Scenario 19

question 132

Multiple Choice

Scenario 19.1 Use the following to answer the questions.
Concession Supply sells hotdogs, buns, and nacho ingredients to several major league ballparks across the country. Currently, Concession Supply has the following pricing information for one case of hotdogs sold at Wrigley Field: Total fixed costs = $1,200, Selling price = $16, and Variable costs = $6.
Refer to Scenario 19.1. If Concession Supply wanted to make a profit of $800 on each case, it would need to sell ____ cases.

• A) 150
• B) 300
• C) 100
• D) 75
• E) 200

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Definitions:

Variable Costing

An accounting method that only includes variable production costs in product costs, excluding fixed costs.

Direct Materials

Raw materials that can be directly linked to the production of specific goods or services.

Variable Overhead

Expenses related to the indirect costs of production that vary with the level of output, including items such as indirect labor and maintenance expenses.

Net Income

The total earnings of a company after subtracting all expenses and taxes from total revenue, indicating overall profitability.