Tutti’s Sandwich Shop has the following information regarding costs at various levels of monthly sales. Help Tutti separate her costs into fixed costs and variable costs so that she can predict and evaluate costs at varying levels of guests served.

January February March as ean SSS STRESSES ESAS PSSST 1 SGpeHC PAINTER Monthly Sales in Guests Served 10,000 16,000 20,000 Cost of Sales (Food Cost) 10,500 16,800 21,000 Salaries, Wages, and Benefits 15,000 15,600 16,000 Telephone 12,750 16,350 18,750 Rent on Building 2,400 2,400 2,400 Depreciation on Equipment 600 600 600 Utilities 1,000 1,300 1,500 Maintenance and Repairs 500 740 900 Administrative Costs 2,600 2,600 2,600 Variable Cost per Item Guest Fixed Costs Cost of Sales (Food Cost)

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a Salaries, Wages, and Benefits Telephone Rent on Building 2 Depreciation on Equipment hee ee Utilities Maintenance and Repairs Administrative Costs Total

a. Develop a total cost equation for Tutti that she can use at any volume of sales.

Total Costs = Fixed Costs + (Variable Cost per Guest x Number of Guests)

b. Determine if Tutti is controlling her costs in April as well as she did in January, February, and March. She sold sandwiches to 30,000 guests in April. Calculate her expected costs based on her actual number of guests.

Expected costs based on the total cost equation:

Total Costs = Fixed Costs + (Variable Cost per Guest x

c. Her actual total costs in April were $81,500. Were her actual costs in April higher or lower than expected based on her total cost equation, and was this a favorable or unfavorable variance?

Were actual costs higher or lower than expected?

Were actual costs favorable or unfavorable?