In: Accounting
Assume a Potbelly's restaurant has the following information available regarding costs at representative levels of monthly sales:
Monthly sales in units | |||
---|---|---|---|
5,000 | 8,000 | 10,000 | |
Cost of food sold | $ 10,000 | $ 16,000 | $ 20,000 |
Wages and fringe benefits | 4,200 | 4,320 | 4,400 |
Fees paid delivery help | 1,100 | 1,760 | 2,200 |
Rent on building | 1,100 | 1,100 | 1,100 |
Depreciation on equipment | 900 | 900 | 900 |
Utilities | 800 | 920 | 1,000 |
Supplies (soap, floor wax, etc.) | 250 | 340 | 400 |
Administrative costs | 1,700 | 1,700 | 1,700 |
Total | $ 20,050 | $ 27,040 | $ 31,700 |
(a) Identify each cost as being variable, fixed, or mixed.
Cost of food sold
Variable
Fixed
Mixed
1.00 points out of 1.00
Wages and fringe benefits
Variable
Fixed
Mixed
1.00 points out of 1.00
Fees paid delivery help
Variable
Fixed
Mixed
1.00 points out of 1.00
Rent on building
Variable
Fixed
Mixed
1.00 points out of 1.00
Depreciation on equipment
Variable
Fixed
Mixed
1.00 points out of 1.00
Utilities
Variable
Fixed
Mixed
1.00 points out of 1.00
Supplies (soap, floor wax, etc.)
Variable
Fixed
Mixed
1.00 points out of 1.00
Administrative costs
Variable
Fixed
Mixed
1.00 points out of 1.00
(b) Use the high-low method to develop a schedule identifying the amount of each cost that is mixed or variable per unit. Total the amounts under each category to develop an equation for total monthly costs.
Round variable cost answers to two decimal places.
Fixed Costs | Variable Costs | ||
---|---|---|---|
Cost of food sold | Answer | Answer | X |
Wages and fringe benefits | Answer | Answer | X |
Fees paid delivery help | Answer | Answer | X |
Rent on building | Answer | Answer | X |
Depreciation on equipment | Answer | Answer | X |
Utilities | Answer | Answer | X |
Supplies (soap, floor wax, etc.) | Answer | Answer | X |
Administrative costs | Answer | Answer | X |
Total costs equation | Answer | Answer | X |
* where X = Unit sales
(c) Predict total costs for a monthly sales volume of 9,800 units.
$Answer