The owner of Fat Man's Sausage Cart is concerned because the stand has been averaging only 5,500 sausage sales per month, the stand and staff can make 7,000 sausages on a bun per month. The variable cost of each sausage (buns, meat, etc.) is $3.50. Monthly fixed costs are (taxes, licenses, space rent and salaries) are $10,000. The owner (Big Bob) wants cost information about different volumes so that he can make some operating decisions.
Required: Fill in the following chart to provide Bob with the information he wants.
Monthly sausage sales
3,000
5,000
7,000
Total fixed Costs
$________
$________
$________
Total variable cost
$________
$________
$________
Total costs
$________
$________
$________
Fixed cost per sausage
$________
$________
$________
Variable cost per sausage
$________
$________
$________
Average cost per sausage
$________
$________
$________
Sales price per sausage
$7.50
$7.50
$7.50
Average profit per sausage
$________
$________
$________
