Cola Food Services Company operates and services soft drinks vending machines located in restaurants, gas stations, factories, etc., in four Southern states. The machines are rented from the manufacturer. In addition Cola must rent space occupied by its machines. The following expense and revenue relationships pertain to a contemplated expansion program of 20 machines. Fixed monthly expenses follow: Machine rental: 20 machines @$43.50 $870 Space rental: 20 locations @$28.80 $576 Part-time wages to service the additional 20 machines $1,454 Other fixed costs $100 Total monthly fixed costs $3000 Other data follow: Per unit per $100 of sales Selling price $1.00 100% Cost of snack $0.80 80% Contribution margin $0.20 20% Required: a) What is the monthly break-even point in number of units? In dollar sales? b) If 18,000 units were sold, what would be the company’s net income? c) If the space rental cost were doubled, what would be the monthly break-even point in number of units? In dollar sales? d) If, in addition to the fixed rent, Cola Food Services Company paid the vending machine manufacture 2₵ per unit sold, what would be the monthly break-even point in number of units? In dollar sales? Refer to the original data. e) If, addition to the fixed rent, Cola paid the machine manufacturer 4₵ for each unit sold in excess of the break-even point, what would the new net income be if 18,000 units were sold? Refer to original data.
Cola Food Services Company operates and services soft drinks vending machines located in restaurants, gas stations, factories, etc., in four Southern states. The machines are rented from the manufacturer. In addition Cola must rent space occupied by its machines. The following expense and revenue relationships pertain to a contemplated expansion program of 20 machines.
Fixed monthly expenses follow:
Machine rental: 20 machines @$43.50 $870
Space rental: 20 locations @$28.80 $576
Part-time wages to service the additional 20 machines $1,454
Other fixed costs $100
Total monthly fixed costs $3000
Other data follow:
Per unit per $100 of sales
Selling price $1.00 100%
Cost of snack $0.80 80%
Contribution margin $0.20 20%
Required:
a) What is the monthly break-even point in number of units? In dollar sales?
b) If 18,000 units were sold, what would be the company’s net income?
c) If the space rental cost were doubled, what would be the monthly break-even point in number of units? In dollar sales?
d) If, in addition to the fixed rent, Cola Food Services Company paid the vending machine manufacture 2₵ per unit sold, what would be the monthly break-even point in number of units? In dollar sales? Refer to the original data.
e) If, addition to the fixed rent, Cola paid the machine manufacturer 4₵ for each unit sold in excess of the break-even point, what would the new net income be if 18,000 units were sold? Refer to original data.
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