# Variable Cost and Net Operating Income Topics: Variable cost, Costs, Fixed cost, Management accounting, Contribution margin, Total cost / Pages: 59 (14633 words) / Published: Jan 30th, 2012

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Question 1: Score 0/4

Your response Exercise 5-1 Fixed and Variable Cost Behavior [LO1] Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is \$1,200 and the variable cost per cup of coffee served is \$0.22. Requirement 1: Fill in the following table with your estimates of total costs and cost per cup of coffee at the indicated levels of activity for a coffee stand. (Round average cost per cup of coffee to 3 decimal places. Omit the "\$" sign in your response.) 2,000 Fixed cost Variable cost Total cost Average cost per cup of coffee served \$ \$ \$
0.60 0.22 0.82 0.792

Correct response Exercise 5-1 Fixed and Variable Cost Behavior [LO1] Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is \$1,200 and the variable cost per cup of coffee served is \$0.22. Requirement 1: Fill in the following table with your estimates of total costs and cost per cup of coffee at the indicated levels of activity for a coffee stand. (Round average cost per cup of coffee to 3 decimal places. Omit the "\$" sign in your response.) Cups of Coffee Served in a Week 2,000 2,100 2,200 1,200 1,200 \$ \$ \$ 1,200
440 1,640 \$ 462 1,662 \$ 484 1,684 \$

Cups of Coffee Served in a Week 2,100 2,200 (0%) \$ 0.571 (0%) \$ 0.545 (0%) (0%) 0.22 (0%) 0.22 (0%) (0%) \$ 0.791 (0%) \$ 0.765 (0%) (0%) \$
0.792

(0%)

\$

0.792

(0%)

Fixed cost Variable cost Total cost Average cost per cup of coffee served

\$ 0.82

\$ 0.791

\$ 0.765

Total grade: 0.0×1/12 + 0.0×1/12 + 0.0×1/12 + 0.0×1/12 + 0.0×1/12 + 0.0×1/12 + 0.0×1/12 + 0.0×1/12 + 0.0×1/12 + 0.0×1/12 + 0.0×1/12 + 0.0×1/12 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% Feedback: Average cost per cup of coffee served = Total cost ÷ cups of coffee served in a week Requirement 2: Does the average cost per cup of