Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Gary is considering opening a Fast 'n Clean Car Service Center. He estimates that the following costs will be incurred during his first year of

Gary is considering opening a Fast 'n Clean Car Service Center. He estimates that the following costs will be incurred during his first year of operations: Rent $9,200, Depreciation on equipment $7,000, Wages $16,410, Motor oil $2 per quart. He estimates that each oil change will require 5 quarts of oil. Oil filters will cost $3.00 each. He must also pay The Fast 'n Clean Corporation a franchise fee of $1.10 per oil change since he will operate the business as a franchise. In addition, utility costs are expected vary with the quantity of oil changes as follows: Quantity of Oil Changes 6,500 Utility Costs $16,000 8,500 $19,800 11.500 $22,100 14,500 $25,100 19.000 $27,500 Gary anticipates that he can provide the oil change service with a filter at $45.02 each. Using the high-low method, determine variable costs per unit and total fixed costs. (Round variable cost to 2 decimal places, e.g. 52.75.) Variable cost $ .92 per unit Fixed cost $ 10020 (b) C Attempts: 1 of 1 used Determine the break-even sales quantity of oil changes and sales dollars. (Round Contribution margin ratio to 2 decimal places, e.g. 57.20%. Round final answers to 0 decimal places, e.g. 5720) Break-even oil changes in units Break-even sales in dollars $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

LO4 Specify how to design a training program for adult learners.

Answered: 1 week ago