Parkview Fish Tacos sells tacos for $6.10 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 $ 2.15 0.71 0.41 1.60 $ 4.87 One of Parkview's regular customers asked the company to fill a special order of tacos at a selling price of $5.10 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 $4.87 and has asked for your advice. Required: a. Prepare a schedule to show the impact on Parkview's profits of providing 380 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?
Parkview Fish Tacos sells tacos for $6.10 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 $ 2.15 0.71 0.41 1.60 $ 4.87 One of Parkview's regular customers asked the company to fill a special order of tacos at a selling price of $5.10 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 $4.87 and has asked for your advice. Required: a. Prepare a schedule to show the impact on Parkview's profits of providing 380 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Parkview Fish Tacos sells tacos for $6.10 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 $5,10 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 $4.87 and has asked for your advice.
Required:
a. Prepare a schedule to show the impact on Parkview's profits of providing 380 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
$ 2.15
0.71
0.41
1.60
$ 4.87
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? (Enter your answer to 2 decimal places.)
Lowest price
per taco
< Required A
Rocuand B
Transcribed Image Text:Parkview Fish Tacos sells tacos for $6.10 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 $5.10 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 $4.87 and has asked for your advice.
Required:
a. Prepare a schedule to show the impact on Parkview's profits of providing 380 tacos in addition to the regular production and sales
of 4,500 tacos per month.
Complete this question by entering your answers in the tabs below.
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?
Required A Required B
Sales revenue
Less variable costs
Materials
Labor
Variable overhead
Prepare a schedule to show the impact on Parkview's profits of providing 380 tacos in addition to the regular production and
sales of 4,500 tacos per month. (Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is
no effect.)
Total variable cost
$ 2,15
0.71
0.41
1.60.
Contribution margin
Less Fixed costs
Operating profit
$ 4.87
Status Quo 4500 Alternative 4880
tacos
tacos
Difference
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