2-20
Problem 2-23
a. Passengers:
Variable cost =
$25,459 $22,225
2,430 2,136
= $11 per passenger
Passenger miles:
Variable cost =
$24,481 $22,435
578,133 373,533
= $0.01 per passenger mile
Train Miles:
Variable cost =
$25,459 $22,225
3,315 2,825
= $6.60 per train mile
c. Logically, train miles would seem to have the most predictive ability
since the miles a train travels and fuel costs should be directly
Chapter 2 – Cost Behavior and Cost Estimation
2-21
Problem 2-24
a. Cost of goods sold – variable
3,000 windows
Per Unit
Sales revenue
$4,500
$1.50
Variable expenses:
Cost of goods sold
1,800
0.60
Salaries expense
300
0.10
Postage expense
600
0.20
Total variable expenses
2,700
0.90
Contribution margin
1,800
$0.60
Fixed expenses:
Advertising expense
400
Salaries expense
500
Insurance expense
200
Total fixed expenses
1,100
Operating Income
$ 700
2-22
Problem 2-25
a. coats sold = $750,000 $250 = 3,000 units
Per Unit
Sales revenue
$750,000
$250.00
Variable expenses:
Cost of goods sold
300,000
100.00
Selling expense
19,500
6.50
Administrative expense
37,500
12.50
Total variable expenses
357,000
119.00
Contribution margin
393,000
$131.00
Fixed expenses:
Selling expense
4,060
Administrative expense
12,000
Total fixed expenses
16,060
Operating Income
$376,940
Chapter 2 – Cost Behavior and Cost Estimation
2-23
Problem 2-26
a.
Per Unit
Sales revenue
$25,500
$30
Variable expenses:
Service expense
$14,450
17
Bookkeeping expense
1,700
2
Total variable expenses
16,150
19
Contribution margin
9,350
$11
Fixed expenses:
Vans expense
2,000
Salaries expense
3,000
Total fixed expenses
5,000
Operating Income
$4,350
2-24
Problem 2-26, continued
c.
850
1,000
1,100
Current cost: $2 customers 12 months
$20,400
$24,000
$26,400
Option 1: $10,200 + ($1 customers 12 months)
$20,400
$22,200
$23,400
Option 2: $18,000 + $5,000
$23,000
$23,000
$23,000
d. Mr. Henley needs to evaluate what he thinks future demand for his services will be. If he thinks he
2-25
SOLUTIONS TO CONTINUING CASE PROBLEMS
Problem 2-27
Cost
Behavior
a.
Monthly sales staff payroll of $650 plus 6% sales
commission on jerseys
mixed
b.
$100 monthly rental for credit card processing
equipment
fixed
c.
Cost of goods sold of $14.80 per jersey
variable
d.
The cost of price tags attached to each jersey
variable
e.
Inventory insurance that costs $2 per $1,000 of
sales
step
f.
Website hosting cost of $25 per month
fixed
2-26
Problem 2-28
a. $20.00x – $16.00x – $168,000 = operating profit
d.
Per Unit
Sales revenue
$1,200,000
$20.00
Variable expenses:
Cost of goods sold
$888,000
14.80
Sales commission expense
72,000
1.20
Total variable expenses
960,000
16.00
Contribution margin
240,000
$ 4.00
Fixed expenses:
Selling expense
136,500
Administrative expense
51,500
Total fixed expenses
188,000
Operating Income
$ 52,000
Chapter 2 – Cost Behavior and Cost Estimation
SOLUTIONS TO CASES
Case 2-29
a.
Ad development
$5,000
Placementa
1,600
($0.80 2,000)
Click-through
4,000
($0.02 .1 2,000,000)
$10,600
a
2,000,000 ad impressions
1,000
= 2,000 (impressions are priced per thousand)
2-28
Case 2-30
c. As a result of Sami’s actions, Helios will experience a higher click
through).