mune sei VIw Arial 10 A- A- Wrap Text Custom X Cut Copy Format Paste B I U- Merge & Center % Office Update To keep up-to-date with security updates, fixes, and improvements, choose Check for Updates. B6 . fx 8000 1 J K L A B D E F G H 1 Cost Behavior 2 3 4 Assume a local pizzeria reported the following results for October and November 5 October November 6 Unt Sales 8.000 12.000 7 8 Cost of Food Sold $ 160,000 $ 240,000 9 Wages and Salaries 30,000 30,000 10 Rent 8,000 8,000 11 Depreciation 5,000 5,000 12 Utilities 2,800 3,000 13 Supplies 2,000 3.000 14 Total $207,800 $289,000 15 16 a. Identify each cost as being foxed, variable or mbed. 17 b. Determine the equation for total operating costs (Fixed + Unt Variable Cost of sandwiches) 18 c. Predict the total operating costs for 15000 pizzas 19 d. Determine the average costs for 15000 pizzas 20 21 Concept question: Why are fixed costs generally not relevant for decision-making? 22 Would average costs be useful for decision-making and why or why not? 23 24 Concept Question: 25 26 27 28 29 30 31 32 33 34 35 36 37 39 Paste B 3 Format E == Merge & Center % ) 00 Office Update To keep up-to-date with security updates, fixes, and improvements, choose Check for Updates. D1 x H ! J K L M N O A B D E F G 1 Name: 2 3 4 Lincoln company sells tote bags in the small, medium and large categories 5 Below are the unseling price for each category, as well as its respective 6 unit variable costs: 7 B Small Medium Large 9 Unit Price 50 70 100 10 Unit Variable Cost 30 40 45 11 12 The sales mix% is as follows: 13 Small Medium Large 14 Sales Mox % 40% 20% 40% 15 16 The company's annual forced costs are $72,000 with a target operating profit of $100,000 17 18 How much of each Hom needs to be sold in order to break-even?...in order to reach the 19 target operating profit? 20 21 Concept Question: 22 23 Suppose 4,900 units were actually sold. Would it be possible for this company 24 to achieve its Target Operating Profit of $108,000 (assuming fixed costs were 25 $72,000). If so, why and what would have had to happen? 26 27 28 29 30 31 32 33 30 37 38 30 40 44 45 Neview 0 Cor For P View X cut Arial 10 A- A Wrap Text Copy General Paste B I U Format Merge & Center Office Update To keep up-to-date with security updates, fixes, and improvements, choose Check for Updates. A6 X fx The average cost for each loaf is $3.50, and Lincoln does have plenty of capacity to produce more loaves of bread. B D E F G H 1 J L M 1 N Name: O 2 3 4 Lincoln Company currently sells 1000 loaves of fresh sourdough bread every moming at a price of $5 per loaf 5 6 The averlo cost for each loaf is $3.50, and Lincoln does have plenty of capacity to produce more loaves of bread 7 8 A local supermarket for a one-time holiday deal offers to buy 200 loaves of bread at $2. The new average cost for 1200 loaves 9 would then be $3.10 per loaf. 10 11 Please calculate the unit variable cost, fixed cost and overall profitability for this new deal. 12 13 14 15 16 17 Would you accept this deal-why or why not? What is the key consideration for a 18 special order? 19 20 21 22 24 25 26 27 28 29 30 31 32 33 34 35 36 37 30 39 40 41 42 44 45 46 nume Wiser Page Layout Formulas Data Review View Arial 10 A- A Wrap Text General Paste Copy Format B I U- Merge & Center % 2 00 Office Update To keep up-to-date with security updates, fixes, and improvements, choose Check for Updates A13 4- Xfx K L M N o B D E F G H 1 J 1 Name 2 Pricing from Chapter 8, Managerial Accounting) 3 4 Assume that you plan to open a soft ice cream franchise in a resort community 5 during the summer months. Fixed costs for the three month period are projected 6 to be $24,000. Variable costs per serving Ice cream and cono) would be $0.75, and there is a $0.25 7 A market analysis prepared by Oakland le indicates that summer 8 sales at the resort community should total 20,000 cones. 9 10 What price should be charged for each ice cream to achieve a profit of $40,000? 11 What risks could happen that might prevent the company from making the target operating profit of $40,000? 12 Please anywer in 2-3 sentences 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 20 30 32 33 34 35 38 37 38 30 40 43 Cut Arial 10 A A To Wrap Text General Paste Copy Format B 1 U E Merge & Center % Conditional For Formatting as To Office Update To keep up-to-date with security updates, fixes, and improvements, choose Check for Updates D1 fx J B D E F 1 1 Dan Company 2 3 4 Dan Company owns and operates a nationwide chain of pizza stores. The 500 properties Dan chain vary from low-volume, smal 5 town, single screen plzza places to high volume, big city pizza restaurants 6 7 Management is considering the purchases of three types of pizza ovens based on baking capacity and cost. These machines would alow pizza restarts to selfreshly 8 better quality pleza. This new feature would be advertised and its intended to increase 9 patronage at the company's pizza places and restaurants 10 11 Annual rental costs and operating costs vary with the size of the ovens. The ovens' capacities and costs are as follows 12 Small Big 13 Annual Capacity 35,000 110,000 200,000 14 16 Costs 16 Annual Oven Rental 10,000 15,000 27.000 17 18 Per Pizza Costs 19 Puza Ingredients 0.13 0.11 0.09 20 Dough costs (less dough needed in larger ovens) 0.22 0.14 0.05 21 Variable Utos and Energy 0.08 0.08 0.07 23 24 Please calculate the break-even (indifference) points between these three sizes. 