Exercise 2-1AIdentifying cost behavior

Rachael's Restaurant, a fast-food restaurant company, operates a chain of restaurants across the nation. Each restaurant employs eight people; one is a manager paid a salary plus a bonus equal to 4 percent of sales. Other employees, two cooks,

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one dishwasher, and four servers, are paid salaries. Each manager is budgeted $3,000 per month for advertising costs.

Required

Classify each of the following costs incurred by Rachael's Restaurant as fixed, variable, or mixed.

1. Advertising costs relative to the number of customers for a particular restaurant.
2. Rental costs relative to the number of restaurants.
3. Cooks' salaries at a particular location relative to the number of customers.
4. Cost of supplies (cups, plates, spoons, etc.) relative to the number of customers.
5. Manager's compensation relative to the number of customers.
6. Servers' salaries relative to the number of restaurants.

Problem 2-17AIdentifying cost behavior

Required

Identify the following costs as fixed or variable.

Costs related to plane trips between Boston, Massachusetts, and San Diego, California, follow. Pilots are paid on a per-trip basis.

1. Pilots' salaries relative to the number of trips flown.
2. Depreciation relative to the number of planes in service.
3. Cost of refreshments relative to the number of passengers.
4. Pilots' salaries relative to the number of passengers on a particular trip.
5. Cost of a maintenance check relative to the number of passengers on a particular trip.
6. Fuel costs relative to the number of trips.

Metro National Bank operates several branch offices in grocery stores. Each branch employs a supervisor and two tellers. Costs related to Metro's branch operations follow.

1. Tellers' salaries relative to the number of tellers in a particular district, which is composed of branches.
2. Supplies cost relative to the number of transactions processed in a particular branch.
3. Tellers' salaries relative to the number of customers served at a particular branch.
4. Supervisors' salaries relative to the number of branches operated.
5. Supervisors' salaries relative to the number of customers served in a particular branch.
6. Facility rental costs relative to the size of customer deposits.

Costs related to operating a fast-food restaurant follow.

1. Depreciation of equipment relative to the number of restaurants.
2. Building rental cost relative to the number of customers served in a particular restaurant.
3. Manager's salary of a particular store relative to the number of employees.
4. Food cost relative to the number of customers.
5. Utility cost relative to the number of restaurants in operation.
6. Company president's salary relative to the number of restaurants in operation.
7. Land costs relative to the number of hamburgers sold at a particular restaurant.
8. Depreciation of equipment relative to the number of customers served at a particular restaurant.

Problem 2-17BIdentifying cost behavior

Required

Identify the following costs as fixed or variable.

Costs related to operating a retail gasoline company follow.

1. Depreciation of equipment relative to the number of customers served at a station.
2. Property and real estate taxes relative to the amount of gasoline sold at a particular station.
3. Depreciation of equipment relative to the number of stations.
4. Cashiers' wages relative to the number of customers served in a station.
5. Salary of a manager of a particular station relative to the number of employees.
6. Gasoline cost relative to the number of customers.
7. Utility cost relative to the number of stations in operation.
8. The company's cost of national TV commercials relative to the number of stations in operation.

Costs related to shuttle bus trips between JFK International Airport and downtown New York follow. Each bus driver receives a specific salary per trip. A manager schedules bus trips and supervises drivers, and a secretary receives phone calls.

1. A driver's salary relative to the number of passengers on a particular trip.
2. Fuel costs relative to the number of trips.
3. Fuel costs relative to the number of passengers on a particular trip.
4. Drivers' salaries relative to the number of trips driven.
5. Office staff salaries relative to the number of passengers on a particular trip.
6. Depreciation relative to the number of buses in service.

Sussie's Barbershop operates several stores in shopping centers. Each store employs a supervisor and three barbers. The supervisor is paid a specific salary per month. Each barber receives a specific salary per month plus a 10 percent commission based on the service revenues he or she has generated. Costs related to Sussie's Barbershop follow.

1. Store rental costs relative to the number of customers.
2. Barbers' commissions relative to the number of customers.
3. Supervisory salaries relative to the number of customers served in a particular store.
4. Barbers' salaries relative to the number of barbers in a particular district.
5. Supplies cost relative to the number of hair services provided in a particular store.
6. Barbers' salaries relative to the number of customers served at a particular store.