49. The following data pertains to activity and costs for two months:
Inspection costs at one of Krivanek Corporation’s factories are listed below:
Management believes that inspection cost is a mixed c ost that depends on units produced.
Variable cost per unit = Change in cost Change in activity
= $293 93 units
= $3.15 per unit
Glatt Inc., an escrow agent, has provided the follo wing data concerning its office
expenses:
Variable cost per unit = Change in cost Change in activity
= $1,403 82 escrows
= $17.11 per escrow
Variable cost per unit = Change in cost Change in activity
= $1,403 82 escrows
= $17.11 per escrow
Total fixed cost = Total cost – Variable cost element
= $8,779 – ($17.11 per escrow 122 escrows)
= $8,779 – $2,087
= $6,692
Sheet1
| Comparison of the Contribution Income Statement | |||||||||||
| with the Traditional Income Statement | |||||||||||
| Traditional Format | Contribution Format | ||||||||||
| Sales | $ 100,000 | Sales | $ 100,000 | ||||||||
| Cost of goods sold | 70,000 | Variable expenses | 60,000 | ||||||||
| Gross margin | $ 30,000 | Contribution margin | $ 40,000 | ||||||||
| Selling & admin. expenses | 20,000 | Fixed expenses | 30,000 | ||||||||
| Net operating income | $ 10,000 | Net operating income | $ 10,000 |
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Direct Indirect
Cost Cost Object Cost Cost
1. The salary of the head
chef
The hotel’s restaurant X
2. The salary of the head
chef
A particular restaurant
customer