Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Last year, the company sold 50,000 units and had the below sales and cost figures. Adding food - Total sales in the number of units

image text in transcribed
Last year, the company sold 50,000 units and had the below sales and cost figures. Adding food - Total sales in the number of units would increase 25% (if added) - The average sales price per unit would increase from the current $3,00 to $5.00 (if added) - The variable cost per unit would increase to $2.50 per unit to account for the added cost (if added) - There would be an increase in fixed costs of $25,000 for advertising (if added) Adding Drive Up Window - This alternative is exclusive of Adding Food Option - Total sales in the number of units would go up 13096 from last year. - The construction of the drive up window would increase fixed costs by $130,000 - which represents 1x construction & installation costs. - Drive Up Window would allow an increase in average sales to $3.20 a cup of coffee and variable cost per unit would remain the same at \$o.99 per unit. 1.) Compute the company's contribution margin ratio under the 3 situations. (Note: DO NOT ROUND the CMR \% for accurate calculations in the following questions) You may find it easier to use formulas in excel as it will use the entire figure in the formula calculation

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

Internal Auditing Assurance And Consulting Services

Authors: Kurt Reding, Paul Sobel, Michael Head, Sridhar Ramamoorti, Urton Anderson

2nd Edition

0894136437, 978-0894136436

More Books

Students also viewed these Accounting questions

Question

Can the actor take some other action at this point?

Answered: 1 week ago