ACC410 Solution Chapter 2

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19 Apr 2012
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Chapter 2
The Cost Function
MULTIPLE-CHOICE QUESTIONS
2.10
Ans: A
2.11
Ans: B
2.12
Ans: B
2.13
Ans: C
2.14
Ans: D
EXERCISES
2.16
A. Variable cost per car wash = 5.25
Total fixed costs = 115,000
Cost Equation TC = 115,000 + 5.25*number of car washes
B. TC = 203,200
C. Variable Cost / unit = 5.41
Total Fixed Cost = $ 118,310
Cost Equation TC = 215,690
2.19
A. TC = $10,000 + $8.00*Q
B. TC = $25,000 + $8.00*Q, for Q 2,000
TC = $35,000 + $8.00*Q, for Q > 2,000
C. Estimated cost per unit = $43
D. TC = $9,500
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2-2 Cost Management
2.20
A. TC = $50,000 + $10.00*Q, for Q < 1,000
TC = $51,000 + $9.00*Q, for Q > 1,000
2.21
A. cumulative average time = 4.8 hours (average time for each of the next two returns)
2.22
A. TC = $20,000 + 25%*Total sales
2.23
A. D or I, F
B. D, V
C. I, F
D. D or I, V
E. I, V or F
F. I, F or M
G. I, F
H. I, F
I. I, F or M
J. D or I, V
2.24
A. Total Fixed = 3,300
Total Variable = 4,500
B. TC = $3,300 + 50%*Total revenue
C. lost contribution margin from the products sold with the flavour that has been replaced.
D.irrelevant
2.25
A. B; F, V, or M
B. PS; V
C. B; F or M
D. FB; F
E. B; F
F. PS; F
G. B; F or M
2.26
A. Cost of plain burger = $0.3489
B. Cost of burger with everything except cheese = $0.5196
Suggested selling price = $1.56
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