# Fixed and Variable Costs

Good Essays
421 Words
Grammar
Plagiarism
Writing
Score
Fixed and Variable Costs
The restaurant Nita’s looked at the costs for the year. The restaurant wanted to see what some of their fixed and variable costs were for the year. They also wanted to make sure they remain in their relevant range.
The costs focused on were the cost of hamburgers (raw materials) and the cost of building rent. It was determined that the raw materials were the variable costs because the cost will vary based on production of hamburgers. A variable cost is a cost that will change in direct proportion to changes in the cost-driver level (Horngren, Sundem, Stratton, Burgstahler & Schatzberg, 2008, pg. 48). It was determined that the building rent was the fixed cost because the cost of rent will stay the same every month regardless of production. A fixed cost is a cost to a company that will not be affected by changes in the cost-driver level. It is a cost that is not going to change (Horngren, Sundem, Stratton, Burgstahler & Schatzberg, 2008, pg. 48).
The costs per unit were then calculated. It was found that the raw materials cost were \$650 for the year and a 1000 units were sold. That means the cost per unit was .65 (\$650/1000). It was found that the building rent cost was \$9000 for the year. That means the cost per unit was \$9 (\$9000/1000).
The restaurant then wanted to see what would happen if the sales increased over the next couple of years. They first increased the number of units sold to 6000. It was found that the raw materials cost per unit would remain the same but the total cost would increase to \$3900 (.65 x 6000). It was then found that the building rent cost per unit would decrease to \$1.50 (9000/6000). Then they increased the number of units sold to 8000. It was found that the raw
Unit 1 Individual Project 3 materials total cost would increase to \$5200 (.65 x 8000). It was then found that the building rent cost per unit would decrease to \$1.125 (9000/8000).
The last thing the restaurant wanted to know is if they would

## You May Also Find These Documents Helpful

• Good Essays

We suppose the water usage, medical supplies, and purchased lab services as variable cost; employee’s salaries, benefits, and equipment depreciation as fixed cost. All revenue and costs will increase or decrease as straight-line…

• 611 Words
• 3 Pages
Good Essays
• Satisfactory Essays

Average cost per unit = Average material cost + average labor cost + average utilities cost…

• 256 Words
• 2 Pages
Satisfactory Essays
• Satisfactory Essays

Menu item |Number sold |Standard/budgeted portion cost | |A |580 |\$4.45 | |B |285 |\$6.20 | |C |600 |\$4.15 | |D |200 |\$6.00 | |E |475 |\$5.95 | |F |320 |\$7.05 | |G |545 |\$6.10 | |H |200 |\$6.95 | |Totals |3,205 | | | | | | |Solve all problems for 2 decimal places (x.xx) | | | |Food sales |\$57,680.30 | | | | | | |1. Food cost \$ based on standard cost figures |\$17834.75 |(1 pt) | | | | | |2. Food cost % based on standard cost figures |30.92% |(1 pt) | | | | | |3. Contribution margin \$ |\$39845.55 |(1 pt) | | | | | |Actual inventory figures | | | |Opening inventory |\$6,415.60 | | |Purchases |\$19,950.30 | | |Ending inventory |\$6,852.65 | | | | | | |4. Cost of goods sold \$ |\$19513.25 |(1 pt) | | | | | | | | | |5. Food cost % based on actual cost figures |33.83% |(1 pt) | | | | | | | | | |6. Difference between standard and actual cost in \$ |+1678.5 |(1 pt) + or | | | | | |7. Difference between standard and actual cost % |+2.91% |(1 pt) + or | |…

• 689 Words
• 3 Pages
Satisfactory Essays
• Satisfactory Essays

(TCO 1) Josie’s Grill budgeted the following costs for a month in which 1,600 steak dinners will be produced and sold: materials, \$4,080; hourly labor (variable), \$6,976; rent (fixed), \$1,700; depreciation, \$800; and other fixed costs, \$600. Each steak dinner sells for \$14.00 each. How much is the budgeted variable cost per unit?…

• 1661 Words
• 14 Pages
Satisfactory Essays
• Powerful Essays

When 5,000 units are produced variable costs are \$35 per unit and total costs are…

• 1812 Words
• 12 Pages
Powerful Essays
• Satisfactory Essays

With the increase in labor, materials, overhead, and property tax, the additional variable cost is \$30.52 per unit. (Appendix 1)…

• 498 Words
• 2 Pages
Satisfactory Essays
• Satisfactory Essays

| fixed costs per unit will change and variable costs per unit will remain the same…

• 945 Words
• 4 Pages
Satisfactory Essays
• Satisfactory Essays

1. Total cost equal the fixed cost plus the variable cost per unit divided by volume…

• 501 Words
• 3 Pages
Satisfactory Essays
• Satisfactory Essays

A cost is \$3,600 at 1,000 units, \$7,000 at 2,000 units, and \$9,200 at 3,000 units. This cost is a…

• 358 Words
• 5 Pages
Satisfactory Essays
• Satisfactory Essays

This problem covers various topics from Chapters 15 through 21. The emphasis is on job…

• 716 Words
• 6 Pages
Satisfactory Essays
• Satisfactory Essays

Square feet - Rent Cubic feet - Heating Cost Electricity Indirect Labor Supplies Purchasing Engineering Total Cost…

• 657 Words
• 3 Pages
Satisfactory Essays
• Good Essays

Add the cost of the materials to the costs of transporting the materials and the builder’s labour. This will give you an estimate for the whole project. If this does not fit your budget you can consider the following ways to reduce the costs: • Reduce the size of the building or rooms. • Use cheaper or fewer finishes and details. • Compare prices of building materials or buy when there is a sale. • Buy good quality second-hand building materials. • Ask experienced homeowners and builders for advice on how to save on the costs of materials…

• 907 Words
• 4 Pages
Good Essays
• Good Essays

Q: Is depreciation expense or depreciation cost is fixed cost or variable cost in nature?…

• 560 Words
• 3 Pages
Good Essays
• Satisfactory Essays

In material cost include cost of cement, iron, machine, stone, glass, aluminum etc and in other expense include office…

• 476 Words
• 2 Pages
Satisfactory Essays