James is considering opening a Fast 'n Clean Car Service Center. He estimates that the following costs will be incurred during his first year of operations: Rent $9,300, Depreciation on equipment $7,100, Wages $16,916, Motor oil $2 per quart. He estimates that each oil change will require 5 quarts of oil. Oil filters will cost $3.00 each. He must also pay The Fast 'n Clean Corporation a franchise fee of $1.10 per oil change since he will operate the business as a franchise. In addition, utility costs are expected vary with the quantity of oil changes as follows: Quantity of Oil Changes 4,100 6,100 9,100 12.100 14,200 Utility Costs $6,410 $7,800 $10,100 $13,100 $15,500 James anticipates that he can provide the oil change service with a filter at $25.92 each
James is considering opening a Fast 'n Clean Car Service Center. He estimates that the following costs will be incurred during his first year of operations: Rent $9,300, Depreciation on equipment $7,100, Wages $16,916, Motor oil $2 per quart. He estimates that each oil change will require 5 quarts of oil. Oil filters will cost $3.00 each. He must also pay The Fast 'n Clean Corporation a franchise fee of $1.10 per oil change since he will operate the business as a franchise. In addition, utility costs are expected vary with the quantity of oil changes as follows: Quantity of Oil Changes 4,100 6,100 9,100 12.100 14,200 Utility Costs $6,410 $7,800 $10,100 $13,100 $15,500 James anticipates that he can provide the oil change service with a filter at $25.92 each
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Do not give answer in image
Transcribed Image Text:James is considering opening a Fast'n Clean Car Service Center. He estimates that the following costs will be incurred during his first
year of operations: Rent $9,300, Depreciation on equipment $7,100, Wages $16,916, Motor oil $2 per quart. He estimates that each
oil change will require 5 quarts of oil. Oil filters will cost $3.00 each. He must also pay The Fast 'n Clean Corporation a franchise fee of
$1.10 per oil change since he will operate the business as a franchise. In addition, utility costs are expected vary with the quantity of oil
changes as follows:
Quantity of Oil Changes
4,100
6,100
9,100
12.100
(a)
14,200
Utility Costs
$6,410
$7,800
$10,100
$13,100
$15,500
James anticipates that he can provide the oil change service with a filter at $25.92 each
Transcribed Image Text:(b)
Determine the break-even sales quantity of oil changes and sales dollars. (Round Contribution margin ratio to 2 decimal places, e.g.
57.20%. Round final answers to 0 decimal places, e.g. 5720)
Break-even oil changes in units
Break-even sales in dollars
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education