Question

What would​ Suzy's Cool Treatz contribution margin be if Suzi prepared a contribution margin income statement for the​ month?

Suzy's Cool Treatz is a snow cone stand near the local park. To plan for the future, the owner wants to determine her cost behaviour patterns. She has the following information available about her operating costs and the numbe of snow cones served. Month Number of snow cones January 3,500 February 3,800 March 5,000 April 3,600 May 4,700 4,250 Suzy uses the high-low method to determine her operating cost equation and sells 4,500 cones in a month for $3.00 each. Total operating costs $5,000 $4,800 $6,800 $5,450 $6,200 $5,950 June O A. $18,900 OB. $8,100 O C. $13,500 O D. $5,400

Answer 1

High Low Method Difference in Total Operating Costs Difference In Number of Snow Cones 5000 High level of activity Low level of activity Change in activity Number of Snow Cones Total Operating Costs 6800 3500 5000 1500 1800 Variable Cost 1.20 Per Snow Cones Determine the fixed cost component using the high-low method Number of Snow Cones Total Operating Costs Less Variable component (5000*1.20) Fixed component 5,000 6,800 6,000 800 3,500 5,000 4,200 (3500*1.20) 800 Cost Formula = $800 + 1.20 * No. of Snow Cones Total Cost = 800 +1.20*4500 44 Total Cost = 6200

Sales (4500 *3) Less Variable expenses (4500*1.20) Contribution Margin. Less Fixed expenses Net Income 13500 5400 8100 800 7300 Note; According to me the options given are wrong.