Hsm/260 Week 4 Fixed Cost, Variable, Costs, Feb

In: Business and Management

Submitted By charley2001
Words 541
Pages 3
Exercise 10.1
During the sixth month of the fiscal year, the program director of the Westchester
Home-Delivered Meals (WHDM) program decides to again recompute fixed costs,
variable costs, and the BEP using the high–low method. Here are the number of
meals served and the total costs of the program for each of the first six months:
Month Meals Served Total Costs
July 3,500 $20,500
August 4,000 22,600
September 4,200 23,350
October 4,600 24,500
November 4,700 25,000
December 4,900 26,000

Recompute fixed costs, variable costs, and the BEP. What are the variable
costs? What are the fixed costs? How many meals will the WHDM program need
to provide during the fiscal year to reach the BEP? How much profit will the program
earn if it completes its 45,000-meal contract with the City of Westchester?
Costs high-low $26,000- $20,500 = $5,500
Meals high-low 4,900- 3,500 = 1,400
Variable cost per meal $5,500 ÷ 1,400 = $3.93
Variable cost for the low month $13,755 ( 3,500x $3.93)
Fixed costs $6,745 ($20,500-$13,755)
3,665.76 meals per month × 12 months = 43,989.12 meals

PX = A + BX

5.77X = 6,745 + 3.93X
(Subtract 3.93X from each side.)
1.84X = 6,745
(Divide each side by 1.84)
X = 3,666 (monthly BEP)
3,666 × 12 = 43,992 (fiscal-year BEP)
45,000 meals – 43,992 meals = 1008 meals x $1.84 revenue per meal = $1,854.72 profit

Exercise 10.2
It has been two years…...

Similar Documents

Week 8 Hsm/260 Checkpoint

...Checkpoint: Collaborative Fund-raising Activity Dora McKinney November 21, 2012 HSM/260 Instructor: Greg O’Donnell Checkpoint: Collaborative Fund-raising Activity Phoenix Homeless Agency (PHA) needs funds to continue providing job counseling to qualifying recipients. Discuss with your assigned group how nontraditional sources of funding might be used to solve the funding problem for the Phoenix Homeless Agency. Be creative! Determine the strategies from your discussion group that you feel would best solve the funding needs for PHA. In dealing with the Phoenix Homeless Agency, the mission that is providing a good and sufficient service to the clients. The agency needs to figure out the most efficient ways to fund it. To fund, there is a variety of fundraising strategies with effort and dedication will be successful. The first strategy that is in mind for our agency could be to try promoting and soliciting money by using different kinds of campaigns. This would if successful, far as generating money. The large supporters and companies would be able to donate funds to benefit both sides, so in doing so the companies and supporters would be able to have a lower tax...

Words: 560 - Pages: 3

Hsm/260 Week 4 Fixed Cost, Variable, Costs, Feb

... $6,745 ($20,500-$13,755) 3,665.76 meals per month × 12 months = 43,989.12 meals PX = A + BX 5.77X = 6,745 + 3.93X (Subtract 3.93X from each side.) 1.84X = 6,745 (Divide each side by 1.84) X = 3,666 (monthly BEP) 3,666 × 12 = 43,992 (fiscal-year BEP) 45,000 meals – 43,992 meals = 1008 meals x $1.84 revenue per meal = $1,854.72 profit Exercise 10.2 It has been two years since the New River Community Council (NRCC) started its newsletter dealing with state and community funding opportunities for human service agencies. The current number of subscribers to the newsletter is 525. During the second year, the NRCC hired a new part-time newsletter coordinator (social work student). The NRCC has raised the salary of the part-time newsletter coordinator to $6,000 per year and has also hired another part-time student as an assistant for ten hours a week. The assistant is to be paid $75 per week or $3,900 per year. Together the newsletter coordinator and the part-time assistant believe they can handle up to 650 newsletter subscribers. Beyond this number, the newsletter program will require still more staff resources. In order to help cover the cost of the new part-time assistant, the executive director has also decided to increase the annual subscription price of the newsletter to $20. Additionally, the variable costs of preparing, printing, and mailing six bimonthly issues of the newsletter have risen to $4.50. Recompute the BEP for the......

