Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Bourbon House, a luxury waterfront restaurant, has store hours fluctuate from week to week. Its utilities costs and hours of operation for the last six

Bourbon House, a luxury waterfront restaurant, has store hours fluctuate from week to week. Its utilities costs and hours of operation for the last six (6) weeks are as follow: Week Hours of Operation Utilities Cost 1 55 6 480 2 60 6 600 3 64 7 460 4 70 7 600 5 45 5 400 6 40 5 200 Required: a) Use the high-low method to estimate the cost behaviour for the restaurants utilities costs, assuming that variable costs vary in proportion to the hours of operation. Express the cost behaviour in a cost function (Y = a + bX). (4 marks) b) During the second week of June, Bourbon House will be opened for 49 hours. Predict the restaurants total utilities cost for the week. (2 marks) c) Explain the impact of a decrease in the level of activity on (i) total variable cost; and (ii) variable cost per unit of activity. (1 mark) PLEASE SHOW ALL OF YOUR WORKINGS

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

ISE Fundamentals Of Cost Accounting

Authors: William N. Lanen, Shannon Anderson, Michael W. Maher

6th Edition

1260569098, 9781260569094

More Books

Students also viewed these Accounting questions

Question

What is Larmors formula? Explain with a suitable example.

Answered: 1 week ago