2-28 Basic Review Exercises

Fill in the blanks for each of the following independent cases (ignore income taxes):

      Sales        Variable Expenses      Contribution Margin        Fixed Expenses          Net Income

1. $900,000         $500,000                            $ —                       $350,000                    $ —

2. 800,000                 —                            350,000                       —                         80,000  

3.    —                   600,000                        340,000                      250,000                     —

2-29 Basic Review Exercises

Fill in the blanks for each of the following independent cases:

Case   Selling       Variable    Total      Total             Total          Net

         Price per     cost per    Unit        Contribution    Fixed       Income

          Unit            Unit        Cost        Margin            Cost

1       $25              $—        120,000    $720,000      $640,000     $ —

2       10                  6        100,000           —           320,000       —

3       20                 15         —               100,000       —           15,000

4       30           20        70,000              —           —           12,000

5       —            9        80,000     160,000      110,000        —

3-35 Predicting Costs

Given the following four cost behaviors and expected levels of cost-driver activity, predict total costs:

1. Fuel costs of driving vehicles, $0.20 per mile, driven 17,000 miles per month

2. Equipment rental cost, $6,000 per piece of equipment per month for seven pieces for three

months

3. Ambulance and EMT personnel cost for a soccer tournament, $1,200 for each 250 tournament

participants; the tournament is expecting 2,400 participants

4. Purchasing department cost, $7,500 per month plus $4 per material order processed at 4,000

orders in one month

3-36 Identifying Discretionary and Committed Fixed Costs

Identify and compute total discretionary fixed costs and total committed fixed costs from the following

list prepared by the accounting supervisor for Huang Building Supply:

Advertising $19,000

Depreciation 47,000

Health insurance for the company’s employees 15,000

Management salaries 85,000

Payment on long-term debt 50,000

Property tax 32,000

Grounds maintenance 9,000

Office remodeling 21,000

Research and development 36,000