hsm 260 week 4 assign 2

Fixed Costs, Variable Costs and Break-even Point
Exercise 10.1
During the sixth month of the fiscal year, the program director of the Westchester
Home-Delivered Meals (WHDM) program decides to again recompute fixed costs, variable costs, and the BEP using the high–low method. Here are the number of meals served and the total costs of the program for each of the first six months:
Month Meals Served Total Costs
July 3,500 $20,500
August 4,000 $22,600
September 4,200 $23,350
October 4,600 $24,500
November 4,700 $25,000
December 4,900 $ 26,000
Recompute fixed costs, variable costs, and the BEP. What are the variable costs? What are the fixed costs? How many meals will the WHDM program need to provide during the fiscal year to reach the BEP? How much profit will the program earn if it completes its 45,000-meal contract with the City of Westchester?
Costs high-low: $26,000 - $20,500 = $5,500
Meals high-low: 4,900 - 3,500 = 1,400
Variable cost per meal: $5,500 ÷ 1,400 = $3.93
Variable cost during low month: $13,755 (3,500 x $3.93)
Fixed costs: $6,745 ($20,500 - $13,755)
3,665.76 meals per month × 12 months = 43,989.12 meals
PX = A + BX
5.77X = 6,745 + 3.93X
(Subtract 3.93X from each side.)
1.84X = 6,745
(Divide each side by 1.84)
X = 3,666 (monthly BEP)
3,666 × 12 = 43,992 (fiscal-year BEP)
45,000 meals – 43,992 meals = 1008 meals x $1.84 revenue per meal = $1,854.72 profit.
Exercise 10.2
It has been two years since the New River Community Council (NRCC) started its newsletter dealing with state and community funding opportunities for human service agencies. The current number of subscribers to the newsletter is 525. During the second year,