## Friday, August 30, 2019

### Variable Costs

Assignment: Fixed cost Dora McKinney Hsm/260 Week 4 Instructor: Greg OÃ¢â‚¬â„¢Donnell Fixed Costs, Variable Costs, and Break-Even Point Exercise 10. 1 Month Meals Served Total Costs July 3,500 \$20,500Low August 4,000 22,600 September 4,200 23,350 October 4,600 24,500 November 4,700 25,000 December 4,900 26,000High In dealing with step 1-The difference in service volume between high-low periods is (4,900-3,500) 1,400 meals. In dealing with step 2-The difference in costs between the high-low period is (\$26,000-20,500) \$5,500. In dealing with step 3-The variable cost is now computed.The cost difference \$5,500 is divided by the service volume of 1,400. The variable cost per unit of service is \$3. 93. In dealing with step 4-Total variable costs are now computed. In the low time period the number of meals provided is 3,500. The service volume is then multiplied by the cost per unit of \$3. 93. The total variable cost for the low month is \$13,755. The same is done to figure the total variabl e costs for the high month 4,900 ? \$3. 93 = \$19,257. In dealing with step 5-Total fixed costs for the low period are now computed. The total program cost for the low month is \$20,500.If the variable costs (\$13,755) are subtracted from the total costs (\$20,500) the remaining amount is the fixed cost at \$6,745. If the same is done for the high month (\$26,000 Ã¢â‚¬â€œ 19,257) the fixed cost is \$6,743. In dealing with step 6-The break-even point is ready to be inputed using the BEP formula and steps 1-5. The contracted service price with the City of Westchester for 45,000 meals is \$5. 77. The variable costs per meal is \$3. 93 per meal, but will earn \$5. 77. The difference between the variable cost per meal and the revenue per meal is 5. 7X = 6745 + 3. 93X is \$1. 84 per meal. This leaves 3,666 which is the monthly BEP. Then 3,666 ? 12 = 43,992 is the fiscal year BEP. The WHDM needs to provide 43,992 meals during the fiscal year to reach the BEP. The difference between the contracted meal s 45,000 and the BEP 43,992 is 1,008. The potential profit is 1,008 meals ? \$1. 84 a total profit of \$1,855. Exercise 10. 2 The newsletter yearly salary coordinator is \$6,000 and the assistant total is \$3,900 for both of \$9,900 a fixed cost. The unit cost of preparing, printing and the mailing is \$4. 0 for the period of six bimonthly issues is \$4. 50 this is a variable cost. This newsletter is now \$20 per annual yearly subscription. This information plus the BEP formula is used to add and complete the BEP. 20X = 9,900 + 4. 50X 15. 50X = 9,900 X = 639 In dealing with the BEP, I believe it will be 639. The new BEP is a acceptable solution because joined with the newsletter coordinator and with the corporation of handling up to the amount of 650 subscriberÃ¢â‚¬â„¢s. There also is an amount of 11 subscribers that is able to subtracting the BEP Dora mckinney [emailÃ‚  protected] com