Until recently, hamburgers at the city sports arena cost $ 2.50 each. The food concessionaire sold an average of 2250 hamburgers on game night. When the price was raised to $2.80 hamburger sales dropped off to an average of 2,100 per night. The concessionaire's fixed costs were $1725.20 per night and the variable cost was $1.70 per hamburger. Answer the following questions (A) through (F).

(A) Assume that the relationship between price p and demand x is linear. Express p as a function of x and find the domain of this function.

p=

The domain of p is (Type a compound? inequality.)

(B) Find the revenue function in terms of x and state its domain.

R(x)=

The domain of R(x) is (Type a compound? inequality.)

(C) Assume that the cost function is linear. Express the cost function in terms of x.

C(x)=

(D) Graph the cost function and the revenue function in the same coordinate system.

Find the break-even points:

The break-even points are:

(Simplify your answer. Type an ordered pair. Use a comma to separate answers as? needed.)

(E) Find the profit function in terms of x.

P(x)=

(F) Evaluate the marginal profit at x=600 and interpret the results.

The marginal profit at x=150 is $:

a)At a production level of 150 hamburgers, the profit is decreasing at a rate of $ per hamburger.

b)At a production level of 150 hamburgers, the profit is increasing at a rate of $ per hamburger.

QUESTION 42

1. Below is a list of items (all with normal balances) from the Bearkat Company adjusted trial balance as of 12/31/19. The accounts are presented in random order. Additional information is also provided below.

   Unearned Service Revenue	80,000		Salaries Expense	60,000
   Rent Revenue	115,000		Accounts Payable	33,000
   Accounts Receivable	60,000		Cost of Goods Sold	39,500
   Notes Payable	100,000		Land	260,000
   Accumulated Depreciation - Building	22,000		Building	92,000
   Sales	400,000		Retained Earnings	?
   Bonds Payable	90,000		Prepaid Advertising	8,000
   Common Stock	200,000		Allowance for Doubtful Accounts	12,000
   Depreciation Expense	30,000		Cash	175,000

   
   Additional Information:

   • The Cash balance of $175,000 includes $50,000 of restricted funds set aside to retire bonds that mature in 2022.
   • On 12/31/19, Bearkat Company purchased a plot of land for $260,000, shown in the adjusted trial balance above. The land is being held for investment.
   • The Notes Payable account consists of a $100,000 note due in four annual installments of $25,000 each. The first installment is due on 6/30/20, with remaining installments due on 6/30 of 2021-2023.
   • 200,000 shares of $1 par common stock are authorized and outstanding.

   What is the balance of total current liabilities?

   	A.	$138,000.
   	B.	$228,000.
   	C.	$113,000.
   	D.	$58,000.

Milano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well as offering take-out and free home delivery services. The pizzeria’s owner has determined that the shop has two major cost drivers—the number of pizzas sold and the number of deliveries made.

The pizzeria’s cost formulas appear below:

In November, the pizzeria budgeted for 2,070 pizzas at an average selling price of $16 per pizza and for 230 deliveries.

Data concerning the pizzeria’s actual results in November were as follows:

Required:

1. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for November. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company’s costs:

For example, electricity costs are $1,300 per month plus $0.06 per car washed. The company expects to wash 8,400 cars in August and to collect an average of $6.70 per car washed.

The actual operating results for August appear below.

Required:

Prepare a flexible budget performance report including the master or planning budget that shows the company’s revenue and spending variances and activity variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Costs that change abruptly at different levels of activity because the resources are available only in indivisible chunks are called ________.

A) mixed costs

B) variable costs

C) fixed costs

D) step costs

Answer:

A compensation plan where the sales force is paid salary plus commission is a ________.

A) purely variable cost

B) mixed cost

C) step cost

D) fixed cost

Answer:

The break-even point on the cost-volume-profit graph is where the ________.

