Question
Question 1: (L) Hotels guest-days of occupancy and custodial supplies expense over the last seven months were: Month Guest-Days of Occupancy Custodial Supplies Expense March
Question 1: (L) Hotels guest-days of occupancy and custodial supplies expense over the last seven months were:
Month
| Guest-Days of Occupancy
| Custodial Supplies Expense
|
March | 4,000 | $7,500 |
April | 6,500 | $8,250 |
May | 8,000 | $10,500 |
June | 10,500 | $12,000 |
July | 12,000 | $13,500 |
August | 9,000 | $10,750 |
September | 7,500 | $9,750 |
Guest-days is a measure of the overall activity at the hotel. For example, a guest who stays at the hotel for three days is counted as three guest-days.
Required:
Using the high-low method, what amount of custodial supplies expense would you expect to be incurred at an occupancy level of 14,000 guest-days?
Question 2:
(G) Company produces three products: X, Y, and Z. Budgeted sales by product and in total for the coming month are shown below:
Product | X | Y | Z | Total | ||||
Percentage of total sales | 48% | 20% | 32% | 100% | ||||
Sales | $331,200 | 100% | 138,000 | 100% | 220,800 | 100% | 690,000 | 100% |
Variable Expenses | 99,360 | 30% | 110,400 | 80% | 121,440 | 55% | 331,200 | 48% |
Contribution Margin | 231,840 | 70% | 27,600 | 20% | 99,360 | 45% | 358,800 | 52% |
Fixed Expenses |
| 233,480 |
| |||||
Net Operating Income |
| $125,320 |
|
Dollars sales to break even = Fixed expenses/CM ratio
= $233,480/52%
= $449,000
As shown by these data, net operating income is budgeted at $125,320 for the month and the estimated break-even sales is $449,000.
Assume that actual sales for the month total $690,000 as planned. Actual sales by product are: X, $210,700; Y, $280,000; and Z, $199,300.
Required:
Compute the break-even point in dollar sales for the month based on your actual data.
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