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

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?