Question

A vendor prepares 100.00 hotdogs every day and sells at $20.00/piece. For each hot dog, he spends $12.00 in the raw material. Additionally he spends $1.00 for packing each hotdog and monthly $50.00, $20.00, $10.00 as food truck rent, electricity and other expenses respectively. Lost sale are taken as $1 per unhappy customer. Leftover hotdogs can be sold for $5.00/piece. On a particular day in June it rained heavily so the vendor was able to sell only 80.00 hot dogs. Determine the vendor's profit for that day? Assume there are 30 days in the month. Submit Answer format: Currency: Round to: 2 decimal places. For a table manufacturing company, variable cost is $125.00 per Unit, rent is $2,571.00 per month and insurance is $1,052.00 per month. Selling price for a table is $200.00 per Unit, How much is the company contributing to covering their fixed costs or generating profits? Submit SITE

Answer 1

According to the requirement of the questions, in part 1st we have to calculate profit for the day and in 2nd part. we have to calculate contribution to covering their fixed cost or generating profits.

Requirement 1:-  Determine the Vendor's profit for that day?  

Solution:- $397.33

Information already given in the question i.e.

Selling Price = $20.00/ piece

Raw Material Cost = $12.00/ piece

Packing Cost = $1.00/ piece

Hot dogs sold on regular day = 100 hot dogs / day

Hot dogs sold on Particular 1 day = 80 hot dogs

Fixed Expenses = $50 + $20 + $10 = $80 per month

There are 30 days in a month.

Now, first of all we have to Calculate Sales for the month.

# Calculation of Sales per month.

100 Hot dogs sold per day * 29 regular days * $20/piece = $58,000

80 Hot dogs sold on Rainy day *1 day *  $20/ piece = $ 1,600

20 Hot dogs sold * $5/ Hot dog = $ 100

Total Sales = $59,700 / Month

# Calculation of Raw material per month

Raw material = 100 Hot dogs * 30 days * $12/piece = $36,000

Packing Expense =  100 Hot dogs * 30 days * $1/piece = $ 3,000

# Calculation of profit per day

Sales (80 hot dogs * $20 + 20 hot dogs * $5) = $1,700

Cost of Raw material ($36,000 / 30 days) =($1,200)

Packing Expenses ($3,000 / 30 days) =($ 100)

Contribution Margin = $ 400

Less: Fixed Cost ($80 / 30 days) = ($ 2.67)

Profit for the day = $397.33

Requirement 2:- How much company is contributing to converting their fixed costs or generating profits?

Solution:-  Company contribution $75 per unit to cover their Fixed Cost and to generate profits.

Information already given in the question i.e.

There are two Fixed Cost = Rent $2,571 per month and Insurance $1,052 per month.

Total fixed Cost = Rent + Insurance

= $2,571 + $1,052 = $3,623

Selling price per unit = $200

Variable Cost per unit = $125

# Calculation of Contribution.

Contribution = Selling Price - Variable Cost

Contribution = $200 - $125 = $75 per unit

Thank You.

Have a Nice Day Ahead.