Log in
Accounting
1
answer
0
watching
169
views

Rohr Training Services (RTS) provides instruction on the use of computer software for the employees of its corporate clients. It offers courses in the clients’ offices on the clients’ equipment. The only major expense RTS incurs is instructor salaries; it pays instructors $4,000 per course taught. RTS recently agreed to offer a course of instruction to the employees of Basemera Incorporated at a price of $600 per student. Basemera estimated that 20 students would attend the course.

Required - What is listed in correct. BOLD and no numbers listed in the box is what I need help with

Part 1:

a.

Relative to the number of students in a single course, is the cost of instruction a fixed or a variable cost?

Fixed cost

Variable cost

b.

Determine the profit, assuming that 20 students attend the course.

Profit

$8,000


c-1.

Determine the profit, assuming a 10 percent increase in enrollment (i.e., enrollment increases to 22 students).

Profit

$9,200

c-2.

What is the percentage change in profitability?

Change in profitability

%

d-1.

Determine the profit, assuming a 10 percent decrease in enrollment (i.e., enrollment decreases to 18 students).

Profit

$6,800

d-2.

What is the percentage change in profitability?

Change in profitability

%

Part 2:

The instructor has offered to teach the course for a percentage of tuition fees. Specifically, she wants $360 per person attending the class. Assume that the tuition fee remains at $600 per student.

f.

Is the cost of instruction a fixed or a variable cost?

Fixed cost

Variable cost

g.

Determine the profit, assuming that 20 students take the course.

Profit

h-1.

Determine the profit, assuming a 10 percent increase in enrollment (i.e., enrollment increases to 22 students).

Profit

h-2.

What is the percentage change in profitability?

Change in profitability

%

i-1.

Determine the profit, assuming a 10 percent decrease in enrollment (i.e., enrollment decreases to 18 students).

Profit

i-2.

What is the percentage change in profitability?

Change in profitability

%

Part 3:

RTS sells a workbook with printed material unique to each course to each student who attends the course. Any workbooks that are not sold must be destroyed. Prior to the first class, RTS printed 20 copies of the books based on the client’s estimate of the number of people who would attend the course. Each workbook costs $30 and is sold to course participants for $50. This cost includes a royalty fee paid to the author and the cost of duplication.

k.

Calculate the workbook cost in total and per student, assuming that 18, 20, or 22 students attempt to attend the course. (Round "Cost per student" answers to 2 decimal places.)

Number of Students Attempting to Attend

18

20

22

Total cost of workbooks

Cost per student


l.

Classify the cost of workbooks as fixed or variable relative to the number of students attending the course.

Fixed cost

Variable cost

Watch
1
answer
0
watching
169
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Nelly Stracke
Nelly StrackeLv2
30 Sep 2019

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related questions

Kenton and Denton Universities offer executive training courses to corporate clients. Kenton pays its instructors $5,700 per course taught. Denton pays its instructors $300 per student enrolled in the class. Both universities charge executives a $343 tuition fee per course attended.

Required

Prepare income statements for Kenton and Denton, assuming that 19 students attend a course.

Kenton University embarks on a strategy to entice students from Denton University by lowering its tuition to $223 per course. Prepare an income statement for Kenton assuming that the university is successful and enrolls 36 students in its course.

Denton University embarks on a strategy to entice students from Kenton University by lowering its tuition to $223 per course. Prepare an income statement for Denton, assuming that the university is successful and enrolls 36 students in its course.

Prepare income statements for Kenton and Denton Universities, assuming that 13 students attend a course, and assuming that both universities charge executives a $343 tuition fee per course attended.

