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In: Accounting

John Smith is requesting your assistance in determining a cost equation for forecasting his expenses for...

John Smith is requesting your assistance in determining a cost equation for forecasting his expenses for his ABC restaurant. He provides costs at two extremes as follows:

Monthly Covers
1000 3000 Type of Cost FC VC/unit
Salaries 15000 15000
Wages 3000 9000
Employee benefits 4000 6000
Supplies 1500 4500
Utilities 5000 8000
Rent 5000 5000
Operating expenses 1500 4500
Insurance 1000 1000

a) Please identify the Type of Cost for each line. (4 points)
Please use "F" as Fixed cost, "V" as Variable cost, "M" as Mixed cost.

b) Calculate the fixed cost and variable cost per unit. (5 points)
If one blank did not have a number to put in, please put zero (0.00) in it.

c) Please provide the Total Fixed Cost and Total Variable Cost per Unit. (2 points)
Total Fixed Cost:   
Total Variable Cost:  

d) If the restaurant has 2,500 covers, what is the total cost? (1 point)
Total Cost:  

Solutions

Expert Solution

ekkarill92 answered 1 year ago
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