# Context-sensitive nature of cost behavior classifications Betty Holland operates a sales booth in…

Context-sensitive nature of cost behavior classifications Betty Holland operates a sales booth in computer software trade shows, selling an accounting software package, Accountsoft. She purchases the package from a software manufacturer for \$200 each. Booth space at the convention hall costs \$7,500 per show. Required a. Sales at past trade shows have ranged between 100 and 300 software packages per show. Determine the average cost of sales per unit if Ms. Holland sells 100, 150, 200, 250, or 300 units of Accountsoft at a trade show. Use the following chart to organize your answer. Is the cost of booth space fixed or variable? b. If Ms. Holland wants to earn a \$60 profit on each package of software she sells at a trade show, what price must she charge at sales volumes of 100, 150, 200, 250, or 300 units? c. Record the total cost of booth space if Ms. Holland attends one, two, three, four, or five trade shows. Record your answers in the following chart. Is the cost of booth space fixed or variable relative to the number of shows attended? d. Ms. Holland provides decorative shopping bags to customers who purchase software packages. Some customers take the bags; others do not. Some customers stuff more than one software package into a single bag. The number of bags varies in relation to the number of units sold, but the relationship is not proportional. Assume that Ms. Holland uses \$40 of bags for every 50 software packages sold. What is the additional cost per unit sold? Is the cost fixed or variable?

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