Prepare income statements for Kenton and Denton, assuming that 19 students attend a course.
University Kenton Denton
Tuition revenue
Total cost of instruction
Net income (loss)

Kenton University embarks on a strategy to entice students from Denton University by lowering its tuition to $223 per course. Prepare an income statement for Kenton assuming that the university is successful and enrolls 36 students in its course.
University Kenton
Tuition revenue
Total cost of instruction
Net income (loss)

Denton University embarks on a strategy to entice students from Kenton University by lowering its tuition to $223 per course. Prepare an income statement for Denton, assuming that the university is successful and enrolls 36 students in its course.
University Denton
Tuition revenue
Total cost of instruction (variable)
Net income (loss)

Prepare income statements for Kenton and Denton Universities, assuming that 13 students attend a course, and assuming that both universities charge executives a $343 tuition fee per course attended.
University Kenton Denton
Tuition revenue
Total cost of instruction
Net income (loss)

13 Allocating to smooth cost over varying levels of productionLO 12-3

Production workers for Kennedy Manufacturing Company provided320 hours of labor in January and 660 hours in February. Kennedyexpects to use 4,000 hours of labor during the year. The rental feefor the manufacturing facility is $12,000 per month.

Required

Based on this information, how much of the rental cost should beallocated to the products made in January and to those made inFebruary?

MONTH ALLOCATED COST

JANUARY _________________

FEBRUARY _________________

10 Pooling overhead cost LO12-2

Eaton Manufacturing Company produced 2,900 units of inventory inJanuary 2014. It expects to produce an additional 9,900 unitsduring the remaining 11 months of the year. In other words, totalproduction for 2014 is estimated to be 12,800 units. Directmaterials and direct labor costs are $73 and $54 per unit,respectively. Eaton Company expects to incur the followingmanufacturing overhead costs during the 2014 accounting period.

Productionsupplies $ 6,000
Supervisorsalary 180,000
Depreciation onequipment 129,000
Utilities 24,000
Rental fee onmanufacturing facilities 333,000
Required
a.

Combine the individual overhead costs into a cost pool andcalculate a predetermined overhead rate assuming the cost driver isnumber of units. (Round your answer to 2 decimalplaces.)

PREDETERMINED OVERHEAD RATE ( ) PER UNIT

9 Allocating costs between divisions LO 12-2

Kaplan Services Company (KSC) has 62 employees, 23 of whom areassigned to Division A and 39 to Division B. KSC incurred $373,860of fringe benefits cost during 2014.

Required

Determine the amount of the fringe benefits cost to be allocatedto Division A and to Division B.

DIVISION ALLOCATED COST

A __________________

B __________________

Desired profit LO 11-5

Lindo Company incurs annual fixed costs of $80,000. Variablecosts for Lindo’s product are $40 per unit, and the sales price is$64 per unit. Lindo desires to earn an annual profit of$40,000.

Required

Determine the sales volume in dollars and units required to earnthe desired profit. (Do not round intermediatecalculations.)

SALES IN DOLLARS ( )

SALES IN UNITS ( )

4 Fixed versus variable cost behavior LO 11-1, 11-2

Moore Entertainment sells souvenir T-shirts at each rock concertthat it sponsors. The shirts cost $8 each. Any excess shirts can bereturned to the manufacturer for a full refund of the purchaseprice. The sales price is $20 per shirt.

Required
a.

What are the total cost of shirts and cost per shirt if salesamount to 7,000, 7,500, 8,000, 8,500, or 9,000?

NUMBER OF T-SHIRTS SOLD 7,000 7,500 8,000 8,500 9,000

TOTAL COST OF SHIRTS _______ ________ ___________ _______________________

COSTS PER SHIRT _______ ________ ___________ ________________________

b.

Is the cost of T-shirts a fixed or a variable cost? FIXED COST () OR VARIABLE COST ( )

3 Fixed versus variable cost behavior LO 11-1, 11-2

Moore Entertainment sponsors rock concerts. The company isconsidering a contract to hire a band at a cost of $90,000 perconcert.

Required
a.

What are the total band cost and the cost per person if concertattendance is 8,000, 8,500, 9,000, 9,500, or 10,000? (Round“Cost per person” answers to 2 decimal places.)

