Use the following information for questions #1 - 3:

An accounting student runs a hotdog concession at his colleges football games. After the first three games the following limited information is available to assess performance and make decisions about future operations:

	Game #1	Game #2	Game #3
No. of Hotdogs Sold	300	290	250
Total Cost	$ 1,100	$ 1,086	$ 1,030

#1. The student knows that total costs are comprised of a variable component (meat, rolls, toppings, napkins) and a fixed component (afternoon rental of cooking cart, wages paid to self) and would like to better understand those. Calculate the following using the High-Low Method (show work).

a.) Variable cost per hotdog sold (unit cost).

b.) Total Variable cost for Game #1

c.) Total Fixed cost for a game.

#2. Although sales have declined in the past couple of games, the student estimates that 280 hotdogs can be sold at Game #4 if he adjusts the price that he charges his customers for each hotdog.

Calculate the following (show all work).

a.) Total Variable Cost for Game #4.

b.) Total Cost for Game #4

c.) What is the Contribution Margin for Game # 4 if the price that customers pay for a hotdog is $3.50 ?

d.) Was the students decision to set the price of hotdogs at $3.50 a good one? Why ?

#3 If the actual number of hotdogs the student sells at Game #4 drops below what was sold in Game #3, then:

Variable Costs per unit would (select one) -

a.) Increase b.) Decrease c.) Remain the same

and Fixed Costs per unit would (select one) -

a.) Increase b.) Decrease c.) Remain the same