**Taco Cost and Pricing Analysis for Parkview Fish Tacos**Parkview Fish Tacos sells tacos for $5.50 each. The breakdown of the cost for each taco is as follows:- **Materials (food):** $1.85- **Labor:** $0.65- **Variable overhead:** $0.35- **Fixed overhead ($7,200 per month, for 4,500 tacos per month):** $1.60**Total Cost per Taco:** $4.45One of Parkview’s regular customers requested a special order of tacos for a youth basketball tournament at a selling price of $4.50 each. Parkview has the capacity to fill this order without affecting its total fixed costs for the month. However, the management is concerned about selling the tacos below the regular cost of $4.45 and has sought advice.**Required:**a. Prepare a schedule to show the impact on Parkview’s profits of providing 350 tacos in addition to the regular production and sales of 4,500 tacos per month.b. Based solely on the data given, calculate the lowest price per taco at which the special order can be filled without reducing Parkview’s profits.**Instructions:**Complete the questions by entering your answers in the tabs below:- **Required A**- **Required B****Note for Calculation B:**Answer to two decimal places.

Status quo AlternativeDifferenceSales Revenue=4500*5.5=(4500*5.5)+(350*4.5)=G12-F12HigherLess…

Answered: for $5.50 each. The cost of each taco…

Business

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for $5.50 each. The cost of each taco follows: month, 4,500 tacos per month) $ 1.85 0.65 0.35 1.60 $4.45

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

**Taco Cost and Pricing Analysis for Parkview Fish Tacos**

Parkview Fish Tacos sells tacos for $5.50 each. The breakdown of the cost for each taco is as follows:

- **Materials (food):** $1.85
- **Labor:** $0.65
- **Variable overhead:** $0.35
- **Fixed overhead ($7,200 per month, for 4,500 tacos per month):** $1.60

**Total Cost per Taco:** $4.45

One of Parkview’s regular customers requested a special order of tacos for a youth basketball tournament at a selling price of $4.50 each. Parkview has the capacity to fill this order without affecting its total fixed costs for the month. However, the management is concerned about selling the tacos below the regular cost of $4.45 and has sought advice.

**Required:**

a. Prepare a schedule to show the impact on Parkview’s profits of providing 350 tacos in addition to the regular production and sales of 4,500 tacos per month.

b. Based solely on the data given, calculate the lowest price per taco at which the special order can be filled without reducing Parkview’s profits.

**Instructions:**

Complete the questions by entering your answers in the tabs below:

- **Required A**
- **Required B**

**Note for Calculation B:**

Answer to two decimal places.

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