Account Analysis Method Shirrell Blackthorn is the accountant for several pizza restaurants based in a tri-city area. The president of the chain wanted some help with budgeting and cost control, so Shirrell decided to analyze the accounts for the past year. She divided t accounts into four different categories, depending on whether they appeared to be primarily fixed or to vary with one of three different drivers. Food and wage costs appeared to vary with the total sales dollars. Delivery costs varied with the nu of miles driven (workers were required to use their own cars and were reimbursed for miles driven). A group of other costs, including purchasing, materials handling, and purchases of kitchen equipment, dishes, and pans, appeared to vary with number of different product types (e.g., pizza, salad, and lasagna). Shirrell came up with the following monthly averages: Food and wage costs Delivery costs Other costs Fixed costs Sales revenue Delivery mileage in miles Number of product types Required: $ $ $ $ $ 175,950 21,150 200 250,000 550,000 9,000 20 1. Calculate the average variable rate for the following costs: food and wages, delivery costs, and other costs. If required, round your answers to two decimal places. Use your rounded answers in subsequent computations if necessary. Average Variable Rate: Food and wages % Delivery costs per mile Other costs per product 2. Form an equation for total cost based on the fixed costs and your results from Requirement 1. Enter the sales percent in decimal form, rounded to four decimal places. For example, 62.75% would be entered as 0.6275. Total cost-$ (sales) +s (miles) +$ (product) 3. The president is considering expanding the restaurant menu and plans to add one new offering to the menu. According to the cost equation, what is the additional monthly cost for the new menu offering?
Account Analysis Method Shirrell Blackthorn is the accountant for several pizza restaurants based in a tri-city area. The president of the chain wanted some help with budgeting and cost control, so Shirrell decided to analyze the accounts for the past year. She divided t accounts into four different categories, depending on whether they appeared to be primarily fixed or to vary with one of three different drivers. Food and wage costs appeared to vary with the total sales dollars. Delivery costs varied with the nu of miles driven (workers were required to use their own cars and were reimbursed for miles driven). A group of other costs, including purchasing, materials handling, and purchases of kitchen equipment, dishes, and pans, appeared to vary with number of different product types (e.g., pizza, salad, and lasagna). Shirrell came up with the following monthly averages: Food and wage costs Delivery costs Other costs Fixed costs Sales revenue Delivery mileage in miles Number of product types Required: $ $ $ $ $ 175,950 21,150 200 250,000 550,000 9,000 20 1. Calculate the average variable rate for the following costs: food and wages, delivery costs, and other costs. If required, round your answers to two decimal places. Use your rounded answers in subsequent computations if necessary. Average Variable Rate: Food and wages % Delivery costs per mile Other costs per product 2. Form an equation for total cost based on the fixed costs and your results from Requirement 1. Enter the sales percent in decimal form, rounded to four decimal places. For example, 62.75% would be entered as 0.6275. Total cost-$ (sales) +s (miles) +$ (product) 3. The president is considering expanding the restaurant menu and plans to add one new offering to the menu. According to the cost equation, what is the additional monthly cost for the new menu offering?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter4: Activity-based Costing
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Problem 7CE: Golding Bank provided the following data about its resources and activities for its checking account...
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Account Analysis Method
Shirrell Blackthorn is the accountant for several pizza restaurants based in a tri-city area. The president of the chain wanted some help with budgeting and cost control, so Shirrell decided to analyze the accounts for the past year. She divided the
accounts into four different categories, depending on whether they appeared to be primarily fixed or to vary with one of three different drivers. Food and wage costs appeared to vary with the total sales dollars. Delivery costs varied with the number
of miles driven (workers were required to use their own cars and were reimbursed for miles driven). A group of other costs, including purchasing, materials handling, and purchases of kitchen equipment, dishes, and pans, appeared to vary with the
number of different product types (e.g., pizza, salad, and lasagna). Shirrell came up with the following monthly averages:
Food and wage costs
Delivery costs
Other costs
Fixed costs
Sales revenue
Delivery mileage in miles
Number of product types
Required:
$ 175,950
$ 21,150
$
200
$
$
250,000
550,000
9,000
20
1. Calculate the average variable rate for the following costs: food and wages, delivery costs, and other costs. If required, round your answers to two decimal places. Use your rounded answers in subsequent computations if necessary.
Average Variable Rate
%
Food and wages
Delivery costs
per mile
per product
Other costs
2. Form an equation for total cost based on the fixed costs and your results from Requirement 1. Enter the sales percent in decimal form, rounded to four decimal places. For example, 62.75% would be entered as 0.6275.
Total cost = $
(sales) +$
(miles) + $
(product)
3. The president is considering expanding the restaurant menu and plans to add one new offering to the menu. According to the cost equation, what is the additional monthly cost for the new menu offering?
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