Words: 541 - Pages: 3


... a significant effect on Costco’s operations, and the operations of its suppliers. Adverse weather can affect the availability and prices of the goods Costco sells. Because Costco carries a large and diverse number of products, it can be indirectly affected my nearly any macro factors. UOIG 4 University of Oregon Investment Group 4/26/2013 Competition The industry is highly competitive, and competes in terms of pricing and volume. There are about 1200 discount warehouses in operation in the U.S. Supply chain efficiency is a huge part that determines how competitive a player is in the industry. The supply chain structure is what allows Costco and Walmart to execute its business strategy of passing down lower costs to consumers. Supply chain decisions include carrying a low number of branded products and reducing product handling to reduce overhead costs. As a company that deals largely with consumer staples, future innovations are not expected to affect Costco from an operation perspective. However, leverage of information technology and new developments in the area has and will continue to prove to be a significant area of competitive advantage. Especially regarding flow of inventory and supply chain activities, leverage of increasingly sophisticated ERP systems and inventory management systems may provide significant cost saving and economies of scale, which will continue to strengthen Costco’s position as one of the market leaders in the retail sector...

Words: 11035 - Pages: 45

Hsm 260 Week 1

...• GAAP meaning generally accepted accounting principles (GAAP) are basic sets of rules governing how the financial books and records of an organization are to be maintained; how revenues, expenditures, and expenses are to be accounted for; and how financial statements are to be prepared. (Ch. 3, pg. 20) • Basic accounting formula is used to determine what might be called the net worth of a private nonprofit human service agency. )Ch. 3, pg. 28) • Transaction/T-account is a transaction of any financial activity that causes a change (either an increase or a decrease) in the assets, liabilities, or net assets of a human service agency. At-account is an individual financial account maintained by a human service agency. Individual accounts are called t-accounts because they are separated into a debit side and credit side which gives the account the appearance of the letter T. (Ch. 4, pg. 37) • General Ledger is the name given to the aggregate of all the t-accounts maintained by a human service agency. (Ch. 4, pg.38) • Debit is any entry made to the left side of any t-account. (Ch. 4, pg. 38) • Credit is any entry made to the right side of any t-account. (Ch. 4, pg. 38) • Account balance is the sum of all debits and credits in an individual t-account. (Ch. 4, pg.38) • Trail balance is the totaling of all the debits and credits in the general ledger accounts at the end of an accounting period. (Ch. 4, pg. 39) • Journal is a chronological listing of all transactions. (Ch. 4,......

Words: 376 - Pages: 2

Hsm 260 Week 2

...• Cash: assets • Land: assets • Note payable: liabilities • Investments: assets • Capital lease: liabilities • Accounts receivable: assets • Accounts payable: liabilities • Furniture and equipment: assets 2) Define the term “bankrupt”? Bankrupt is when an organization or individual is declared by law unable to pay their outstanding debts. 3) What does “temporarily restricted” mean? Temporally restricted means that revenue has requirements that will eventually be satisfied. Unlike permanently restricted, where your revenue is permanently restricted. 4) Is the finical position of the organization positive or negative? By the information given in the balance sheet the organization is a negative position, the organizations assets are less than its liabilities. 5) when determining whether or not an organization needs to file bankruptcy which document would you look at, the statement of cash flows, or a balance sheet? If an organization is considering filing bankruptcy, they are going to look at their statement of cash flows because a balance sheet, which is, also known as the statement of financial position is a summary of the organizations assets, liabilities and net assets. A statement of cash flows allows an organization to see ahead if they can pay their bills when they are due. 6) Is it possible for an organization to meet its monthly operational expenses but still be in a poor financial position? An organization can only be successful for a short period if......