25 28 Concept question: Should management ease the same type of oven and force every chain to use the same oven type? 27 Explain why or why not? 28 29 30 What is the issue with the indifference point between Smal vs Large? What would the actual difference be given the capacity constraints? 32 33 34 35 38 40 42 43 44 Pricing Relevant Costs-Special Order Fixed vs Variable costs 5 fx 8000 B E D F G H 1 Cost Behavior Assume a local pizzeria reported the following results for October and November October November Unit Sales 8,000 12,000 Cost of Food Sold Wages and Salaries Rent Depreciation Utilities Supplies Total $ 160,000 $240,000 30,000 30,000 8,000 8,000 5,000 5,000 2,800 3,000 2,000 3,000 $207,800 $ 289,000 a. Identify each cost as being fixed, variable or mixed. b. Determine the equation for total operating costs (Fixed + Unit Variable Cost * # of sandwiches) c. Predict the total operating costs for 15000 pizzas d. Determine the average costs for 15000 pizzas Concept question: Why are fixed costs generally not relevant for decision-making? Would average costs be useful for decision-making and why or why not? Concept Question: D1 fx H 1 A B C D E F G 1 Name: 2 3 4 Lincoln company sells tote bags in the small, medium and large categories. 5 Below are the unit selling price for each category, as well as its respective 6 unit variable costs: 7 8 Small Medium Large 9 Unit Price 50 70 100 10 Unit Variable Cost 30 40 45 11 12 The sales mix% is as follows: 13 Small Medium Large 14 Sales Mix % 40% 20% 40% 15 16 The company's annual fixed costs are $72,000 with a target operating profit of $108,000. 17 18 How much of each item needs to be sold in order to break-even?...in order to reach the 19 target operating profit? 20 21 Concept Question: Suppose 4,900 units were actually sold. Would it be possible for this company 23 24 to achieve its Target Operating Profit of $108,000 (assuming fixed costs were 25 $72,000). If so, why and what would have had to happen? 26 27 28 29 30 22 Arar IU Wapen ULICIDI Copy Paste B U Merge & Center - % ) 00 Format - A6 X fx The average cost for each loaf is $3.50, and Lincoln does have plenty of capacity to produce more loaves of bread A B D E F G H 1 J K L M N 0 1 Name: 2 3 4 Lincoln Company currently sells 1000 loaves of fresh sourdough bread every moming at a price of $5 per loaf. 5 6 The averale cost for each loaf is $3.50, and Lincoln does have plenty of capacity to produce more loaves of bread. 7 8 A local supermarket, for a one-time holiday deal, offers to buy 200 loaves of bread at $2. The new average cost for 1200 loaves 9 would then be $3.10 per loaf. 10 11 Please calculate the unit variable cost, fixed cost and overall profitability for this new deal. 12 13 14 15 16 17 Would you accept this deal-why or why not? What is the key consideration for a 18 special order? 19 20 21 22 23 24 25 26 27 228 29 30 31 32 33 34 35 36 37 HJUL Page Layout PUrrulas Data Review View Cut 9 Copy Arial 10 A- A+ = ET w Paste 00 I U Format lili M A13 4Xfx K B D E F G H 1 Name: 2 Pricing (from Chapter 8, Managerial Accounting) 3 4 Assume that you plan to open a soft ice cream franchise in a resort community 5 during the summer months. Fixed costs for the three month period are projected 6 to be $24,000. Variable costs per serving (ice cream and cone) would be $0.75, and there is a $0.25 7 A market analysis prepared by Oakland Ice indicates that summer 8 sales at the resort community should total 20,000 cones. 9 10 What price should be charged for each ice cream to achieve a profit of $40,000? 11 What risks could happen that might prevent the company from making the target operating profit of $40,000? 12 Please answer in 2-3 sentences 13 14 15 16 17 18 19 20 21 22 23 24 Home Page Layout Formulas Data Review View Insert & cut Arial 10 A A Wrap Text General Copy Paste B U- lili ill Format Merge & Center 2 0 00 0 F D1 x fx A B D E F G H 1 1 Dan Company 2 3 4 Dan Company owns and operates a nationwide chain of pizza stores. The 500 properties Dan chain vary from low-volume, small 5 town, single screen pizza places to high volume, big city pizza restaurants. 7 Management is considering the purchases of three types of pizza ovens based on baking capacity and cost. These machines would allow pizza restauants to sell freshly 8 better qualty pizza. This new feature would be advertised and its intended to increase 9 patronage at the company's pizza places and restaurants 10 11 Annual rental costs and operating costs vary with the size of the ovens. The ovens' capacities and costs are as follows: 12 Small Normal Big 13 Annual Capacity 35,000 110,000 200,000 14 15 Costs 16 Annual Oven Rental 10,000 15.000 27,000 17 18 Per Pizza Costs 19 Puza Ingredients 0.13 0.11 0.09 20 Dough costs (less dough needed in larger ovens) 0.22 0.14 0.05 21 Variable Utilities and Energy 0.08 0.08 0.07 22 23 24 Please calculate the break-even (indifference) points between these three sizes. 25 26 Concept question: Should management lease the same type of oven and force every chain to use the same oven type? 27 Explain why or why not? 28 29 30 What is the issue with the indifference point between Smal vs Large? What would the actual indifference be given the capacity constraints? 31 32 33 34 36 37