Question

Rita Jekyll operates a sales booth in computer software trade shows, selling an accounting software package, Abacus. She purchases the package from a software company for $185 each. Booth space at the convention hall costs $15,000 per show. Required a. Sales at past trade shows have ranged between 400 and 600 software packages per show. Determine the average cost of sales per unit if Ms. Jekyll sells 400, 450, 500, 550, or 600 units of Abacus at a trade show. Use the following chart to organize your answer. Is the cost of booth space fixed or variable? . If Ms. Jekyll wants to earn a $52 profit on each package of software she sells at a trade show, what price must she charge at sales volumes of 400, 450, 500, 550, or 600 units? c. Record the total cost of booth space if Ms. Jekyll attends two, three, four, five, or six trade shows. Is the cost of booth space fixed or variable relative to the number of shows attended? d. Ms. Jekyll provides decorative shopping bags to customers who purchase software packages. Some customers take the bags; others do not. Some customers stuff more than one software package into a single bag. The number of bags varies in relation to the number of units sold, but the relationship is not proportional. Assume that Ms. Jekyll uses $36 of bags for every 56 software packages sold. What is the additional cost per unit sold? Is the cost fixed or variable?

Answer 1

Please hit LIKE button if this helped. Parta Sales Volume in Units (a) Total cost of software (a x $185) Total cost of booth rental Total cost of sales (b) 400 450 500 550 600 $ 74,000 $ 83,250 $ 92,500 $ 101,750 $ 111,000 $ 15,000 $ 15,000 $ 15,000 $ 15,000 $ 15,000 $ 89,000 $ 98,250 $ 107,500 116,750 $ 126,000 Average cost per unit (b+a) $ 222.50 $ 218.33 $ 215.00 $ 212.27 $ 210.00 The cost of booth space is fixed. Part b Sales Volume Average cost per unit (a) Price per package (a + $52) 200 250 300 350 400 $ 222.50 $ 218.33 $ 215.00 $ 212.27 $ 210.00 $ 274.50 $ 270.33 $ 267.00 $ 264.27 $262.00 Partc Trade Shows Attended (a) Cost of booth rental (a x $15,000) The cost of booth space is variable. 1 2 $ 15,000 $ 30,000 $ 3 4 5 45,000 $ 60,000 $ 75,000 Part d The additional cost is $36 + 56 units $ 0.64 per unit The cost would be treated as a variable cost.