Hurricane Wings has budgeted the following costs for a month in which 24,000 wings will be cooked and sold. Wings, breading, and sauce $4,900 Direct labor (Variable) 3,500 Rent 1,100 Depreciation 900 Other fixed costs 400 Each wing sells for $0.80 each. How much would Hurricane Wing's profit increase if 100 more wings were sold?

Question

Vanessa Rangel

Business

20 September, 05:34

Hurricane Wings has budgeted the following costs for a month in which 24,000 wings will be cooked and sold. Wings, breading, and sauce $4,900 Direct labor (Variable) 3,500 Rent 1,100 Depreciation 900 Other fixed costs 400 Each wing sells for $0.80 each. How much would Hurricane Wing's profit increase if 100 more wings were sold?

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Answers (1)

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Muffy · Answer 1

Profit increase = $45

Explanation:

Giving the following information:

Q = 24,000 wings will be cooked and sold.

Wings, breading, and sauce $4,900

Direct labor (Variable) 3,500

Rent 1,100

Depreciation 900

Other fixed costs 400

Each wing sells for $0.80 each.

First, we need to calculate the unitary variable cost:

Wings, breading, and sauce = 4900/24000 = 0.2042

Direct labor = 3500/24000 = 0.1458

Total variable cost = 0.35

Now, we can calculate the increase in profit:

Q increase = 100 units

Profit increase = marginal contribution*100

Profit increase = (0.80-0.35) * 100 = $45