Question

For the "Mead Meals on Wheels Center" case study how are the fixed costs determined? For example, Q1 fixed costs are $520,000, Q2 $442,000, Q3 455,000, and Q4 481,000. Thank you for your guidance on this.

Answer 1

Quarterly fixed cost in each quarter is the multiplication of fixed cost per week per quarter and the number of weeks in that quarter.

There are 4 quarters in a year, since there are 3 months in each quarter.

Number of weeks in a year is 52.

Therefore, number of weeks in each quarter are (52 weeks / 4 quarters in each year) = 13.

Given (very beginning), fixed cost per week per quarter:

Q1 = $38,000

Q2 = $34,000

Q3 = $35,000

Q4 = $37,000

Therefore, fixed cost per quarter:

Q1 = $38,000 × 13 = $494,000

Q2 = $34,000 × 13 = $442,000

Q3 = $35,000 × 13 = $455,000

Q4 = $37,000 × 13 = $481,000