PROBLEM 2-A1______
Riccardo Food Services Company operates and services soft drink vending machines located in restaurants, gas stations, and factories in four southeastern states. The machines are rented from the manufacturer. In addition, Riccardo must rent the space occupied by its machines. The following expense and revenue relationships pertain to a contemplated expansion program of 40 machines.
Fixed monthly expenses follow:
Machine rental: 40 machines @ $53.50$2,140
Space rental: 40 locations @ $38.801,552
Part-time wages to service the additional 40 machines2,008
Other fixed costs300
Total monthly fixed costs$6,000
Other data follow:
Per UnitPer $100 of Sales
Selling price$1.00 100%
Cost of snack.8080
Contribution margin$.20 20%
Required:
These questions relate to the above data unless otherwise noted. Consider each question independently.
1.What is the monthly break-even point in number of units? In dollar sales?
2.If 40,000 units were sold, what would be the company’s net income?
3.If the space rental cost were doubled, what would be the monthly break-even point in number of units? In dollar sales?
4.If, in addition to the fixed rent, Riccardo Food Services Company paid the vending machine manufacturer 24 per unit sold, what would be the monthly break-even point in number of units? In dollar sales? Refer to the original data.
5.If, in addition to the fixed rent, Riccardo paid the machine manufacturer 44 for each unit sold in excess of the break-even point, what would the new net income be if 40,000 units were sold? Refer to the original data.
PROBLEM 2-A1
Continued
Instructions:
1.Review the printed template called Problem 2-A1 that follows these instructions. In some problems, some of the problem data have been entered for you in the data input section of the spreadsheet.
2.There are 8 FORMULAS in the template that you need to provide to complete your analysis. Using the spaces provided below, write the formulas where requested in the template.
FORMULA1______FORMULA5______
FORMULA2______FORMULA6______
FORMULA3______FORMULA7______
FORMULA4______FORMULA 8______
- Click the Excel icon from the program manager screen to start the spreadsheet program. Click on the Open File SmartIcon/Button to retrieve the template for the problem. Then enter the 8 FORMULAS where indicated on the template.
4.Click the Save File SmartIcon/Button to save your work.
5.Click the Print Button to print your work.