1 van Abuzi is a house painter He incurred the following costs during August 2009, when he painted four houses In the first weeks of August, Abuzi placed a $60 classified ad for his business in the newspaper He also bought two pairs of coveralls for $35 each to wear while working Abuzi spent $25 for a day planner book in which he records hours spent at each job, mileage to and from jobs (at a rate of $0 32 per mile), information on referral work, and bids submitted for other jobs Toll road charges for driving to various job locations were $0 75 for each section of toll road traveled Cell phone charges for the month were $60 Abuzi has a cell phone plan that allows up to 2,000 minutes of nationwide calling, a time frame that he has never exceeded Abuzi uses the cell phone for both business and personal calls In August approximately 40 of his calls were business related Materials costs for the month were $500 for paint, $40 for mineral spirits, and $155 for brushes Abuzi hired a helper who worked 15 hours at $18 per hour on one of Abuzis jobs The insurance on Abuzis work truck is $509 per month Using the following headings and indicate how each of the August costs incurred by Abuzi would be classified Assume that the cost object is a house painting job Type of Cost, Variable, Fixed, Direct, Indirect, Period, Product Type of Cost Variable Fixed Direct Indirect Period Product 2 Use the information below to answer the questions that follow Month Procedures Electricity Jan 1,000 4,500 Feb 800 3,500 Mar 700 3,025 Apr 900 3,250 May 950 3,300 Jun 1,000 4,400 Jul 1,100 4,200 Aug 1,250 4,800 Sep 1,200 5,000 Oct 1,050 4,500 Nov 1,100 4,250 Dec 900 3,200 Separate the fixed and variable components Are the number of procedures a good cost driver Assuming 1,000 procedures next month, what would be the projected total cost of electricity 3 ChangingTimes sells 185,000 bottles of TempeTingler nail polish each year The product, which is very popular with teens, sells for $13 per bottle, and variable cost per unit is $5 50 Total annual fixed costs are $1,260,000 What is the degree of operating leverage If the company can increase unit sales by 20 , what percentage increase will it experience in income Prove your answer using an income statement 4 Barkley, Inc has the following revenue and cost information Revenue $300 per consulting hour Variable costs $170 per hour Fixed costs $93,600 per month What is the break even point per month in consulting hours What is the break even point per month in revenue dollars If the average consulting engagement is 28 hours, how many consulting engagements per year will Barkley, Inc need to break even Assume that Barkley, Inc wants to earn $7,800 in profits each month and has a 25 tax rate How many consulting hours does the company need to work each month How might Barkley, Inc decrease variable costs per consulting hour Fixed costs per month Assume that Barkley, Inc has decided to limit air travel by consultants Instead the company will invest in a state of the art satellite teleconferencing system How will these decisions affect variable and fixed costs What are the potential drawbacks of this decision

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 07, 2024

1. van Abuzi is a house painter. He incurred the following costs during August 2009, when he painted four houses. In the first weeks of

1. van Abuzi is a house painter. He incurred the following costs during August 2009, when he painted four houses. In the first weeks of August, Abuzi placed a $60 classified ad for his business in the newspaper. He also bought two pairs of coveralls for $35 each to wear while working. Abuzi spent $25 for a day-planner book in which he records hours spent at each job, mileage to and from jobs (at a rate of $0.32 per mile), information on referral work, and bids submitted for other jobs. Toll road charges for driving to various job locations were $0.75 for each section of toll road traveled. Cell phone charges for the month were $60; Abuzi has a cell phone plan that allows up to 2,000 minutes of nationwide calling, a time frame that he has never exceeded. Abuzi uses the cell phone for both business and personal calls. In August approximately 40% of his calls were business-related. Materials costs for the month were $500 for paint, $40 for mineral spirits, and $155 for brushes. Abuzi hired a helper who worked 15 hours at $18 per hour on one of Abuzis jobs. The insurance on Abuzis work truck is $509 per month.

Using the following headings and indicate how each of the August costs incurred by Abuzi would be classified. Assume that the cost object is a house-painting job:

Type of Cost, Variable, Fixed, Direct, Indirect, Period, Product

Type of Cost	Variable	Fixed	Direct	Indirect	Period	Product

2. Use the information below to answer the questions that follow:

Month	Procedures	Electricity
Jan	1,000	4,500
Feb	800	3,500
Mar	700	3,025
Apr	900	3,250
May	950	3,300
Jun	1,000	4,400
Jul	1,100	4,200
Aug	1,250	4,800
Sep	1,200	5,000
Oct	1,050	4,500
Nov	1,100	4,250
Dec	900	3,200

Separate the fixed and variable components.

Are the number of procedures a good cost driver?

Assuming 1,000 procedures next month, what would be the projected total cost of electricity?

3. ChangingTimes sells 185,000 bottles of TempeTingler nail polish each year. The product, which is very popular with teens, sells for $13 per bottle, and variable cost per unit is $5.50. Total annual fixed costs are $1,260,000.

What is the degree of operating leverage?

If the company can increase unit sales by 20%, what percentage increase will it experience in income? Prove your answer using an income statement.

4. Barkley, Inc. has the following revenue and cost information:

Revenue - $300 per consulting hour Variable costs - $170 per hour Fixed costs - $93,600 per month

What is the break-even point per month in consulting hours?

What is the break-even point per month in revenue dollars?

If the average consulting engagement is 28 hours, how many consulting engagements per year will Barkley, Inc. need to break even?

Assume that Barkley, Inc. wants to earn $7,800 in profits each month and has a 25% tax rate. How many consulting hours does the company need to work each month?

How might Barkley, Inc. decrease variable costs per consulting hour? Fixed costs per month?

Assume that Barkley, Inc has decided to limit air travel by consultants. Instead the company will invest in a state-of-the-art satellite teleconferencing system. How will these decisions affect variable and fixed costs? What are the potential drawbacks of this decision?