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Class Question.1

Dan's Sandwich Shop reported unit sales of 2,100 in April and 2,700 in May. Costs included variable costs like food and supplies that increased with units sold, fixed costs like rent and depreciation that stayed the same each month, and mixed costs like wages that had both fixed and variable portions. To predict costs for other volumes, a schedule was developed separating each cost into a fixed monthly amount and variable cost per unit to create a cost estimating equation for total monthly expenses.

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Sauban Ahmed
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33 views1 page

Class Question.1

Dan's Sandwich Shop reported unit sales of 2,100 in April and 2,700 in May. Costs included variable costs like food and supplies that increased with units sold, fixed costs like rent and depreciation that stayed the same each month, and mixed costs like wages that had both fixed and variable portions. To predict costs for other volumes, a schedule was developed separating each cost into a fixed monthly amount and variable cost per unit to create a cost estimating equation for total monthly expenses.

Uploaded by

Sauban Ahmed
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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CLASS QUESTION

Dan’s Sandwich Shop reported the following results for April and May 2017.

Description April May


Unit sales 2,100 2,700
Cost of food sold Rs 1,575 Rs 2,025
Wages and salaries 1,525 1,675
Rent on building 1,500 1,500
Depreciation on equipment 200 200
Utilities 710 770
Supplies 225 255
Miscellaneous 113 131
Total 5,848 6,556

Required:
a. Identify each cost as being variable, fixed or mixed.

b. Develop a schedule identifying the amount of each cost that is fixed per month or variable per
unit. Total the amounts in each category to develop a cost estimating equation for total monthly
costs.

c. Predict total and average costs for monthly volumes of 1,000 units and 2,000 units.

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