Period Ending Estimate the total variable costs for Dell in the Year ending Feb
ID: 2417434 • Letter: P
Question
Period Ending
Estimate the total variable costs for Dell in the Year ending Feb 2 2007?
Estimate the Fixed to Variable cost ratio for Dell for the year ending Feb 1 2008?
Assume the variable COGS is 0.419607 in 2008. Estimate the total fixed cost of goods sold for that year?
Period Ending
February 2 2007 February 1 2008 Total Revenue 57,420,000 61,133,000 Cost Of Revenue 47,904,000 49,462,000 Gross Profit 9,516,000 11,671,000 Operating Expenses Research and Development 498,000 610,000 Selling, general, Administrative 5,948,000 7,538,000 Total Operating expenses 6,446,000 8,148,000 Operating Income or Loss 3,070,000 3,523,000 Net Income 2,583,000 2,947,000Explanation / Answer
All amounts in $ 1. Total Variable Costs for Dell for the year ending February 2, 2007 Research and Development costs are in the nature of fixed expenses only. Hence, only the selling, general and administrative costs are considered to be variable aggregating $ 5,948,000 as on February 2, 2007. 2. Fixed Costs to Variable Costs for the year ending February 1, 2008 (assuming Selling, General and Admin Costs as Variable) = $ 610,000 / $ 7,538,000 = 8.09% 3. Variable COGS out of total $ 49,462,000 for 2008 is 41.9607% = 20754601.43 $ Hence, the Fixed COGS for 2008 will be 28707398.57 $