Ch_13_Hot_dog_operation_with_High-Efficiency_Alternative

Ch_13_Hot_dog_operation_with_High-Efficiency_Alternative -...

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Operating Data: Product Costs Period Costs 20 operating days per month Direct Materials (1000 x $1.25) $1,250 License Fee ($300 / 12 months) $25 1,000 hot dogs sold per month Depreciation ($6,000 / 60 months) $100 Wages: Selling Price = $2.50 per dog Fixed portion ($25 x 20 days) $500 Fuel - one tank $25 Variable portion ($0.25 x 1000) $250 Cost of sausage, bun, & container = $1.25 per dog Condiments ($5 x 20 days) $100 Total Period Costs $775 Cost of hot dog cart = $6,000 * Life = 5 years, SL depreciation, no salvage value Total Product Costs $1,475 One tank of fuel required per month - $25 Condiments are disposed of each day, cost = $5 per day Licence Fee = $300 per year Wages (selling expense) = $25 per day + $0.25 per dog * A high efficiency (better insulated) model of this cart is also available. This option increases the cost of the cart 10% but will decrease fuel consumption 20%
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Product Costs Direct Materials (1000 x $1.25) $1,250 Sales $2,500 Depreciation ($6,000 / 60 months)
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Unformatted text preview: $100 Cost of Goods Sold 1,475 Fuel - one tank $25 Gross Margin 1,025 Condiments ($5 x 20 days) $100 S G & A 775 Total Product Costs $1,475 Operating Income $250 Period Costs License Fee ($300 / 12 months) $25 Wages: Fixed portion ($25 x 20 days) $500 Variable portion ($0.25 x 1000) $250 Total Period Costs $775 Traditional Format Income Statement Product Costs Direct Materials (1000 x $1.25) $1,250 Sales $2,500 Depreciation ($6,000 / 60 months) $110 Cost of Goods Sold 1,480 Fuel - one tank $20 Gross Margin 1,020 Condiments ($5 x 20 days) $100 S G & A 775 Total Product Costs $1,480 Operating Income $245 Period Costs License Fee ($300 / 12 months) $25 Wages: Fixed portion ($25 x 20 days) $500 Variable portion ($0.25 x 1000) $250 Total Period Costs $775 Traditional Format Income Statement Relevant Cost Regular High-efficiency Depreciation 100 110 Fuel - Propane 25 20 125 130...
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