person.
2.
Find out the total cost of renting space if 200 people and attend and calculate the average cost.
2.

Explanation of Solution
Calculate the amount of fixed cost:
Calculate the amount of average cost:
Therefore, the amount of fixed cost is $4,500 and average cost is $22.50 per person.
3.
Explain the reason for which
3.

Explanation of Solution
Decrease in fixed cost per person is $7.50
Working notes:
(1)Calculate the amount of fixed cost per person for 100 people:
(2)Calculate the amount of fixed cost per person for 200 people:
(3)Calculate the average cost of 200 people:
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Chapter 3 Solutions
COST MANAGMENT WITH CONNECT ACCESS
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