Question
1.1 Cost Behaviour - Markham Theatre Company is interested in estimating fixed and variable costs. The following data are available: Table A Month Costs Number
1.1 Cost Behaviour -
Markham Theatre Company is interested in estimating fixed and variable costs. The following data are available:
Table A
| Month | Costs | Number of Tickets Sold |
January | $160,000 | 19,000 |
February | $190,000 | 22,000 |
March | $215,000 | 28,000 |
April | $217,000 | 29,000 |
May | $209,500 | 29,500 |
June | $194,500 | 24,500 |
July | $240,000 | 35,000 |
August | $172,000 | 20,000 |
September | $185,000 | 22,000 |
October | $202,000 | 26,000 |
November | $191,500 | 23,500 |
December | $207,000 | 30,000 |
- Using the high-low method of cost estimation:
- what is the variable cost per ticket sold?
- what is the fixed portion ($) of the theatre costs?
- Using the high-low method of cost estimation, express the total costs (fixed costs per month and variable costs per ticket) in equation form.
- Markham Theatre is considering an advertising campaign that is expected to increase annual sales by 15,000 tickets. Assume that the ticket selling price is $25. Ignoring the cost of the advertising campaign, which has not been provided, what is the expected increase in profits associated with the advertising campaign?
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Financial Accounting Tools for Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
5th Canadian edition
978-1118024492
