EXERCISE 2-15 Classification of Costs as Variable or Fixed and as Product or

Period [103,104]
Below are listed various costs that are found in organizations.
Cost behavior product Period
Variable Fixed
Hamburger buns in a Wendy's outlet.
Advertising by a dental office

Apples processed and canned by Del Monte.

Shipping canned apples from a Del Monte

plant to customers.
Insurance on a Bausch & Lomb factory
producing contact lenses.
Insurance on IBM's corporate headquarters.

Salary of a supervisor overseeing

production of printers at Hewlett-Packard.

Commissions paid to automobile

salespersons.
. Depreciation of factory lunchroom
facilities at a General Electric plant.

Steering wheels installed in BMWs.

Required:
Classify each cost as being either variable or fixed with respect to the number of
units produced and sold. Also classify each cost as either a selling and
administrative cost or a product cost.
Exercise 1-4 (Static) Fixed and Variable Cost Behavior [LO1-4]
Espresso Express operates a number of espresso coffee stands in busy suburban
malls. The fixed weekly expense of a coffee stand is $1,200 and the variable cost
per cup of coffee served is $0.22.

Required:
1. Fill in the following table with your estimates of the company's total cost and
average cost per cup of coffee at the indicated levels of activity.

Cups of Coffee Served in a Week

2,000 2,100 2,200
Fixed cost ? ? ?

Variable cost ? ? ?

Total cost ? ? ?

2- Does the average cost per cup of coffee served increase, decrease, or remain the
same as the number of cups of coffee served in a week increases?
EXERCISE 2-10 Cost Behavior; Contribution Format Income Statement
[L04,106]
Harris Company manufactures and sells a single product. A partially completed
schedule of the company's total and per unit costs over the relevant range of 30,000
to 50,000 units produced and sold annually is given below:

Required:
Complete the schedule of the company's total and unit costs above.