Question

Wave Runners is a boat rental business that has the following costs over the relevant range of 17,000 to 23.000 operating hours for its boats: Required: 1. Complete the schedule of the company's total and unit costs. (Round "Cost per unit" answers to 2 decimal places.) 17,000 Operating Hours 19,000 21,000 23,000 Total costs: Variable costs Fixed costs Total costs $ 79,900 3,120,180 $ 3.200,000S 0S 0 Cost per unit: Variable cost Fixed cost Total cost per hour $ 0.00 $ 0.00 $ 0.00 $ 0.00

Answer 1

Answer:

1.

Operating Hours

	17,000	19,000	21,000	23,000
Total Costs:
Variable Cost *	$79,900	$89,300	$98,700	$108,100
Fixed Cost#	3,120,180	3,120,180	3,120,180	3,120,180
Total Cost	$3,200,080	$3,209,480	$3,218,880	3,228,280
Cost Per Unit
Variable Cost	$4.7	$4.7	$4.7	$4.7
Fixed Cost	$183.54	$164.22	$148.58	$135.66
Total Cost	$188.24	$168.92	$153.28	$140.36

* Variable Cost per unit = $79,900 ÷ 17 = $4.7

# Fixed cost remains the same irrespective of the change in units.

2

Income Statement ( Contribution Format)

	$
Revenue ($169*20,000)	3.380,000
Less: Variable Cost ($4.7*20,000)	(94,000)
Contribution	3,286,000
Less : Fixed Cost	(3,120,180)
Net Operating Income	$165,820