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ohn is considering opening a Fast 'n Clean Car Service Center. He estimates that the following costs will be incurred during his year of operations: Rent $9,200, Depreciation on equipment $7,000, Wages $16,400, Motor oil $2 per quart. He estimates tha 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 $1.10 per oil change since he will operate the business as a franchise. In addition, utility costs are expected vary with the quantit changes as follows: Quantity of Oil Changes 4,200 6.200 Utility Costs $6,820 $8,300

ohn is considering opening a Fast 'n Clean Car Service Center. He estimates that the following costs will be incurred during his year of operations: Rent $9,200, Depreciation on equipment $7,000, Wages $16,400, Motor oil $2 per quart. He estimates tha 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 $1.10 per oil change since he will operate the business as a franchise. In addition, utility costs are expected vary with the quantit changes as follows: Quantity of Oil Changes 4,200 6.200 Utility Costs $6,820 $8,300

FINANCIAL ACCOUNTING
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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John 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 $9,200, Depreciation on equipment $7,000, Wages $16,400, 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 4,200 6,200 9,200 12,200 14,400 Utility Costs $6,820 $8,300 $10,600 $13,600 $16,000 John anticipates that he can provide the oil change service with a filter at $26.88 each.
Transcribed Image Text:John 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 $9,200, Depreciation on equipment $7,000, Wages $16,400, 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 4,200 6,200 9,200 12,200 14,400 Utility Costs $6,820 $8,300 $10,600 $13,600 $16,000 John anticipates that he can provide the oil change service with a filter at $26.88 each.
Using the high-low method, determine variable costs per unit and total fixed costs. (Round variable cost to 2 decimal places, e.g. 52.75.) Variable cost $ Fixed cost $ Break-even oil changes in units Determine the break-even sales quantity of oil changes and sales dollars. (Round Contribution margin ratio places, e.g. 57.20 %. Round final answers to 0 decimal places, e.g. 5720) Break-even sales in dollars per unit $ Attempts: 1 of 1 used I 2 decimal
Transcribed Image Text:Using the high-low method, determine variable costs per unit and total fixed costs. (Round variable cost to 2 decimal places, e.g. 52.75.) Variable cost $ Fixed cost $ Break-even oil changes in units Determine the break-even sales quantity of oil changes and sales dollars. (Round Contribution margin ratio places, e.g. 57.20 %. Round final answers to 0 decimal places, e.g. 5720) Break-even sales in dollars per unit $ Attempts: 1 of 1 used I 2 decimal
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