#3. Bubba’s Steakhouse has budgeted the following costs for a month in which 1,600 steak dinners will be produced and sold: Materials, $4,080; hourly labor (variable), $5,200; rent (fixed), $1,530; depreciation, $620; and other fixed costs, $400. Each steak dinner sells for $13.80 each. How much would Shula’s profit increase if 10 more dinners were sold?
PLEASE show me the steps without using Excel!!
Answer : Shula’s Profit will increases by 80 .
Current profit is 10250 $ and if 10 dish increse ,new profit will be 10330 $.
Calculation in details are as follow
Sales 22080 $ (1600*13.80)
-Total Variable cost 9280 $ (4080+5200)
Total Variable profit 12800 $
-Total Fixed cost 2550 $ (1530+620+400)
Total profit 10250 $
Variable cost is 9280 $
Material 4080
+Hourly Labour 5200
Total 9280
So variable Cost will be 9280/1600 = 5.80 $ per dish
Fixed cost is 2550 $
Rent 1530
Depriciation 620
Other FC 400
Total 2550
So current Variable profoit is 8 $ per dish
Sale price 13.80 $
– Varable cost 5.8 $
Total V.p 8 $
Explanation
Fixed cost will remain fixed any time . It has nothing ti do with increase or decrease in number of dishes . Only variable cost will change with the Chang in the dishes.
So if there is 10 dishes increase then there will be 80 $ profit will increases
Increse in dish 10
* Variable profit 8
Total increse inprofit 80
