Parkview Fish Tacos sells tacos for $4.70 each. The cost of each taco follows: Materials (food) Labor Variable overhead Fixed overhead ($7,200 per month, 4,500 tacos per month) Total costs per taco $1.45 0.57 0.27 1.60 $ 3.89 One of Parkview's regular customers asked the company to fill a special order of tacos at a selling price of $3.70 each for a youth Dasketball tournament at the local school. Parkview has capacity to fill it without affecting total fixed costs for the month. Parkview's general manager (and owner and cook) was concerned about selling the tacos below the cost of $3.89 and has asked for your advice. Required: a. Prepare a schedule to show the impact on Parkview's profits of providing 310 tacos in addition to the regular production and sales of 4,500 tacos per month. b. Based solely on the data given, what is the lowest price per taco at which the special order can be filled without reducing Parkview's profits?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Parkview Fish Tacos sells tacos for $4.70 each. The cost of each taco follows:
Materials (food)
Labor
Variable overhead
Fixed overhead ($7,200 per month, 4,500 tacos per month)
Total costs per taco
One of Parkview's regular customers asked the company to fill a special order of tacos at a selling price of $3.70 each for a youth
basketball tournament at the local school. Parkview has capacity to fill it without affecting total fixed costs for the month. Parkview's
general manager (and owner and cook) was concerned about selling the tacos below the cost of $3.89 and has asked for your advice.
Required:
a. Prepare a schedule to show the impact on Parkview's profits of providing 310 tacos in addition to the regular production and sales
of 4,500 tacos per month.
b. Based solely on the data given, what is the lowest price per taco at which the special order can be filled without reducing
Parkview's profits?
Complete this question by entering your answers in the tabs below.
Required A Required B
Prepare a schedule to show the impact on Parkview's profits of providing 310 tacos in addition to the regular production and
sales of 4,500 tacos per month.
Note: Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.
Sales revenue
Less variable costs:
Materials
Labor
Variable overhead
Total variable cost
Contribution margin
Less: Fixed costs
Operating profit
Status Quo 4500 Alternative 4810
tacos
tacos
Required A
0
$1.45
0.57
0.27
1.60
$ 3.89
Difference
10
Required B >
Transcribed Image Text:Parkview Fish Tacos sells tacos for $4.70 each. The cost of each taco follows: Materials (food) Labor Variable overhead Fixed overhead ($7,200 per month, 4,500 tacos per month) Total costs per taco One of Parkview's regular customers asked the company to fill a special order of tacos at a selling price of $3.70 each for a youth basketball tournament at the local school. Parkview has capacity to fill it without affecting total fixed costs for the month. Parkview's general manager (and owner and cook) was concerned about selling the tacos below the cost of $3.89 and has asked for your advice. Required: a. Prepare a schedule to show the impact on Parkview's profits of providing 310 tacos in addition to the regular production and sales of 4,500 tacos per month. b. Based solely on the data given, what is the lowest price per taco at which the special order can be filled without reducing Parkview's profits? Complete this question by entering your answers in the tabs below. Required A Required B Prepare a schedule to show the impact on Parkview's profits of providing 310 tacos in addition to the regular production and sales of 4,500 tacos per month. Note: Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect. Sales revenue Less variable costs: Materials Labor Variable overhead Total variable cost Contribution margin Less: Fixed costs Operating profit Status Quo 4500 Alternative 4810 tacos tacos Required A 0 $1.45 0.57 0.27 1.60 $ 3.89 Difference 10 Required B >
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