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Chapter 20: Q8RQ (page 1119)

A chain of convenience stores has one manager per store who is paid a monthly salary. Relative to the number of stores, is the manager’s salary fixed or variable? Why?

Short Answer

Expert verified

The manager’s salary is a variable cost.

Step by step solution

01

Variable cost

The cost which is function of other variable is known as variable cost

02

Reasoning  

The manager’s salary is a variable cost because the salary of manager is dependent upon the number of stores. If the number of stores increase or decrease the manager’s salary will also change, therefore manager salary is variable.

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Of the three approaches to calculate sales required to achieve the breakeven point, which one(s) calculate the required sales in units and which one(s) calculate the required sales in dollars?

Question: Gilbert’s Steel Parts produces parts for the automobile industry. Thecompany has monthly fixed costs of \(640,220 and a contribution margin of85% of revenues.

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1. Compute Gilbert’s monthly breakeven sales in dollars. Use the contributionmargin ratio approach.

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