Question

In a slow year, Deutsche Burgers will produce 2.000 million hamburgers at a

total cost of $4.100 million. In a good year, it can produce 5.000 million hamburgers at a total cost of $5.600 million.

a. What are the fixed costs of hamburger production? (Do not round intermediate calculations. Enter your answer in millions rounded to 1 decimal place.)

b. What is the variable cost per hamburger? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

c. What is the average cost per burger when the firm produces 1 million hamburgers? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

d. What is the average cost per burger when the firm produces 2 million hamburgers? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

A project currently generates sales of $17 million, variable costs equal 40% of sales, and fixed costs are $3.4 million. The firm’s tax rate is 30%. Assume all sales and expenses are cash items.

a. What are the effects on cash flow, if sales increase from $17 million to $18.7 million? (Input the amount as positive value. Enter your answer in dollars not in millions.)

b. What are the effects on cash flow, if variable costs increase to 45% of sales? (Input the amount as positive value. Enter your answer in dollars not in millions.)

The following estimates have been prepared for a project:

Fixed costs: $10,800

Depreciation: $7,200

Sales price per unit: $4

Accounting break-even: 40,000 units

What must be the variable cost per unit? (Round your answer to 2 decimal places.)

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