EXERCISE 5-4 (20 MINUTES)

1. - SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH05 COST BEHAIVIOR ANALYSSIS AND USE
SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH05 COST BEHAIVIOR ANALYSSIS AND USE
1.

Occupancy-

Days Electrical

Costs

High activity level (August) ... 2,406 $5,148 Low activity level (October) .. 124 1,588 Change ... 2,282 $3,560 Variable cost = Change in cost ÷ Change in activity = $3,560 ÷ 2,282 occupancy-days = $1.56 per occupancy-day Total cost (August) ... $5,148 Variable cost element ($1.56 per occupancy-day × 2,406 occupancy-days) ... 3,753 Fixed cost element ... $1,395