Quiz 2Cost Behaviour

School: Algonquin College - Course: ACC 2354 - Subject: Accounting

Quiz 2 Cost Behaviour (5%) This assignment relates to the following Course Learning Requirements: CLR 1: Explain the role of managerial accounting in the global environment. CLR 2: Classify the various kinds of costs and calculate product costs CLR 3: Discuss the differences between activity-based costing and traditional costing. Objective of this Assignment: Demonstrate your comprehension of the chapter material and your ability to apply this knowledge through calculations. Pre-Assignment Instructions: 1.To prepare for this assignment, read modules 3 and 4 content and follow the embedded learning activities. 2.Read Chapter 3 of the Textbook. 3.Complete Modules 3 and 4 Learning Activities Assignment Tasks: 1.Read the three Problems below 2.Answer the three questions that follow each problem Problem 1 Prompt Parcel Service operates a fleet of delivery trucks in a large metropolitan area. A careful study by the company's cost analyst has determined that if a truck is driven 120,000 kilometres during a year, the average operating cost is 11.6 cents ($0.116) per kilometre. If a truck is driven only 80,000 kilometres during a year, the average operating cost increases to 13.6 cents ($0.136) per kilometre. Required:

1.Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. 5 Marks 2.Express the variable and fixed costs in the form Y = a + bx. 5 Marks 3.If a truck was driven 100,000 kilometres during a year, what total cost would you expect to be incurred? 5 Marks Problem 2 Haaki Shop Inc. is a large retailer of surfboards. The company assembled the information shown below for the quarter ended May 31: Amount Total sales revenue$800,000 Selling price per surfboard400 Variable selling expense per surfboard50 Variable administrative expense per surfboard20 Total fixed selling expense150,000 Total fixed administrative expense120,000 Merchandise inventory, beginning balance80,000 Merchandise inventory, ending balance100,000 Merchandise purchases320,000 Required: Watch the YouTube video:Managerial Accounting - Traditional vs. Contribution Income Statement Formats - Severson - YouTube 4.Prepare a traditional income statement for the quarter that ended May 31.