Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773



Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem

Use the following information for Exercises 3-42 and 3-43:

Ben Palman owns an art gallery. He accepts paintings and sculpture on consignment and then receives 20% of the price of each piece as his fee. Space is limited, and there are costs involved, so Ben is careful about accepting artists. When he does accept one, he arranges for an opening show (usually for 3 hours on a weekend night) and sends out invitations to his customer list. At the opening, he serves wine, soft drinks, and appetizers to create a comfortable environment for prospective customers to view the new works and to chat with the artist. On average, each opening costs $500. Ben has given as many as 20 opening shows in a year. The total cost of running the gallery, including rent, furniture and fixtures, utilities, and a part-time assistant, amounts to $80,000 per year.

Exercises 3-43 Mixed Costs and Cost Formula

Refer to the information for Ben Palman’s art gallery on the previous page.


  1. 1. Assume that the cost driver is number of opening shows. Develop the cost formula for the gallery’s costs for a year.
  2. 2. Using the formula developed in Requirement 1, what is the total cost for Ben in a year with 12 opening shows? With 14 opening shows?


To determine

Prepare the cost formula for the cost of gallery for a year.



Cost can be defined as the cash and cash equivalent which is incurred against the products or its related services which will benefit the organization in the future. There are two types of costs that are fixed and variable costs.

The cost formula for the cost of gallery for a year is,

Total Cost=Fixed Cost+(Variable Rate×Numberx


To determine

Calculate the amount of total cost for BE in a year when the number of opening shows is 12. Also, with 14 opening shows.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What is the confirmation process?

Accounting Information Systems

Identify the sources of the information needed to prepare the balance sheet.

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

PRESENT VALUE What is the present value of a security that will pay 5,000 in 20 years if securities of equal ri...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

What distinguishes money from other assets in the economy?

Principles of Macroeconomics (MindTap Course List)

When using normal costing, how are jobs charged with overhead?

Cornerstones of Cost Management (Cornerstones Series)