1.You run a school in Florida. Fixed monthly cost is $5,892.00 for rent and util
ID: 3143953 • Letter: 1
Question
1.You run a school in Florida. Fixed monthly cost is $5,892.00 for rent and utilities, $6,065.00 is spent in salaries and $1,497.00 in insurance. Also every student adds up to $96.00 per month in stationary, food etc. You charge $679.00 per month from every student now.
You are considering moving the school to another neighborhood where the rent and utilities will increase to $11,776.00, salaries to $6,126.00 and insurance to $2,229.00 per month. Variable cost per student will increase up to $187.00 per month. However you can charge $1,023.00 per student. At what point will you be indifferent between your current mode of operation and the new option?
2. A vendor prepares 100.00 hotdogs every day and sells at $21.00 /piece. For each hot dog, he spends $11.00 in the raw material. Additionally he spends $1.66 for packing each hotdog and monthly $51.00, $22.00, $9.00 as food truck rent, electricity and other expenses respectively. On a particular day in June 107.00 people came wanting the hotdog. Vendor thinks $4.00 per lost sale. Determine vendor’s profit for that day? Assume there are 30 days in the month.
3. A restaurant prepares 200.00 pizza slices and sells them at a rate of $14.00/slice. Expenses for the restaurant include raw material for pizza at $6.00 per slice, $116.00 as monthly rental and $48.00 monthly as insurance. Restaurant is open only for 25 days in a month. Today there was a party at nearby office so the demand for pizza went up to 218.00 slices. Due to lack of availability vendor could not fulfill the demand and analyzed a lost sale as $4.00 per item. How much profit could the restaurant earn today?
4. You run a school in Florida. Fixed monthly cost is $5,168.00 for rent and utilities, $6,242.00 is spent in salaries and $1,695.00 in insurance. Also every student adds up to $103.00 per month in stationary, food etc. You charge $622.00 per month from every student now.
You are considering moving the school to another neighborhood where the rent and utilities will increase to $11,940.00, salaries to $6,883.00 and insurance to $2,403.00 per month. Variable cost per student will increase up to $177.00 per month. However you can charge $1,041.00 per student. At what point will you be indifferent between your current mode of operation and the new option?
Explanation / Answer
indifference point =changes in fixed cost/changes in contribution=$6677/253=26.39 approx 27 students
so we conclude 27 students in order to make no difference
You run a school in Florida. Fixed monthly cost is $5,168.00 for rent and utilities, $6,242.00 is spent in salaries and $1,695.00 in insurance. Also every student adds up to $103.00 per month in stationary, food etc. You charge $622.00 per month from every student now.
You are considering moving the school to another neighborhood where the rent and utilities will increase to $11,940.00, salaries to $6,883.00 and insurance to $2,403.00 per month. Variable cost per student will increase up to $177.00 per month. However you can charge $1,041.00 per student. At what point will you be indifferent between your current mode of operation and the new option?
indifference point =changes in fixed cost/changes in contribution=$8121/345=23.53approx 24 students
so we conclude 24 students in order to make no difference
A restaurant prepares 200.00 pizza slices and sells them at a rate of $14.00/slice. Expenses for the restaurant include raw material for pizza at $6.00 per slice, $116.00 as monthly rental and $48.00 monthly as insurance. Restaurant is open only for 25 days in a month. Today there was a party at nearby office so the demand for pizza went up to 218.00 slices. Due to lack of availability vendor could not fulfill the demand and analyzed a lost sale as $4.00 per item. How much profit could the restaurant earn today?
given rate of slice =14/slice
given that restaurent is opened for 25 days so rent for each day=$116/25=$4.64
insurance per day=48/25=$1.92
profit on 200 pizza slices=200*14-1.92-4.64-200*6=$1600-6.56=$1593.44
lost sale=4*18=72
profit made=$1593.44-$72=$1521.44
2. A vendor prepares 100.00 hotdogs every day and sells at $21.00 /piece. For each hot dog, he spends $11.00 in the raw material. Additionally he spends $1.66 for packing each hotdog and monthly $51.00, $22.00, $9.00 as food truck rent, electricity and other expenses respectively. On a particular day in June 107.00 people came wanting the hotdog. Vendor thinks $4.00 per lost sale. Determine vendor’s profit for that day? Assume there are 30 days in the month.
given vendor sells 100 hotdogs each hot dog for 21=21*100=$2100
he spends monthly $51.00, $22.00, $9.00 as food truck rent, electricity and other expenses respectively=51+22+9=$82
per day he sepds s food truck rent, electricity and other expenses respectively=82/30=$2.7333
total cost price=100*11+2.7333+1.66*100=1268.733
lost sale=7*4=28
profit=2100-1268.733-28=$803.267
cost (before changes) cost(after changes) changes fee collected from students $679.00 $1023 $344 variable cost stationery&food(per student) 96 187 $91 contribution per student=revenue -variable cost $583 $836 $253 Fixed cost rent&utilities $5892 $11776 $5884 salaries $6065 $6126 $61 insurances $1497 $2229 $732 Total fixed cost $13454 $20131 $6677Related Questions
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