Problem 2.46 The university\'s Wildcat Lair has been reporting losses in past mo

Question

Problem 2.46 The university's Wildcat Lair has been reporting losses in past months. In July, for example, the loss was $4,900: Revenue 74,800 Expenses Purchases of prepared food $21,692 Serving personnel Cashier Administration University surcharge Utilities 30,712 5,500 12,716 7,480 1,600 79,700 Loss (4,900 The Lair purchases prepared food directly from University Food Services. The charge varies proportionately with the number and kind of meals served. Personnel who are paid by the Lair serve the food, tend the cash register, bus and clean tables, and wash dishes. The staffing levels in the Lair rarely change; the existing staff can usually handle daily fluctuations in volume. Administrative costs are primarily the salaries of the Lair manager and her office staff. The university charges the Lair a surcharge of 10% of its revenue. Utility costs are the costs of cooling, heating, and lighting the Lair during its normal operating hours. The university's management is considering shutting down the Lair because it has been operating at a loss. Your answer is partially correct. Try again. Determine the fixed and variable expenses of the Wildcat Lair and the most likely cost driver for each variable expense. (If there is no cost driver, select NA, all boxes must be filled to be correct.) Variable Fixed Cost Driver Purchases of prepared foodVariableNumber of students Serving personnel Numher of nersonnel

Explanation / Answer

Variable / Fixed Cost Driver Purchase of Prepared Foods Variable Number & Kind of Meals Served Serving Personnel Fixed NA Cashier Fixed NA Administration Fixed NA University Surcharge Variable Total Revenue Utilities Fixed NA Fixed Variable Purchase of Prepared Foods                   21,692.00 Serving Personnel          30,712.00 Cashier            5,500.00 Administration          12,716.00 University Surcharge                      7,480.00 Utilities            1,600.00 Total          50,528.00                   29,172.00 Variable Costs = $29,172 / $74,800 Variable Costs = 39% Cost Formula : Total Cost = $50,528 + 39% X Total Revenue Revenues = $84,800 Total Cost = $50,528 + 39% X $84,800 Total Cost = $50,528 + $33,072 Total Cost = $83,600 Profit (Loss) = $84,800 - $83,600 Profit (Loss) = $1,200

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