Words: 273 - Pages: 2


...Question 1. Costs may be broadly classified as: Selling and administrative Product and marginal Fixed and variable Fixed and indirect Question 2. For a hot bread shop, which of the following costs would most likely be classified as variable rather than fixed? Flour Advertising Equipment lease payments Rent of premises Question 3. Which statement is correct in relation to fixed costs per unit of output? They stay the same irrespective of the level of activity They increase as the level of activity increases They decline as the level of activity declines None of the above Question 4. A total cost line is non-linear and of a convex nature, when it is: A fixed cost A linear variable cost Expenses involving economy of scale benefits Expenses where a high level of demand caused supply shortages Question 5. Which of the following would not normally represent an example of a semi-variable (semi-fixed) cost? Spare parts-vehicle service centre Electricity-hairdresser Telephone-butcher Depreciation of equipment Question 6. What does the point where the total cost line cuts the revenue line represent? Break-even point Relevant range The margin of safety Total fixed cost Question 7. What statistical technique can be used to determine the fixed and variable components of different cost types? Probability analysis Regression analysis Correlation Factor analysis...

Words: 750 - Pages: 3

Hsm 260 Cost Per Output

...Write a 200- to 300-word response to the following: Why are cost per output and cost per outcome calculations valuable to a human service agency? What might happen if a human service agency did not determine the cost per output and cost per outcome? Determining the cost per outcome and the cost per output is the final step in cost analysis. According to Financial Management for Human Service Administrators by Lawrence L. Martin, to compute cost per output (per unit), the total cost of the program is placed as a numerator and the total outputs to be provided for the fiscal year is placed as the denominator. Once the division is done the result would be the cost per output. The cost per outcome Is all the programs total costs as the numerator and the total outcomes to be achieved are placed as the denominators, and then the division that is done is the cost per outcome. Human service agencies need to determine the cost per output and the cost per outcome to successfully run the business. The cost per outcome and the cost per output is also important to human service agency’s financial allocations. It helps the organization to know exactly what money needs to go to which program and what it would cost to run and back each program. This type of information becomes even more important when the organization is trying to get funds to come into their programs. This could also help the organization cut down on fraudulent behavior financially within the company....

Words: 259 - Pages: 2

Bus 630 Week 2 Dq 2 Direct Labor Variable or Fixed Cost

...In this document of BUS 630 Week 2 Discussion Questions 2 Direct Labor Variable or Fixed Cost you will find the next information: Direct Labor: Variable or Fixed Cost? Throughout the corporate world, businesses are transforming labor into a more flexible (and variable) cost. Among such companies are Hewlett-Packard, General Electric, DuPont, Sun Microsystems, and British Airways. Discuss whether direct labor is a fixed or a variable cost. What are the pros and cons of management treating direct labor as a variable cost? Are there ethical issues to be considered here? Respond to at least two of your fellow students Business - General Business BUS 630 Week 1 Complete Ethics in Cost Control. (Exercise 1-9) Zoya Arbiser, regional manager of Gold Medal Sports Shops, is reviewing the results of 15 stores in her region. Store managers are moved annually. Each store manager's income is very dependent on the direct contribution margin of that store. For the past year, Store 9 has been managed by a person who has operated several other profitable stores in recent years and is about to be promoted to a larger store. Zoya notices several items that bother her. Store 9 has almost no personnel training expenses relative to other stores. Store 9 has stopped participating in numerous community events that gave the store significant visibility but did incur substantial expenses. Store 6, where this store manager worked the prior year, has had a...

Words: 365 - Pages: 2


..., firms are a bit less lazy than they were. Although profit is one goal of a firm, often firms focus on other intermediate goals such as cost and sales. The Lazy Monopolist and X-Inefficiency Lazy monopolists are not profit maximizers; they see to it that they make enough profit so that the stockholders aren’t squealing, but they don’t push as hard as they could to hold their costs down. They perform as efficiently as is consistent with keeping their jobs. The result is what economists call X-inefficiency (firms operating far less efficiently than they could technically). Such firms have monopoly positions, but they don’t make large monopoly profits. Instead, their costs rise because of inefficiency; they may simply make a normal level of profit or, if X-inefficiency becomes bad enough, a loss. The standard model avoids dealing with the monitoring problem by assuming that the owner of the firm makes all the decisions. The owners of firms who receive the profit, and only the profit, would like to see that all the firm’s costs are held down. Unfortunately, very few real-world firms operate that way. In reality owners seldom make operating decisions. They hire or appoint managers to make those decisions. The managers they hire don’t have that same incentive to hold costs down. Therefore, it isn’t surprising to many economists that managers’ pay is usually high and that high-level managers see to it that they have “perks” such as chauffeurs, jet planes, ritzy offices, and...

