Determine the average cost per gallon

Assignment Help Accounting Basics

Reference no: EM131974095

Problem

Sangria Fido operates a wine outlet in a tourist area. One-gallon bottles sell for $18. Daily fixed costs are $4, 500, and variable costs are $9 per gallon. An average of 750 gallons is sold each day. Sangria Fido has a capacity of 800 gallons per day.

Required:

a. Determine the average cost per gallon.

b. A bus loaded with 40 senior citizens stops by, at closing time and the tour director offers Sangria Fido Manager $450 for 40 gallons. The manager refuses, saying they would lose $3.75 on each gallon. Is the manager of Sangria Fido correct about the $3.75? Do you agree with Sangria Fido manager decision? Why or why not? Consider quality factors.

c. A fund-raising organization has offered Sangria Fido a one-year contract to buy 300 gallons a day for $10.75 each. Should they accept the offer? Why or why not? Consider quality factors in your decision.

Reference no: EM131974095

Questions Cloud

Compute the residual income of the teen division : Compute the residual income of the Teen division if the embroidery machine is not purchased. Compute the ROI of Teen division if embroidery machine is purchase.

Preemployment screening and facebook-ethical considerations : 1. What are the main ethical issues regarding social media users and employers?

Changing demographics of the workforce : Identify two major trends in the changing demographics of the workforce. Include a trend that you as a student or employee could be or are now affected by.

Determine the average cost per gallon : Sangria Fido operates a wine outlet in a tourist area. One-gallon bottles sell for $18. Daily fixed costs are $4, 500. Determine the average cost per gallon.

How much does sarah earn this month : Sarah Jones earns $520 per week selling life insurance for Farmer's Insurance plus 4% of sales over $5,750. How much does Sarah earn this month?

Prepare an income statement for the company for the month : Prepare an Income Statement for the company for the month of January and also prepare a Statement of Owner's Equity.

Price elasticity of demand for that product : When patents on certain products expire, what happens to the price elasticity of demand for that product?

Regulate and legislate the environment : The Government's Role in Sustainability. The government should implement laws and statues to regulate and legislate the environment.

User Account

All Pages