Reference no: EM132241129

Question - Context-sensitive nature of cost behavior classifications

Rita Jekyll Operates a sales booth in computer software trade shows, selling an accounting software package, Abacus. She purchases the package from a software company for $210 each. Booth Space at the convention hall costs $8,400 per show.

Required -

a. Sales at past trade shows have ranged between 200 and 400 software packages per show. Determine the average cost of sales per unit if Ms. Jekyll sells 200, 250, 300, 350, or 400 units of Abacus at a trade show. Use the following chart to organize your answer. Is the cost of booth space fixed or variable? Round your computation to two decimal points.

	Sales Volume In Units (a)
	200	250	300	350	400
Total cost of software (a x $210)	$42,000
Total cost of booth rental	8,400
Total cost of sales (b)	$50,400
Average cost per unit (b/a)	$252

b. If Ms. Jekyll wants to earn a $50 profit on each package of software she sells at a trade show, what price must she charge at sales volumes of 200, 250, 300, 350, or 400 units?