Fleet Skating Center (Cost Profit Volume)

                                             Cost-Profit Volume Opening Story: evanesce skate philia 1. peter out regular(a) point occurs when the level of sales at which clams is zero. If abounding skaters visit the outdoor ice glide rink to present 115,000 ( $100,000 + $15,000) in constituent margin, then all in all of the situated get down exit be finish offed and the go with go out throw off got managed to at least break even-that to introduce neither turn a profit nor loss unless but cover all of its approach. This will keep critics of the glide center quite. 2. In order for Fleet Skating Center to break even in sales, the constituent margin must equal to fixed comprise ($115,000). If contribution margin equals 115,000 then net income would be 0. This shows that neither profit or loss but just cover all its hail division margin ¦¦¦¦. 115,000         Â  less(prenominal)(prenominal) fixed expenses ¦¦¦¦¦.. 115,000 Net Income ¦¦¦¦¦¦¦ -0- * read that each skater counterbalances $8.00 per ticket ( Contribution margin (Per Skater) = 115,000/82,500 = 1.39 Variable damage per unit is: 8- 1.39 = $6.61 3. When we say the cost is inconstant, we mean it variable with heed to the peck generating output. In this case, the operating(a) expenses and the cost of equipment will be anticipate to go up as activities lurch. If the bon ton is profitable, the sale volume will in addition gain. At the result, I bring to an end that, incline skating rink, path hockey, dances, or any otherwise activities cause changes in variable cost, especially the cost that I mentioned above. Other variable costs are: utilities cost and cost of labors. $100,000 debt service and the season $15,000 judgeship bung paid to the company managing the rink will catch ones breath fixed. Other remain fixed costs are r ent, depreciation of equipment, property ta! xes, and insurance.

( denounce: rent, depreciation, taxes and insurance are not listed in the opening story, but I think every businesses pay rent, taxes and insurance, therefore I assume these costs remain fixed) 4. germane(predicate) range is the range of bodily process within which the assumptions about variable cost and fixed cost are valid. If there is a big enough change in activity, the fixed costs may change. In this case, if more skaters visit Fleet Skating Center, another staking center efficacy have to be built. If this is the case, the managing fee will also increase double (15,000 x 2 = $30,000) . 5. Its a fixed cost within a pertinent range. The skating center will pay $50,000 if the incline amounting less than $30,000. If there is change in activity, the fixed cost may change. In this case, if the incline skating amounting to $300,000, Fleet Staking Center would have to purchase an additional policy. If you insufficiency to get a abundant essay, order it on our website: OrderCustomPaper.com

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