EXERCISE 5-9 (CONTINUED)

2. - SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH05 COST BEHAIVIOR ANALYSSIS AND USE
SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH05 COST BEHAIVIOR ANALYSSIS AND USE
2. (Note: Students’ answers will vary considerably due to the inherent lack of precision and subjectivity of the quick-and-dirty method.) Total costs at 7,500 guest-days per month [a point fal-ling on the line in (1)]... $9,750 Less fixed cost element (intersection of the Y axis)... 3,750 Variable cost element ... $6,000 $6,000 ÷ 7,500 guest-days = $0.80 per guest-day. The cost formula is therefore $3,750 per month, plus $0.80 per guest-day or Y = $3,750 + $0.80X, where X is the number of guest-days.