CONCERT ATTENDANCE 8,000 8,500 9,000 9,500 10,000

TOTAL COST OF CONCERT ________ _________ _________ __________________

COST PER PERSON _________ _________ _________ ___________________

b.

Is the cost of hiring the band a fixed or a variable cost? FIXEDCOST ( ) OR VARIABLE COST ( )

CASE 6–30 Service Organization; Segment Reporting[LO6–4]

Music Teachers, Inc., is an educational association for musicteachers that has 20,000 members. The association operates from acentral headquarters but has local membership chapters throughoutthe United States. Monthly meetings are held by the local chaptersto discuss recent developments on topics of interest to musicteachers. The association’s journal, Teachers’ Forum, is issuedmonthly with features about recent developments in the field. Theassociation publishes books and reports and also sponsorsprofessional courses that qualify for continuing professionaleducation credit. The association’s statement of revenues andexpenses for the current year is presented below.



d

Page 278

The board of directors of Music Teachers, Inc., has requestedthat a segmented income statement be prepared showing thecontribution of each segment to the association. The associationhas four segments: Membership Division, Magazine SubscriptionsDivision, Books and Reports Division, and Continuing EducationDivision. Mike Doyle has been assigned responsibility for preparingthe segmented income statement, and he has gathered the followingdata prior to its preparation.

Membership dues are $100 per year, of which $20 is considered tocover a one-year subscription to the association’s journal. Otherbenefits include membership in the association and chapteraffiliation. The portion of the dues covering the magazinesubscription ($20) should be assigned to the Magazine SubscriptionDivision.

One-year subscriptions to Teachers’ Forum were sold tononmembers and libraries at $30 per subscription. A total of 2,500of these subscriptions were sold last year. In addition tosubscriptions, the magazine generated $100,000 in advertisingrevenues. The costs per magazine subscription were $7 for printingand paper and $4 for postage and shipping.

A total of 28,000 technical reports and professional texts weresold by the Books and Reports Division at an average unit sellingprice of $25. Average costs per publication were $4 for printingand paper and $2 for postage and shipping.

The association offers a variety of continuing education coursesto both members and nonmembers. The one-day courses had a tuitioncost of $75 each and were attended by 2,400 students. A total of1,760 students took two-day courses at a tuition cost of $125 foreach student. Outside instructors were paid to teach somecourses.

Salary costs and space occupied by division follow:



d

Personnel costs are 25% of salaries inthe separate divisions as well as for the corporate staff. The$280,000 in occupancy costs includes $50,000 in rental cost for awarehouse used by the Books and Reports Division for storagepurposes.

Page 279

Printing and paper costs other than for magazine subscriptionsand for books and reports relate to the Continuing EducationDivision.

General and administrative expenses include costs relating tooverall administration of the association as a whole. The company’scorporate staff does some mailing of materials for generaladministrative purposes.

The expenses that can be traced or assigned to the corporatestaff, as well as any other expenses that are not traceable to thesegments, will be treated as common costs. It is not necessary todistinguish between variable and fixed costs.

Required:

Prepare a contribution format segmented income statement forMusic Teachers, Inc. This statement should show the segment marginfor each division as well as results for the association as awhole.

Give arguments for and against allocating all costs of theassociation to the four divisions.

Somewhat similar to a vignette in literature, this provides anopportunity to look at the application of Managerial Accounting ina diverse set of factual circumstances.

After completing the requirements for the case study, pleaseprovide a short narrative (two to four pages) and analysis of yourimpressions on how these principles and processes can be appliedproductively in settings that you encounter or expect to encounterin your career. Which aspects of the course do you believe you willbe able to apply most productively going forward? Which of thesetechniques are you regularly using in your current positions? Ifyou are using different applications, provide insight of the prosand cons in comparison to the reports and analysis above.

Schedules should be submitted in excel format and any analysisand write-ups should be in a Microsoft Word Document.

Weekly leaderboard

Home
Homework Help 3,900,000
Accounting 580,000
Start filling in the gaps now
Log in