A) total cost line intersects the net profit line

B) total cost line intersects the net loss line

C) revenue line intersects the total cost line

D) revenue line intersects the variable cost line

Answer:

Suppose a hotel has annual fixed costs applicable to its rooms of $2.0 million for its 300-room hotel. Average daily room rents are $50 per room and average variable costs are $10 for each room rented. It operates 365 days per year. If the hotel is completely full throughout the year, what is net income for one year?

A) $1,280,000

B) $2,380,000

C) $3,180,000

D) $4,380,000

Answer:

Murphy Company produces dolls. Each doll sells for $20.00. Variable costs per unit are $14.00 and total fixed costs for the period are $435,000. What is the break-even point in units?

A) 21,750

B) 31,071

C) 51,176

D) 72,500

Page Interiors, an interior design company, has experienced a drop in business due to an increase in interest rates and a corresponding slowdown in remodeling projects. To stimulate business, the company is considering exhibiting at the Middleton Home and Garden Expo. The exhibit will cost the company $14,910 for space. At the show, Page Interiors will present a slide show on a laptop, pass out brochures that were printed previously (the company printed more than needed), and show its portfolio of previous jobs.

The company estimates that revenue will increase by $40,330 over the next year as a result of the exhibit. For the previous year, profit was as follows:

Assume that design supplies and travel other than depreciation are variable costs.

Calculate the impact of the exhibit on company profit. (Round intermediate calculations to 4 decimal places, e.g. 0.3215 and final answer to 0 decimal places, e.g. 125.)

Should the company exhibit at the home show?

Exercise 4-10

The following is information for Ayayai Corp. for the year ended December 31, 2017:

The effective tax rate is 25% on all items. Ayayai prepares financial statements in accordance with IFRS. The FV-OCI investments trade on the stock exchange. Gains/losses on FV-OCI investments are recycled through net income.

1. Prepare a multiple-step statement of comprehensive income for 2017, showing expenses by function. Ignore calculation of EPS.

2. Prepare the retained earnings section of the statement of changes in equity for 2017. (List items that increase retained earnings first following the adjustment of prior years.)

3. Prepare the journal entry to record the depreciation expense omitted by mistake in 2016. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

The New York city that has a 12/31 fiscal year end has adopted a policy of recognizing property tax revenue consistent with the 60-day rule allowable period under GAAP. Property taxes of $600,000 (of which none are estimated to be uncollectible) are levied in October 2016 to finance the activities of fiscal year 2017. Property taxes are due in two installments June 20 and December 20. Cash collections related to property taxes are as follows:

                2/15/17    for property taxes levied in 2015, due in 2016                            $ 25,000

                3/15/17    for property taxes levied in 2015, due in 2016                            $ 15,000

                4/15/17    for property taxes levied in 2015, due in 2016                            $ 10,000

                6/20/17    First installment of taxes levied in 2016, due 6/20/17                $350,000

                12/20/17   Second installment of taxes levied in 2016, due 12/20/17       $150,000

                1/15/18    for property taxes levied in 2016, due in 2017                            $ 15,000

                3/15/18    for property taxes levied in 2016, due in 2017                            $ 10,000

                4/15/18    for property taxes levied in 2016, due in 2017                            $    5,000

. The total amount of property tax revenue that should be recognized in the governmental fund financial statements in 2017 is:

The preliminary 2021 income statement of Alexian Systems, Inc., is presented below:

Additional information:

1. Selling and administrative expense includes $44 million in restructuring costs.
2. Included in other income is $110 million in income from a discontinued operation. This consists of $90 million in operating income and a $20 million gain on disposal. The remaining $9 million is from the gain on sale of investments.
3. Cost of goods sold was increased by $10 million to correct an error in the calculation of 2020’s ending inventory. The amount is material.

Required:
Prepare a revised income statement for 2021 reflecting the additional facts. Use a multiple-step format. Assume that an income tax rate of 25% applies to all income statement items, and that 10 million shares of common stock were outstanding throughout the year. (Enter your answers in millions rounded to 2 decimal places. Round EPS answers to 2 decimal places.)