1. Determining mixed costs- the high low method
The manager of Quick Car Inspection reviewed the monthly operating costs for the past year. The costs ranged from $4,400 for 1,400 inspections to $4,200 for 1,000 inspections.
Requirements- In excel format
1. Calculate the variable cost per inspection
2. Calculate the total fixed costs
3.Write the equation and calculate the operating costs for 1,200 inspections
4. Draw a graph illustrating the total cost under this plan. Label the axes, and show the costs at 1,000, 1,200 and 1,400 inspections.
2. For its top Managers, Global Travel formats its income statements as follows
Sales Revenue 318,500
Variable Costs 111,475
Contribution Margin 207,025
Fixed Costs 175,000
Operating Income 32,025
Globals' relevant range is between sales of 250,000 and 360,000
1. Calculate the contribution margin ratio
2. Prepare two contribution margin income statements: one at the 250,000 level and the other at the 360,000 level.
3. Using sensitivity analysis
Intersection Driving School charges $500 per student to prepare and administer written and driving tests. Variable costs of $150 per student
include trainers wages, study materials and gasoline. Annual fixed costs of $140,000 include the training facility and fleet of cars.
Requirements:
1 For each of the following independent situations, calculate the contribution margin per unit and the breakeven point in units by first referring to the original data provided.
a. Breakeven point with no change in information
b.Decrease sales price to $250 per student
c. Decrease variable costs to $100 per student
d. Decrease fixed costs to $122,500
Compare the impact of changes in the sales price, variable costs, and fixed costs on the contribution margin per unit and the breakeven point in units.