As manager of the St. Cloud Theatre Company,you have decided that concession sales will support themselves.The following table provides the information you have been ableto put together thus far:ITEM SELLING PRICE VARIABLE COST % OF REVENUESoft drink $1.00 $.65 25Wine 1.75 .95 25Coffee 1.00 .30 30Candy 1.00 .30 20Last year’s manager, Jim Freeland, has advised you to be sureto add 10% of variable cost as a waste allowance for all categories.You estimate labor cost to be $250.00 (5 booths with 2 peopleeach). Even if nothing is sold, your labor cost will be $250.00, soyou decide to consider this a fixed cost. Booth rental, which is acontractual cost at $50.00 for each booth per night, is also a fixedcost.a) What is the break-even volume per evening performance?b) How much wine would you expect to sell each evening at thebreak-even point?
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
As manager of the St. Cloud Theatre Company,
you have decided that concession sales will support themselves.
The following table provides the information you have been able
to put together thus far:
ITEM SELLING PRICE VARIABLE COST % OF REVENUE
Soft drink $1.00 $.65 25
Wine 1.75 .95 25
Coffee 1.00 .30 30
Candy 1.00 .30 20
Last year’s manager, Jim Freeland, has advised you to be sure
to add 10% of variable cost as a waste allowance for all categories.
You estimate labor cost to be $250.00 (5 booths with 2 people
each). Even if nothing is sold, your labor cost will be $250.00, so
you decide to consider this a fixed cost. Booth rental, which is a
contractual cost at $50.00 for each booth per night, is also a fixed
cost.
a) What is the break-even volume per evening performance?
b) How much wine would you expect to sell each evening at the
break-even point?
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