Assume a local subway reported the following results for


Managerial Accounting Assignment - This assignment has 5sections.

1. Cost Behavior

Assume a local Subway reported the following results for April and May-


August

September

Unit Sales

     2,000

            2,500




Cost of Food Sold

 $1,000

 $1,250

Wages and Salaries

1,525

1,675

Rent

1,500

1,500

Depreciation

200

200

Utilities

710

770

Supplies

500

625

Miscellaneous

110

140

Total

 $5,545

 $ 6,160

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 2750 3000 sandwiches

d. Determine the average costs for 2750 3000 sandwiches

2. Brodsky Corp

Brodsky Company - Data for Brodsky Company is as Follows:

Units Sold

100,000





Revenue

 $1,000,000


Costs




Fixed

Variable

Raw Material

-  

300,000

Direct labor

100,000

200,000

Factory Costs

100,000

-  

Selling and Administrative

200,000

-  

Total Costs

400,000

500,000




Operating Income

 $100,000


a. Based on the above information, calculate the break-even units.                                                        

b. If Brodsky is subject to an effective income tax rate of 40%, calculate the number of units Brodsky would have to sell to earn an after-tax profit of $100,000. Hint: operating income = Aftertax profit/ (1- tax rate).

3. Mulitple Product Breakeven

The sales mix is 2:4:4 (i.e. for every 2 Printers sold, 4 Monitors and 4 Desktops are sold).

1) Find the break-even point for each product. The company's annual fixed costs are $28M

2) Additionally, please find the target # of units to reach an operating profit of $14M.

3) Concept question: Which product do you think Monday's sales team will try to promote more and why? (Answer in no more than 3 sentences)


Selling Price Per Unit

Variable Cost Per Unit

Contribution Margin Per unit

 Printers

500

300

200

 Monitors

200

100

100

 Desktops

800

300

500

4. Optometry Clinic

You are evaluating ways to expand an optometry practice and its earnings capacity. Optometrists perform eye exams, prescribe corrective lenses (eyeglasses and contact lenses) and sell corrective lenses. One way to expand the practice is to hire an additional optometrist.  The annual cost of the optometrist, including salary, benefits and payroll taxes is $80,000.  You estimate that this individual can conduct two exams per hour at an average price to the patient of $45 per exam. The new optometrist will work 40-hour weeks for 48 weeks per year.  However, because of scheduling conflicts, patient no shows, training and other downtime, the new optometrist will not be able to conduct, bill and collect 100% of her available examination time.          

From past experience, you know that each eye exam drives additional product sales. Each exam will lead to either an eyeglass sale with a net profit of $90 (does NOT include the $45 exam fee) or a contact lens sale of $65 of net profit.  On average, 60% of exams lead to eyeglass sales, 20% lead to contact lens sales, and 20% lead to no further sales.

Below are additional incremental costs for the new optometrist:             


 Annual

Office Occupancy Costs

 $10,000

Leased Equipment

5,000

Office Staff

30,000

What is the minimum level of examinations the new optometrist must perform to pay for herself (break-even)?

5. Trade-off between fixed and variable costs

Dan Company - Dan Company owns and operates a nationwide chain of pizza stores.  The 500 properties Dan chain vary from low-volume, small town, single screen pizza places to high volume, big city pizza restaurants.

Management is considering the purchases of three types of pizza ovens based on baking capacity and cost. These machines would allow pizza restauarnts to sell freshly better quality pizza. This new feature would be advertised and it's intended to increase patronage at the company's pizza places and restaurants.

Annual rental costs and operating costs vary with the size of the ovens. The ovens' capacities and costs are as follows:


Small

Normal

Big

Annual Capacity

35,000

110,000

200,000





Costs




Annual Oven Rental

6,000

9,000

15,000





Per Pizza Costs

 

 

 

Pizza Ingredients

0.13

0.11

0.09

Dough costs (less dough needed in larger ovens)

0.22

0.14

0.05

Variable Utilities and Energy

0.08

0.08

0.07

Please calculate the break-even (indifference) points between these three sizes.

Concept question: Should management lease the same type of oven and force every chain to use the same oven type? Explain why or why not?

Attachment:- Assignment.rar

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Managerial Accounting: Assume a local subway reported the following results for
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