EX.1 If sales revenue is $7,600 and variable costs are $3,040, what is the varia

Question

EX.1 If sales revenue is $7,600 and variable costs are $3,040, what is the variable cost percentage?

Variable rate

Variable Cost Formula:

If sales revenue is $158,000 and variable costs are 44 % what is the dollar contribution margin?

Contribution in dollars

Dollar Contribution Formula:

You are asked to cater a buffet for 70 people at $18/person. Your variable cost is 72% and fixed costs are $400 per day. Calculate contribution margin in dollars and operating income. Should you accept?

Fixed cost

Operating income

Should you accept the catering job?

Use the High-Low Method with the following data to determine the variable cost per guest and the total fixed costs, using both the high and the low data to confirm calculations

Fixed Cost

You are offered a five year lease at a fixed cost of $150,000 per year or a variable lease rate equal to 9% of revenue. Sales are projected to be $1,700,000. Find the indifference point and determine which lease offer you would accept.

Indifference point

Which option would you choose and why?

Sales Variable cost

Variable rate

Variable Cost Formula:

If sales revenue is $158,000 and variable costs are 44 % what is the dollar contribution margin?

Sales Variable cost

Contribution in dollars

Dollar Contribution Formula:

You are asked to cater a buffet for 70 people at $18/person. Your variable cost is 72% and fixed costs are $400 per day. Calculate contribution margin in dollars and operating income. Should you accept?

Customer count Price Variable cost 72%

Fixed cost

Revenue Variable cost at 72%% Contribution margin Fixed cost

Operating income

Should you accept the catering job?

Use the High-Low Method with the following data to determine the variable cost per guest and the total fixed costs, using both the high and the low data to confirm calculations

Guests Labor Cost Maximum 28,000 35,500 Minimum 24,000 31,000 Difference or Variable Cost per Guest Maximum Labor Cost Variable Cost for High Data Fixed Cost Minimum Labor Cost Variable Cost for Low Data

Fixed Cost

You are offered a five year lease at a fixed cost of $150,000 per year or a variable lease rate equal to 9% of revenue. Sales are projected to be $1,700,000. Find the indifference point and determine which lease offer you would accept.

Fixed lease cost $150,000 Variable lease rate 9% Sales projection $1,700,000

Indifference point

Which option would you choose and why?

Explanation / Answer

b.

So it shouldnt accept the proposal as their is operating loss of 47.2

d.

As variable rent is in excess of 3000 from fixed lease . so fixed lease is recommended

a, sales 158000 variable cost 69520 Contribution 88480 Contribution margin contribution          sales Contribution margin 56

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