# Chapter 2 Solutions.

1459 Words May 28th, 2013 6 Pages
CHAPTER 2
AN INTRODUCTION TO COST TERMS AND PURPOSES

2-20 (15–20 min.) Classification of costs, manufacturing sector.

Cost object: Type of car assembled (Corolla or Geo Prism)
Cost variability: With respect to changes in the number of cars assembled There may be some debate over classifications of individual items, especially with regard to cost variability.

|Cost Item |D or I |V or F |
|A |D |V |
|B |I |F |
|C |D |F
Number of attendees 0 100 200 300 400 500 600
Variable cost per person (\$10 caterer charge – \$5 student door fee) \$5 \$5 \$5 \$5 \$5 \$5 \$5
Fixed Costs \$1,500 \$1,500 \$1,500 \$1,500 \$1,500 \$1,500 \$1,500
Variable costs (number of attendees x variable cost per person) 0 500 1,000 1,500 2,000 2,500 3,000
Total costs (fixed + variable) \$1,500 \$2,000 \$2,500 \$3,000 \$3,500 \$4,000 \$4,500

[pic]

2.
|Number of attendees |0 |100 |200 |300 |400 |500 |600 |
|Total costs |\$1,500 |\$2,000 |\$2,500 |\$3,000 |\$3,500 |\$4,000 |\$4,500 |
|(fixed + variable) | | | | | | | |
|Costs per attendee (total costs[pic]number| | \$20.00 |\$12.50 | \$10.00 |\$ 8.75 |\$ 8.00 |\$ 7.50 |
|of attendees) | | | | | | | |

As shown in the table above, for 100 attendees the total cost will be \$2,000 and the cost per attendee will be \$20.

3. As shown in the table in requirement 2, for 500 attendees the total cost will be \$4,000 and the cost per attendee will be \$8.

4.