Question

Exercise 2-48 (Static) Cost Behavior and Forecasting (LO 2-5)

Sophia's Restaurant served 5,000 meals last quarter. Sophia recorded the following costs with those meals.

Variable costs:
Ingredients used	$	14,000
Direct labor		10,500
Indirect materials and supplies		5,300
Utilities		1,700
Fixed costs:
Managers' salaries		22,000
Rent		18,000
Depreciation on equipment (straight-line, time basis)		2,000
Other fixed costs		3,000

	Total variable costs Total fixed costs Total costs Unit costs

Answer 1

Variable costs	Amount
Ingredients used	$     14,000
Direct labor	$     10,500
Indirect materials and supplies	$       5,300
Utilities	$       1,700
Total Variable cost	$        31,500

Fixed costs:	Amount
Managers' salaries	$     22,000
Rent	$     18,000
Depreciation on equipment (straight-line, time basis)	$       2,000
Other fixed costs	$       3,000
Total Fixed cost	$        45,000

Total Cost = Total Variable cost + Total Fixed cost

=31,500+45,000

= $76,500

Unit costs = Total cost / Number of meals

= 76,500/5,000

= $15.30

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