The Edelweiss Hotel in Vail - 71100

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 1.  The following costs were incurred in September:

  Direct materials $ 43,000 

  Direct labor $ 29,000 

  Manufacturing overhead $ 20,000 

  Selling expenses $ 20,000 

  Administrative expenses $ 31,400 

Prime costs during the month totaled:



2. A partial listing of costs incurred during December at Gagnier Corporation appears below:

   

  Factory supplies $ 24,500  

  Administrative wages and salaries $ 343,000  

  Direct materials $ 490,000  

  Sales staff salaries $ 245,000  

  Factory depreciation $ 196,000  

  Corporate headquarters building rent $ 98,000  

  Indirect labor $ 98,000  

  Marketing $ 343,000  

  Direct labor $ 264,600  

 

The total of the period costs listed above for December is:



3. The  Edelweiss  Hotel  in  Vail,  Colorado,  has  accumulated  records  of  the  total  electrical  costs  of  the  hotel

and the number of occupancy-days over the last year. An occupancy-day represents a room rented out for

one day. The hotel's business is highly seasonal, with peaks occurring during the ski season and in the

summer.



   

Month

Occupancy-

Days

Electrical

Costs

  January 3,290      $ 16,450    

  February 3,160      $ 15,800    

  March 1,800      $ 9,000    

  April 4,430      $ 18,500    

  May 970      $ 4,850    

  June 1,650      $ 8,250    

  July 4,150      $ 18,020    

  August 4,160      $ 18,070    

  September 2,050      $ 10,250    

  October 1,110      $ 5,550    

  November 780      $ 3,900    

  December  2,810      $ 14,050    

Required:

1. Using  the  high-low  method,  estimate  the  fixed  cost  of  electricity  per  month  and  the  variable  cost  of

electricity per occupancy-day.

2. What other factors other than occupancy-days are likely to affect the variation in electrical costs from

month to month?

 

4. Redhawk, Inc., is a merchandiser that provided the following information:

    

  Number of units sold   13,000 

  Selling price per unit $ 17 

  Variable selling expense per unit $ 2 

  Variable administrative expense per unit $ 1.5 

  Total fixed selling expense $ 20,000 

  Total fixed administrative expense $ 13,000 

  Merchandise inventory, beginning balance $ 8,000 

  Merchandise inventory, ending balance $ 23,000 

  Merchandise purchases $ 89,000

 

 

Required:  
1. Prepare a traditional income statement
2. Prepare a contribution format income statement.
Solution Description

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