Words: 9559 - Pages: 39


... American Institute of Architects has proved to be satisfactory and has been used on many building projects with good results. The form followed for non-building projects is often more varied. Man: agencies have own standard forms, which are used on all their projects. Cost Estimating 22 Dr. Emad Elbeltagi Information usually included in the agreement of three parts. The first part is a short introductory paragraph which defines the parties, gives the date of the agreement, and state that each party agrees to what follows. The second part contains the elements of contract and defines the work to be undertaken. The final paragraph confirms the agreement and provides space for signatures of the parties. Thus, the agreement usually composed of the following articles: 1. A short introductory paragraph. 2. Scope of the work. 3. Time of completion. 4. Contract documents. 5. Performance bond. 6. Contractor's insurance. 7. Owner's insurance. 8. Laws, regulations and permits. 9. Payments. 10. Extensions of time. 11. Changes in the work. 12. Owner's right to terminate the work. 13. Contractor's right to terminate the work. 14. Confirmation and signatures. 2.1.2 Quantity take-off: Why? Owner perspective: - Initial (preliminary) estimate of the project costs at the different stages of the project. - Preparing the BOQ as a requirement of the contract documents. - Estimating the work done for issuing the contractor payments...

Words: 2097 - Pages: 9


... Introduction to Financial Accounting Introduction to Financial Accounting Section L5101 L0101 L0201 L5101 T0101 T0201 T0301 T0401 T0501 T0601 T0701 T0801 T0901 T1001 T1101 T1201 T1301 T1401 T1501 T1601 T5101 T5201 T5301 T5401 L0101 L0201 L0301 L0401 L0501 L0601 L0701 L0801 L0901 L5101 L5201 T0101 Time T 5-7 W 9-11 W 2-4 W 6-8 M 2-4 M 10-12 W 4-6 M 12-2 F 2-4 F 4-6 T 10-12 T 12-2 T 2-4 T 4-6 R 10-12 R 12-2 R 2-4 R 4-6 F 10-12 F 12-2 M 5-7 T 6-8 R 6-8 M 7-9 M 10-12 M 12-2 M 3-5 M 4-6 T 8-10 T 1-3 T 3-5 R 1-3 R 3-5 M 6-8 Classroom ES B142 OI G162 OI G162 OI G162 LA 211 RW 229 SS 1087 UC 52 UC 163 WW 126 ES B149 GB 221 VC 215/EM 302 LA 211 HI-CART WI 1017 UC A101/RW 229 LA 211 WW 126 RW 229 ES B149 UC 52 MP 137 MP 134 WO 30 WO 30 WO 25 WO 20 WO 20 WO 35 WO 35 WO 35 WO 35 WO 20 Instructor Email John Oesch John Oesch John Oesch Elisa Zuliani Elisa Zuliani Mindy Callen Elisa Zuliani Alexander Edwards Elisa Zuliani Elisa Zuliani Alexander Edwards Alexander Edwards Mindy Callen john.oesch@rotman.utoronto.ca john.oesch@rotman.utoronto.ca john.oesch@rotman.utoronto.ca ezuliani@rotman.utoronto.ca ezuliani@rotman.utoronto.ca Mindy.Callen@rotman.utoronto.ca ezuliani@rotman.utoronto.ca alex.edwards@rotman.utoronto.ca ezuliani@rotman.utoronto.ca ezuliani@rotman.utoronto.ca alex.edwards@rotman.utoronto.ca alex.edwards@rotman.utoronto.ca Mindy.Callen@rotman.utoronto.ca Cancelled August 4, 2011 T 4-5 SS 1083 - Course RSM 219H1 RSM 219H1 RSM 219H1 RSM 219H1 RSM......

