Question

A.

Pavarti's Sandwiches sells its signature 2-foot long sub sandwiches. These sandwiches are so good, it is the only item on the menu. In recent years, Pavarti’s breakeven point has been 30,000 sandwiches. Annual fixed cost are $600,000 and the sandwiches have a sales price of $27.

What is the variable cost per unit of each sandwich?

B.

Using the following data, apply the high-low method of cost analysis to the three cost data groups:

Volume	Alpha	Beta	Gamma
2,000	$6,600	$2,400	$8,000
6,000	$9,800	$7,000	$8,000
13,000	$13,000	$12,000	$8,000
20,000	$21,000	$24,000	$8,000

What cost behavior patterns are apparent for Alpha?

Select one:

a. Fixed

b. Variable

c. Mixed

d. Semi-fixed

e. None of the above

Answer 1

a)	Variable cost per unit	7
	Break even units = Total fixed cost / contribution per unit
	30000 = 600000 / Contribution margin
	CM per unit = $20
	Variable cost = selling price - contribution margin
	=27-20
	=$7
b)	Cost behavior	None of the above
	Volume	Alpha	Cost per Unit
	2,000	6,600	3.30
	6,000	9,800	1.63
	13,000	13,000	1.00
	20,000	21,000	1.05
	As, per unit cost is not constant its not variable and total cost is not constant is not fixed, per unit s decreasing then its not mixed also. Semi fixed is not a type of cost behavior.