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1 September, 09:29

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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  1. 1 September, 10:36
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    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
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Home » Business » 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.
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