PROBLEM 1

Green Goblet Express operates a number of espresso coffee stands in a busy suburban mall. The fixed weekly expense of a coffee stands is 11,000 and the variable cost peer cup of coffee is 2.60

REQUIRED:

Fill in the following table with your estimates of total cost per coffee at the indicated levels of activity for a coffee stand round off the cost of a cup of coffee to 2 decimal point

Cups of coffee served in a week

1,8001,9002,000

Fixed Cost???

Variable Cost???

Total Cost???

Cost per cup of coffee served ???

Does the cost per cup of coffee served increase, decrease or remain the same as the number of cups of coffee served in a week increase? Explain.

PROBLEM 2

Nat Company's most recent income statement is shown below:

TOTALPER UNIT

Sales30,000units150,0005

Less variable expense90,0003

Contribution Margin60,0002

Less:Fixed Expenses50,000

Net operating Income10,000

REQUIRED: PREPARE 2 NEW INCOME STATEMENT UNDER EACH OF THE FOLLOWING CONDITIONS(CONSIDER EACH CASE INDEPENDENTLY)

1.The selling price increase by 50 cents per unit, fixed expense increase by 10,000 and the sales volume decrease b 5%

2.Variable Expense increase by 20 cents per unit, the selling price increases by 12%and the sales volume decreases by 10%.

Prepare new income statements

PROBLEM 3:

What are the causes of capacity orvolume variance. Explain atleast 2 causes and how it affects the operating performance of the business?