Instructions6,0009,000(b)12,00014,000Format answers with $ signs, commas, or % when appropriate.(a) Using the high-low method, determine variable costs per unitBill Braddock anticipates that he can provide the oil change service with a filter at $25 each.for the utility costs.Determine the break-even point in number of oil changes$ 8,300breakeven sales are $80,000.$ 10,600lyi$13,000$15,0004(c) Without regard to your answers in parts (a) and (b), determine the margin of safety in dollarsand percentageif current actual sales are $100,000 andand fixed costs99+and sales dollars Bill Braddock is considering opening a Fast 'n Clean Car Service Center. He estimates that the followingcosts will be incurred during his first year of operations: Rent $8,800, Depreciation on equipment$7,000, Wages $16,400, Motor oil $12.00 per oil change. Oil filters will cost $5.00 per oil change. Hemust also pay The Fast 'n Clean Corporation a franchise fee of $1.20 per oil change, since he willoperate the business as a franchise. In addition, utility costs are expected to behave in relation to thenumber of oil changes as follows:Number of Oil ChangesInstructions4,0006,0009,00012,00014,000Format answers with $ signs, commas, or % when appropriate.(a) Using the high-low method, determine variable costs per unit$15,000Bill Braddock anticipates that he can provide the oil change service with a filter at $25 each.for the utility costs.Utility Costslyr$7,000$ 8,300$ 10,600$13,000and fixed costs

The costs incurred for production are differentiated as fixed and variable costs. The fixed costs…

Instructions 12,000 14,000 (b) Bill Braddock anticipates that he can provide the oil change service with a filter at $25 each. Format answers with $ signs, commas, or % when appropriate. (a) Using the high-low method, determine variable costs per unit for the utility costs. Determine the break-even point in number of oil changes $13,000 $15,000 breakeven sales are $80.000 4 and fixed costs and sales dollars (c) Without regard to your answers in parts (a) and (b), determine the margin of safety in dollars and percentage if current actual sales are $100,000 and

Instructions 12,000 14,000 (b) Bill Braddock anticipates that he can provide the oil change service with a filter at $25 each. Format answers with $ signs, commas, or % when appropriate. (a) Using the high-low method, determine variable costs per unit for the utility costs. Determine the break-even point in number of oil changes $13,000 $15,000 breakeven sales are $80.000 4 and fixed costs and sales dollars (c) Without regard to your answers in parts (a) and (b), determine the margin of safety in dollars and percentage if current actual sales are $100,000 and

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Junker Rental Car has a contract with a garage for major repair service for $450 per car, every 6 months. Management estimates that for $350,000, the company could have its own facility, financed at 8% interest for 20 years, and a salvage value of $20,000. They will do their own car repairs at a cost of $200 per car, every 6 months. Ignoring taxes and other economic factors, what is the minimum number of cars needed to make the change feasible?
3. Bill Braddock is considering opening a Fast 'n Clean Car Service Center, He estimates that the following costs will be incurred during his first year of operations: Rent $9,200, Depreciation on equipment $7,000, Wages $16,400, Motor oil $2.00 per quart. He estimates that each oil change will require 5 quarts of oil. Oil filters will cost $3.00 each. He must also pay The Fast 'n Clean Corporation a franchise fee of $1.10 per oil change, since he will operate the business as a franchise. In addition, utility costs are expected to behave in relation to the number of oil changes as follows: Number of Oil Changes 4,000 6,000 9,000 Utility Costs $ 6,000 $7,300 $ 9,600 12,000 $12,600 $15,000 14,000 Bill Braddock anticipates that he can provide the oil change service with a filter at $25 each. Instructions: (a) Using the high-low method, determine variable costs per unit and total fixed costs. (b) Determine the break-even point in number of oil changes and sales dollars. (c) Without regard…
Kent Duncan is exploring the possibility of opening a self-service car wash and operating it for the next five years until he retires. He has gathered the following information: A building in which a car wash could be installed is available under a five-year lease at a cost of $3,400 per month. Purchase and installation costs of equipment would total $315,000. In five years the equipment could be sold for about 10% of its original cost. An investment of an additional $2,000 would be required to cover working capital needs for cleaning supplies, change funds, and so forth. After five years, this working capital would be released for investment elsewhere. Both a wash and a vacuum service would be offered. Each customer would pay $1.54 for a wash and $.85 for access to a vacuum cleaner. The only variable costs associated with the operation would be 7.5 cents per wash for water and 10 cents per use of the vacuum for electricity. In addition to rent, monthly costs of operation…
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Kent Duncan is exploring the possibility of opening a self-service car wash and operating it for the next five years until he retires. He has gathered the following information: A building in which a car wash could be installed is available under a five-year lease at a cost of $3,600 per month. Purchase and installation costs of equipment would total $200,000. In five years the equipment could be sold for about 10% of its original cost. An investment of an additional $5,000 would be required to cover working capital needs for cleaning supplies, change funds, and so forth. After five years, this working capital would be released for investment elsewhere. Both a wash and a vacuum service would be offered. Each customer would pay $1.51 for a wash and $.81 for access to a vacuum cleaner. The only variable costs associated with the operation would be 7.5 cents per wash for water and 10 cents per use of the vacuum for electricity. In addition to rent, monthly costs of operation…
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