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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 $
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