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Rocky River Fast Lube does oil changes on vehicles in 15 minutes or less. The variable cost associated with each oil change is $12 (oil, filter, and 15 minutes of employee time). The fixed costs of running the shop are $8,000 each month (store manager salary, depreciation on shop and equipment, insurance, and property taxes). The shop has the capacity to perform 4,000 oil changes each month. Read the requirements. Requirement a. Total cost of performing 1,000 oil changes in May. Determine the formula, then calculate the current total product cost of performing 1,000 oil changes in May. +( +( Requirement b. Average cost of performing each oil change in May. Determine the formula, then calculate the current average cost per oil change. Total product cost Average cost per oil change Requirement c. Marginal cost of performing an oil change in May. The marginal cost of performing an oil change in May is Requirement d. If the company could reach full capacity one month, what would the total cost be? If the company could reach full capacity one month, the total cost would be Requirement e. At full capacity, what would the average cost be of each oil change? (Enter your answer to the nearest cent.) At full capacity, the average cost of each oil change would be Requirement f. Could Rocky River Fast Lube offer more competitive pricing if it operated closer to full capacity? Explain. As the shop operates closer to full capacity, the fixed costs market. , thereby the average cost of each oil change. As the average cost the shop could offer its service at a price point in order to stay competitive in the

Rocky River Fast Lube does oil changes on vehicles in 15 minutes or less. The variable cost associated with each oil change is $12 (oil, filter, and 15 minutes of employee time). The fixed costs of running the shop are $8,000 each month (store manager salary, depreciation on shop and equipment, insurance, and property taxes). The shop has the capacity to perform 4,000 oil changes each month. Read the requirements. Requirement a. Total cost of performing 1,000 oil changes in May. Determine the formula, then calculate the current total product cost of performing 1,000 oil changes in May. +( +( Requirement b. Average cost of performing each oil change in May. Determine the formula, then calculate the current average cost per oil change. Total product cost Average cost per oil change Requirement c. Marginal cost of performing an oil change in May. The marginal cost of performing an oil change in May is Requirement d. If the company could reach full capacity one month, what would the total cost be? If the company could reach full capacity one month, the total cost would be Requirement e. At full capacity, what would the average cost be of each oil change? (Enter your answer to the nearest cent.) At full capacity, the average cost of each oil change would be Requirement f. Could Rocky River Fast Lube offer more competitive pricing if it operated closer to full capacity? Explain. As the shop operates closer to full capacity, the fixed costs market. , thereby the average cost of each oil change. As the average cost the shop could offer its service at a price point in order to stay competitive in the

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter2: Building Blocks Of Managerial Accounting
Section: Chapter Questions
Problem 11EA: Markson and Sons leases a copy machine with terms that include a fixed fee each month plus acharge...
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Rocky River Fast Lube does oil changes on vehicles in 15 minutes or less. The variable cost associated with each oil change is $12 (oil, filter, and 15 minutes of employee time). The fixed costs of running the shop are $8,000 each month (store manager salary, depreciation on shop and equipment, insurance, and property taxes). The shop has the capacity to perform 4,000 oil changes each month.

Rocky River Fast Lube does oil changes on vehicles in 15 minutes or less. The variable cost associated with each oil change is $12 (oil, filter, and 15 minutes of employee time). The fixed costs of running the shop are $8,000 each month (store manager salary, depreciation on shop and equipment, insurance, and property taxes). The shop has the capacity to perform 4,000 oil changes each month. Read the requirements. Requirement a. Total cost of performing 1,000 oil changes in May. Determine the formula, then calculate the current total product cost of performing 1,000 oil changes in May. +( +( Requirement b. Average cost of performing each oil change in May. Determine the formula, then calculate the current average cost per oil change. Total product cost Average cost per oil change Requirement c. Marginal cost of performing an oil change in May. The marginal cost of performing an oil change in May is Requirement d. If the company could reach full capacity one month, what would the total cost be? If the company could reach full capacity one month, the total cost would be Requirement e. At full capacity, what would the average cost be of each oil change? (Enter your answer to the nearest cent.) At full capacity, the average cost of each oil change would be Requirement f. Could Rocky River Fast Lube offer more competitive pricing if it operated closer to full capacity? Explain. As the shop operates closer to full capacity, the fixed costs market. , thereby the average cost of each oil change. As the average cost the shop could offer its service at a price point in order to stay competitive in the
Transcribed Image Text:Rocky River Fast Lube does oil changes on vehicles in 15 minutes or less. The variable cost associated with each oil change is $12 (oil, filter, and 15 minutes of employee time). The fixed costs of running the shop are $8,000 each month (store manager salary, depreciation on shop and equipment, insurance, and property taxes). The shop has the capacity to perform 4,000 oil changes each month. Read the requirements. Requirement a. Total cost of performing 1,000 oil changes in May. Determine the formula, then calculate the current total product cost of performing 1,000 oil changes in May. +( +( Requirement b. Average cost of performing each oil change in May. Determine the formula, then calculate the current average cost per oil change. Total product cost Average cost per oil change Requirement c. Marginal cost of performing an oil change in May. The marginal cost of performing an oil change in May is Requirement d. If the company could reach full capacity one month, what would the total cost be? If the company could reach full capacity one month, the total cost would be Requirement e. At full capacity, what would the average cost be of each oil change? (Enter your answer to the nearest cent.) At full capacity, the average cost of each oil change would be Requirement f. Could Rocky River Fast Lube offer more competitive pricing if it operated closer to full capacity? Explain. As the shop operates closer to full capacity, the fixed costs market. , thereby the average cost of each oil change. As the average cost the shop could offer its service at a price point in order to stay competitive in the
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