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Part II - Prepare the C-V-P oxercises per instructions below using the following data: - 60 solnts Cinchede xosimetkina panen in rosir sutmistion) ABC Company
Part II - Prepare the C-V-P oxercises per instructions below using the following data: - 60 solnts Cinchede xosimetkina panen in rosir sutmistion) ABC Company is considering opening an Auto Cleaning Center. He entimates that the following costs will be incurred during his first year of operations: Rent $9,200, Depreciation on equipment $7,000. Wages $16,400, Motor ol $2.00 per quart. He estimates that each oil change will require 5 quarts of oil, Oil fitters will cost $3.00 each. He must also pay Auto Cleaning Center a franchise fee of $1.10 per oil change, since he will operate the business as a franchise. in addition, utility costs are expected to behave in relation to the number of oil changes as follows: ABC Company anticipates that he can provide the oll change service with a filter at $25 each. Instructions (a) Using the high-low method, determine variable costs per unit (ealculate it to 4 decimols spoces), and total fixed costs. (b) Determine the break-even point (add the variable cost per unit and fxed cost for utilities calculated in "a" above): i - in number of oil changes (units). (c) Without regard to your answers in parts (a) and (b), determine the oil changes required to earn net income of ii - in sales dollars. $20,000, assuming fixed costs are $22,000 and the contribution margin per unit is $6
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