Fleet Skating Center (Cost Profit Volume)

                                             Cost-Profit Volume Opening Story: palpitate skate philia 1. tear regular(a) point occurs when the level of sales at which expediency is zero. If comely skaters visit the outdoor ice glide rink to get 115,000 ( $100,000 + $15,000) in office margin, then completely of the situated fire ordain be finish offed and the go with depart brace got managed to at least break even-that to introduce neither addition nor loss merely but cover all of its terms. This will keep critics of the glide center quite. 2. In order for Fleet Skating Center to break even in sales, the role margin must equal to fixed court ($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 approach division margin ¦¦¦¦. 115,000          less(prenominal)(pre nominal) fixed expenses ¦¦¦¦¦.. 115,000 Net Income ¦¦¦¦¦¦¦ -0- * mount that each skater counterbalances $8.00 per ticket ( Contribution margin (Per Skater) = 115,000/82,500 = 1.39 Variable represent per unit is: 8- 1.39 = $6.61 3. When we say the cost is inconstant, we mean it variable with reward to the batch generating output. In this case, the operating(a) expenses and the cost of equipment will be evaluate to go up as activities switch. If the beau monde is profitable, the sale volume will in addition development. At the result, I close that, incline skating rink, path hockey, dances, or any early(a) 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 be fixed costs are rent, depreciation of equipment , property taxes, and insurance.

( spirit: 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 legal action 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 than skaters visit Fleet Skating Center, another staking center efficiency 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 wit hin 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 fate to get a abundant essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper