Question

Wave Runners is a boat rental business that has the following costs over the relevant range of 12,000 to 18,000 operating hours for its boats Required 1. Complete the schedule of the company's total and unit costs. (Round "Cost per hour" answers to 2 decimal places.) Operating Hours 14,000 12,000 16,000 18,000 Total costs Variable costs $ 54,000 504,000 $ 558,000 Fixed costs Total costs Cost per unit: Variable cost Fixed cost Total cost per hour 0.00 0.00 $ 0.00 S 0.00

Answer 1

Answer

Question 1

Particulars	Operating Hours
	12000	14000	16000	18000
Total costs:
Variable Cost	$54,000.00	$63,000.00	$72,000.00	$81,000.00
Fixed Cost	$5,04,000.00	$5,04,000.00	$5,04,000.00	$5,04,000.00
Total costs	$5,58,000.00	$5,67,000.00	$5,76,000.00	$5,85,000.00
Cost per hour:
Variable Cost	$4.50	$4.50	$4.50	$4.50
Fixed Cost	$42.00	$36.00	$31.50	$28.00
Total cost per hour	$46.50	$40.50	$36.00	$32.50

Notes:

1) Total Fixed Cost do not change with change in total hours, but the per unit fixed cost changes with change in hours.

2) Total Variable Cost changes with change in total hours, but the per unit variable cost do not change with change in total hours.

Question 2

Income Statement for the year
Particulars	Amount
Rental Income (15000*40)	$6,00,000.00
Less: Variable Cost (15000*4.5)	$67,500.00
Contribution Margin	$5,32,500.00
Less: Fixed Cost	$5,04,000.00
Profit	$28,500.00

Please let me know if you require any further clarifications. I am happy to help you. Kindly give me a feedback

Thank you,