Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Cost-Profit Volume Opening Story: egest skate philia 1. dislodge regular(a) point occurs when the level of sales at which net income is zero. If complete skaters visit the outdoor ice glide rink to incur 115,000 ( $100,000 + $15,000) in character margin, then all in all of the situated surface pass on be finish offed and the go with result fork up got managed to at least break even-that to introduce neither emolument nor loss solely but cover all of its damage. This will keep critics of the glide center quite. 2. In order for Fleet Skating Center to break even in sales, the region margin must equal to fixed constitute ($115,000). If contribution margin equals 115,000 then net income would be 0. This shows that neither profit or loss but just cover all its personify division margin Â¦Â¦Â¦Â¦. 115,000 Â Â Â Â Â Â Â Â less(prenominal)(prenominal) fixed expenses Â¦Â¦Â¦Â¦Â¦.. 115,000 Net Income Â¦Â¦Â¦Â¦Â¦Â¦Â¦ -0- * choose that each skater counterbalances $8.00 per ticket ( Contribution margin (Per Skater) = 115,000/82,500 = 1.39 Variable personify per unit is: 8- 1.39 = $6.61 3. When we say the cost is inconstant, we mean it variable with prize to the strength generating output. In this case, the operating(a) expenses and the cost of equipment will be judge to go up as activities compound. If the conjunction is profitable, the sale volume will in addition maturation. At the result, I cerebrate that, incline skating rink, path hockey, dances, or any early(a) activities cause changes in variable cost, especially the cost that I mentioned above. Other variable costs are: utilities cost and cost of labors. $100,000 debt service and the season $15,000 judgeship bung paid to the company managing the rink will catch ones breath fixed. Other be fixed costs are ren t, depreciation of equipment, property taxe! s, and insurance.
( abide by: rent, depreciation, taxes and insurance are not listed in the opening story, but I think every businesses pay rent, taxes and insurance, therefore I assume these costs remain fixed) 4. germane(predicate) range is the range of body process within which the assumptions about variable cost and fixed cost are valid. If there is a big enough change in activity, the fixed costs may change. In this case, if to a greater extent skaters visit Fleet Skating Center, another staking center competency have to be built. If this is the case, the managing fee will also increase double (15,000 x 2 = $30,000). 5. Its a fixed cost within a pertinent range. The skating center will pay $50,000 if the incline amounting less than $30,000. If there is change in activity, the fixed cost may change. In this case, if the incline skating amounting to $300,000, Fleet Staking Center would have to purchase an additional policy. If you want to get a abundant essay, order it on our website: OrderCustomPaper.com
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