Words: 4934 - Pages: 20


... = $ 33840 + $ 42000 = $ 75840 Total variable cost = DM + DL + Variable manufacturing overhead cost + Sales commissions =$ 120000 + $ 40000+ $ 18000 + $ 14000 = $ 192000 Variable cost per unit= $ 192000/ 25000 units = $ 7.68 Sales commissions = 4% sales $ 14000= 4% sales Sales= $ 14000/ 4% = $ 350000 Selling price= $ 350000/ 25000 units = $ 14 Contribution Margin per unit= $14- $7.68= $ 6. 32 Breakeven point in units= $ 75840 / $ 6.32 = 12000 units 2. Sales in units= Total fixed costs+ Target operating income Contribution margin per unit 75840 + 18960 6.32 = 15000 units 3. Safety margin units = 25000 units – 12000 units = 13000 units 4. Increase in profits= increase in units * CMU = 5000 units * 6.32 = $ 31600 ...

Words: 472 - Pages: 2


...CLASSIFICATION OF COSTS: Manufacturing We first classify costs according to the three elements of cost: a) Materials b) Labour c) Expenses Product and Period Costs: We also classify costs as either 1      Product costs: the costs of manufacturing our products; or 2      Period costs: these are the costs other than product costs that are charged to, debited to, or written off to the income statement each period. The classification of Product Costs: Direct costs: Direct costs are generally seen to be variable costs and they are called direct costs because they are directly associated with manufacturing. In turn, the direct costs can include: Direct materials: plywood, wooden battens, fabric for the seat and the back, nails, screws, glue. Direct labour: sawyers, drillers, assemblers, painters, polishers, upholsterers Direct expense: this is a strange cost that many texts don't include; but (International Accounting Standard) IAS 2, for example, includes it.  Direct expenses can include the costs of special designs for one batch, or run, of a particular set of tables and/or chairs, the cost of buying or hiring special machinery to make a limited edition of a set of chairs. Total direct costs are collectively known as Prime Costs and we can see that Product Costs are the sum of Prime costs and Overheads. Indirect Costs: Indirect costs are those costs that are incurred in the factory but that cannot be directly...

Words: 767 - Pages: 4


... variation in the approaches employed to estimate and allocate indirect costs. Some organizations use a percentage multiplier (typically between 120 and 150 percent) for overhead costs, on top of direct costs. Recurring costs, such as labor and materials, are repeatedly incurred throughout the project life cycle. Nonrecurring costs, on the other hand, are one-time costs that are typically incurred at the beginning or at the end of the project, such as market research and labor training. Fixed costs do not vary with usage. For example, costs incurred in the purchase of capital equipment remain fixed, regardless of the extent of equipment use. Variable costs, on the other hand, vary directly with usage. They are typically associated with labor and materials. Normal costs are incurred when project tasks are completed according to the original planned duration. Expedited costs or crash costs are unplanned costs incurred as a result of steps taken to accelerate project completion. For example, costs associated with using additional overtime or hiring additional workers specifically to hasten project completion can be regarded as expedited costs. While all of the above are viable approaches to classifying project costs, it should be emphasized that many of these costs belong to multiple classifications; for example, labor costs can be regarded as direct, recurring, variable, and normal costs. 51 Cost Estimating Methods 3.4 COST ESTIMATING METHODS At......

Words: 94122 - Pages: 377


...-time-only special order. What is Cochran’s change in operating profits if the one-time-only special order is accepted? a. $14,800 increase b. $17,200 increase c. $22,000 increase d. $33,200 increase Answer: a Difficulty: 3 Objective: 3 ($4.00 + 6.00 + 3.00 + 3.60) = $16.60 ($24.00 – 16.60) x 2,000 = $14,800 increase The sum of all the costs incurred in a particular business function (for example, marketing) is called the a. business function cost. b. full product cost. c. gross product cost. d. multiproduct cost. Answer: a Difficulty: 1 Objective: 3 80. The sum of all costs incurred in all business functions in the value chain (product design, manufacturing, marketing, and customer service, for example) is known as the a. business cost. b. full product cost. c. gross product cost. d. multiproduct cost. Answer: b Difficulty: 1 Objective: 3 81. Problems that should be avoided when identifying relevant costs include all EXCEPT a. assuming all variable costs are relevant. b. assuming all fixed costs are irrelevant. c. using unit costs that do not separate variable and fixed components. d. using total costs that separate variable and fixed components. Answer: d Difficulty: 2 Objective: 4 82. The BEST way to avoid...

Words: 7235 - Pages: 29