Wicked Wich of the West by Mr.

Bong Stahp

Section 1: Selling Price Target Sales in Units

Mangwich 240.00 200

Ingredients to make 1 unit: Per Unit Costs

2 slices of bread 2.00 slices 6.00
1/2 mango 1/2 5.00
1 slice of cheese 1.00 slice 2.00
Cooking time = 10mins 10.00 mins 25.00
Other costs = 2/units 2.00 per unit 2.00
Depreciation 4,000.00 per month

Bread 10 slices 30.00

Mango 10.00 piece
Cheese 5 slices 10.00 pack

Salaries:
Cook 150.00 per hour DL
Resto Manager 10,000.00 Monthly OH
2 waiters 10,000.00 Monthly OH
1 admin 6,000.00 Monthly PC
Building Depreciation 8,000.00 per month
6,000.00 Resto OH
2,000.00 Admin PC
Admin expenses 1,500.00 FIXED PC

Requirement 1: Total Variable Cost

2 slices of bread 6.00

1/2 mango 5.00
1 slice of cheese 2.00
Cooking time 25.00
Other costs 2.00
Total Variable Costs 40.00

Requirement 2: Prime Cost

2 slices of bread 6.00
1/2 mango 5.00
1 slice of cheese 2.00
Cooking time 25.00
Total Prime Costs 38.00

Requirement 3: Period Costs

Admin Salary 6,000.00
Depreciation Expense - Building 2,000.00
Admin Expenses 1,500.00
Total Period Costs 9,500.00

Requirement 4: Cost Function

Y = a + bx
Fixed Costs:
Depreciation Expense - Machine 4,000.00
Resto Manager 10,000.00
2 waiters 10,000.00
1 admin 6,000.00
Depreciation Expense - Building 8,000.00
Admin Expense 1,500.00
Total Fixed Costs 39,500.00

Variable Costs 40.00

Y = 39,500 + 40 (200)
Y = 47,500

Requirement 5:
Depreciation of Building is FIXED COST
DM Variable
DM Variable
DM Variable
DL Variable
OH Variable
OH Fixed

Variable
Fixed
Fixed
Fixed

Fixed
Fixed
Fixed
Section 2:
Durwiches Produced RKS Costs
July 300 46,000.00 HIGH
August 280 45,800.00
September 150 43,000.00 LOW
October 190 43,900.00
November 230 44,800.00
December 210 44,600.00

Section 3:
October 200 units sold
November 180 units sold
December 240 units sold

Section 4:
Mangwich 180 units sold monthly
Strabewich 50 units sold monthly
Papawich 100 units sold monthly

SP/Unit VC/Unit
Strawberich 300 100.00
Papawich 150 20.00

Requirement 1: Variable Cost - High Low

b= 46,000-43,000
300-150
b= 3000
150
b= 20

Requirement 2: Fixed Cost - High Low

a= 46,000 - 20(300) 43000-20(150)
a= 40,000.00 40,000.00

Requirement 3: Variable Cost - least squares

x y
Durwiches Produced RKS Costs XY
July 300 46,000.00 13,800,000.00
August 280 45,800.00 12,824,000.00
September 150 43,000.00 6,450,000.00
October 190 43,900.00 8,341,000.00
November 230 44,800.00 10,304,000.00
December 210 44,600.00 9,366,000.00
 1,360.00 268,100.00 61,085,000.00
Div 6 Div 6
Mean 226.67 44,683.33

b= 61,085,000 - (6) (226.67) (44,683.33)

324,000 - (6) (226.67* 226.67)

b= 315,666.67
15,733.33
b= 20.06

Requirement 4: Fixed Costs

a= 40,135.59

Requirement 5:
Answer: Use the RKS
X2
90,000.00
78,400.00
22,500.00
36,100.00
52,900.00
44,100.00
324,000.00
2 slices of bread 6.00
1/2 mango 5.00
1 slice of cheese 2.00
Cooking time 25.00
Other costs 2.00
Depreciation - Machine 20.00
Resto Manager 50.00
2 waiters 50.00
Depreciation - bldg 30.00
Toal Manufacturing Costs 190.00

