ACC2005 Management Accounting

The Wiley Col owns and operates six fast food shops in and around Sydney. You are given the following corporate budget data for next year:

Revenues      $16 500 000

Fixed costs      $5 700 000

Variable costs    $8 250 000

Variable costs change with respect to the number of fast food meals sold.

Required

Calculate the budgeted profit for each of the following deviations (1–8) from the original budget data. (Consider each case independently.)

1. A 10% increase in contribution margin, holding revenues constant

2. A 10% decrease in contribution margin, holding revenues constant

3. A 5% increase in fixed costs

4. A 5% decrease in fixed costs

5. An 8% increase in units sold

6. An 8% decrease in units sold

7. A 10% increase in fixed costs and a 10% increase in units sold

8. A 5% increase in fixed costs and a 5% decrease in variable costs