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This is a manegerial accounting question, which confuses me Star Dollar Cafe operates a chain of cozy cafe shops specializing in selling brewed coffee and
This is a manegerial accounting question, which confuses me
Star Dollar Cafe operates a chain of cozy cafe shops specializing in selling brewed coffee and cake sets for tea time and breakfast. For the year ending 31 December 20X5, Star Dollar Cafe had the following Statement of Comprehensive Income for sales of 20,000 set meals ( comprising of drink and cakes) . Variable cakes and drink costs average $5 per set and the chef's salary includes a salesrelated component giving him a commission of $0.80 per set meal sold. All other costs are viewed as fixed. : With reference to the above information, a) Compute the variable cost per set meal for the year ended 31 December 20X5. ( 2 marks) b) Compute the total fixed costs for Star Dollar Cafe for the year ended 31 December 20X5. (3 marks) c) The breakeven point in number of set meals (rounded to the nearest whole number) for Star Dollar Cafe for the year ended 31 December 20X5 ( 4 marks) d) Draw up a Contribution Margin Statement for Star Dollar Caf for the year ended 31 December 20X5. ( 5 marks) e) The company CEO is considering spending additional funds on advertising its new coffee ice cream product. Using CVP analysis, what are the potential impact of increasing the advertising cost ? Explain. (4 Marks) f) What is the caf's margin of safety in units of set meals? What does this information tell you? Explain briefly the significance of the term 'margin of safety'. ( 4 marks)Step by Step Solution
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