Recompute fixed costs, variable costs, and the BEP.
Meals: High-Low=
Cost: High-Low=
What are the variable costs? The variable cost per meal: $5,500.00 ÷ 1,400 = $3.93
What are the fixed costs? Fixed cost: $20,500.00 − (3,500 •$3.93) = $6,745.00
PX=A+BX
5.77X=6,745+3.93X
5.77-3.93=6,745+(3.93-3.93)
1.84X=6,745.
1.84X÷1.84X=6, 745÷1.84X
X=3,666 Monthly BEP
3,666●12=43,992 Fiscal year BEP
How many meals will the WHDM program need to provide during the fiscal year to reach the BEP? 43,992 meals will need to be provided during the fiscal year.
How much profit will the program earn if it completes its 45,000-meal contract with the City of Westchester? ($5,816.16-$3961.44=$1,854.72)
The program will earn $1,854 .72 in total profit.
New River Community Council (NRCC)
Break Even Point (BEP)
PX = A + BX
20 X = 6,000. + 3,900. + 4.50 X
20 X = 9,900. + 4.50 X
20 X – 4.50 X =9,900. + (4.50 X – 4.50 X)
15.5 X= 9,000.
15.5 X ÷ 15.5 X = 9,900.÷15.5 X
X= 639
Maximum Number= 650
Break Even Point = 639
Surplus Capacity = 11
Newsletter Coordinator salary: $6,000 per year
Newsletter assistant salary: $3,900 per year
There is no slack capacity because the maximum capacity of the two employees is 650.
Koontz
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Exercise 10.1
Recompute fixed costs, variable costs, and the BEP. What are the variable
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000.
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