Question

"Guest-Days Custodial Supplies Expense

High activity level
12,000 $13,500
Low activity level
4,000 7,500
Change
8,000 $6,000







What is the variable cost per guest-day?
1) 0.75 per guest-day
2) 0.50 per guest-day
3) 1.00 per guest-day
4) 1.50 per guest-day

Answer 1

The variable cost per guest-day is $0.75.

Step-by-step explanation:

The variable cost per guest-day can be calculated by finding the change in cost and dividing it by the change in activity level.

Change in cost = High activity level cost - Low activity level cost = $13,500 - $7,500 = $6,000.

Change in activity level = High activity level - Low activity level = 12,000 - 4,000 = 8,000.

Variable cost per guest-day = Change in cost / Change in activity level = $6,000 / 8,000 = $0.75 per guest-day.

Therefore, the correct answer is option 1) 0.75 per guest-day.