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
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 16E
Related questions
Question
Do not give answer in image
![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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6e121155-4256-460e-be39-59dcec17ee4a%2F2a4eac91-b2d8-4d6d-84c6-9196df4c0abb%2Fk3b7709_processed.jpeg&w=3840&q=75)
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
![(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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6e121155-4256-460e-be39-59dcec17ee4a%2F2a4eac91-b2d8-4d6d-84c6-9196df4c0abb%2Fhvn1it_processed.jpeg&w=3840&q=75)
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
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