Concept explainers
Consider the following information for a local concession stand’s first four weeks of operation:
Using the high-low method, what is the equation for total operating cost for this concession stand?
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Loose-leaf For Managerial Accounting
- Atlantis Company is placing an ad in the local paper to advertise its products . The ad will run for one week at a total cost of P5,500. Atlantis Company has four categories of products as follows: Product category % of floor space Expected sales occupied value A 20 P35,000 1515,000 45 64,500 D 2025,500 What amount of advertising cost should be allocated to product category A, assuming Atlantis allocates based on percent of floor space occupied ?arrow_forwardJake’s Roof Repair has provided the following data concerning its costs: Fixed Cost per Month Cost per Repair-Hour Wages and salaries $ 20,500 $ 15.00 Parts and supplies $ 7.40 Equipment depreciation $ 2,750 $ 0.50 Truck operating expenses $ 5,790 $ 1.50 Rent $ 4,640 Administrative expenses $ 3,810 $ 0.50 For example, wages and salaries should be $20,500 plus $15.00 per repair-hour. The company expected to work 2,700 repair-hours in May, but actually worked 2,600 repair-hours. The company expects its sales to be $51.00 per repair-hour. Required: Compute the company’s activity variances for May. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)arrow_forwardKenzi, a manufacturer of kayaks, began operations this year. During this year, the company produced 1,100 kayaks and sold 850 at a price of $1,100 each. At year-end, the company reported the following income statement information using absorption costing. Sales (850 × $1,100) $ 935,000 Cost of goods sold (850 × $425) 361,250 Gross profit 573,750 Selling and administrative expenses 220,000 Income $ 353,750 Additional Information a. Product cost per kayak under absorption costing totals $425, which consists of $325 in direct materials, direct labor, and variable overhead costs and $100 in fixed overhead cost. Fixed overhead of $100 per unit is based on $110,000 of fixed overhead per year divided by 1,100 kayaks produced.b. The $220,000 in selling and administrative expenses consists of $85,000 that is variable and $135,000 that is fixed.Prepare an income statement for the current year under variable costing.arrow_forward
- Brisbane Indoor Sports, a sporting complex, has opening hours that fluctuate from month to month.The electricity costs and hours of operation for past six months is listed below:Month Total hours of operation Total electricity costJanuary 650 $ 4,240February 700 $ 4,400March 800 $ 4,800April 600 $ 4,200May 550 $ 3,700June 500 $ 3,600Required:a) Use the high-low method to estimate the cost behaviour for the complex’s electricity costs,assuming that the variable costs vary in proportion to the hours of operation. Express the totalcost behaviour in formula form (Y = a + bx). What is the variable electricity cost per hour ofoperation?arrow_forwardJake’s Roof Repair has provided the following data concerning its costs: Fixed Costper Month Cost perRepair-Hour Wages and salaries $ 20,900 $ 15.00 Parts and supplies $ 7.60 Equipment depreciation $ 2,730 $ 0.55 Truck operating expenses $ 5,750 $ 1.60 Rent $ 4,650 Administrative expenses $ 3,870 $ 0.70 For example, wages and salaries should be $20,900 plus $15.00 per repair-hour. The company expected to work 2,900 repair-hours in May, but actually worked 2,800 repair-hours. The company expects its sales to be $48.00 per repair-hour. Required: Compute the company’s activity variances for May.arrow_forwardBennington Health purchased three dialysis systems each at an installed cost of $100,000 for different locations in the city. The AOC over 2 years varied as shown. (All values are costs.) The load factor in terms of percentage of clients at each location is shown in decimal form. Find the expected AW of costs for each location at i = 15% per year. Location North South West Load 0.50 0.35 0.15 Year AOC Per Year 0 100,000 100,000 100,000 1 20,000 15,000 12,000 2 8,600 11,500 5,600arrow_forward
- In a 30-day period a restaurant was open for nine hours per day. Costs incurred in the period totalled GH¢65,124. The following additional information is available: Number of tables available=15, Number of seats per table=4, customer turnaround is 1 hour and Seating occupancy achieved is 60%. What was the cost per customer?A. GH¢4·02B. GH¢6·70C. GH¢16·08D. GH¢26·80arrow_forwardCalculate the profit(loss) for an accounting period using the following information; Food sales $600,000, Labor Costs $ 350,000, Operating Overhead (Operating Expenses) $250,000, Food Cost 40%, Total Sales $1,000,000, Beverage Sales 40%, Beverage Cost $80,000. Show all work in proper sequence and form.arrow_forwardAtlantis Company is placing an ad in the local paper to advertise its products. The ad will run for one week at a total cost of P5, 500. Atlantis Company has four categories of products as follows: Product category % of floor space occupied Expected sales value A 20 P35,000 B 15 15,000 C 45 64,500 D 20 25,500 What amount of advertising cost should be allocated to product category A, B, C, and D assuming Atlantis allocates based on percent of floor space occupied?arrow_forward
- The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of the hoteland the number of occupancy-days over the last year. An occupancy-day represents a room rented out for oneday. The hotel’s business is highly seasonal, with peaks occurring during the ski season and in the summer.Month Occupancy-Days Electrical CostsJanuary ..................... 1,736 $4,127February .................... 1,904 $4,207March ........................ 2,356 $5,083April ........................... 960 $2,857May ........................... 360 $1,871June .......................... 744 $2,696July ............................ 2,108 $4,670August ....................... 2,406 $5,148September ................ 840 $2,691October ..................... 124 $1,588November ................. 720 $2,454December ................. 1,364 $3,529Required:1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost ofelectricity per occupancy-day.…arrow_forwardA transport company purchased a truck for $40,000. The operating cost was $3,800 per month, with average revenues of $5,500 per month. The truck was sold for $12,000 after two and a half years. The company's actual rate of return was closest to:arrow_forwardLavage Rapide owns and operates a large automatic car wash facility near Montreal. The following table provides estimates concerning the company’s costs: Fixed Cost per Month Cost per Car Washed Cleaning supplies $ 0.60 Electricity $ 1,200 $ 0.07 Maintenance $ 0.15 Wages and salaries $ 4,700 $ 0.40 Depreciation $ 8,500 Rent $ 2,000 Administrative expenses $ 1,700 $ 0.04 For example, electricity costs should be $1,200 per month plus $0.07 per car washed. The company expects to wash 8,500 cars in August and to collect an average of $6.20 per car washed. The actual operating results for August are as follows: Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed 8,600 Revenue $ 54,800 Expenses: Cleaning supplies 5,600 Electricity 1,765 Maintenance 1,515 Wages and salaries 8,460 Depreciation 8,500 Rent 2,200 Administrative expenses 1,940 Total expenses 29,980 Net operating income $…arrow_forward
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