Admin Salary 6,000.00 Fixed

Depreciation Expense - Building 2,000.00 Fixed
Admin Expenses 1,500.00 Fixed
Total Period Costs 9,500.00

Depreciation 4,000.00 per month OH Fixed

Resto Manager 10,000.00 Monthly OH Fixed
2 waiters 10,000.00 Monthly OH Fixed
Depreciation - bldg 6,000.00 Resto OH Fixed
TOTAL OH Cost 30,000.00

Requirement 1: OCTOBER
NI, AC
Sales 48,000.00
Less: COGS 38,000.00
Gross Profit 10,000.00
Less: G & A Expenses 9,500.00
Net Income 500.00

NI, VC
Sales 48,000.00 VOLUME VARIANCE = 0
Less: Variable Costs
VCOGS 8,000.00
G&A 0 8,000.00
Contribution Margin 40,000.00
Less: Fixed Costs 39,500.00
Net Income 500.00

Difference -

Requirement 2: NOVEMBER 180 units sold

NI, AC
Sales 43,200.00
Less: COGS 34,200.00
Gross Profit 9,000.00
Less: G & A Expenses 9,500.00
Net Income (500.00)

NI, VC VOLUME VARIANCE = 200-18

Sales 43,200.00 VOLUME VARIANCE = 20*150
Less: Variable Costs
VCOGS 7,200.00
G&A 0 7,200.00
Contribution Margin 36,000.00
Less: Fixed Costs 39,500.00
Net Income (3,500.00)

Difference 3,000.00

Requirement 3:
ANSWER : The difference in net income across the three months in total is zero

Requirement 4:
COGS = 45,600

Requirement 5:
DECEMBER 240 units
NI, AC
Sales 57,600.00
Less: COGS 45,600.00
Volume Variance 20 units (3,000.00)
Gross Profit 15,000.00
Less: G & A Expenses 9,500.00
Net Income 5,500.00

NI, VC VOLUME VARIANCE = 200-24

Sales 57,600.00 VOLUME VARIANCE = -40*15
Less: Variable Costs
VCOGS 9,600.00
G&A 0 9,600.00
Contribution Margin 48,000.00
Less: Fixed Costs 45,500.00
Volume Variance 20 units (3,000.00)
Net Income 5,500.00

Difference -
VOLUME VARIANCE = 0
VOLUME VARIANCE = 200-180 units
VOLUME VARIANCE = 20*150 (3,000)

VOLUME VARIANCE = 200-240 units

VOLUME VARIANCE = -40*150 (6,000)
Requirement 1:

Total Fixed Cost 39,500.00

Contribution Margin per Unit 200.00
Selling Price 240.00
CMR 0.83

BEP in Pesos = Total Fixed Cost

CMR

BEP in Pesos = 39,500.00

0.83

BEP in Pesos = 47,400.00

Requirement 2: CM per Unit = 240 - 40

TS in Units = Total Fixed Cost + (DP/1-TR) CM per Unit = 200
CM/unit

TS in Units = 39,500 + (17,500/70%)

200

TS in Units = 64,500.00
200.00

TS in Units = 323

Requirements 3-5:

Section 4:
Mangwich 180 units sold monthly
Strabewich 50 units sold monthly
Papawich 100 units sold monthly
330
SP/Unit VC/Unit CM/Unit
Strawberich 300 100.00 200.00
Papawich 150 20.00 130.00

Product CM Sales Mix Total

Mangwich 200.00 180.00 36,000.00
Strabewich 200.00 50.00 10,000.00
Papawich 130.00 100.00 13,000.00
Total 59,000.00
Divide by 330.00
WACM/unit 178.79

Total Fx Cost/units 39,500.00

Fixed Cost 39,500.00

WACM/unit 178.79

BEP in Unit 220.93 SP/Unit Total

Mangwich 120.51 240 28,922.03
Strabewich 33.47 300 10,042.37
Papawich 66.95 150 10,042.37
BEP in Pesos 49,006.78