stop-n-Shop operates a downtown parking lot containing 800 parking spaces. The lot is open 2500 hours per year. The parkingcharge per car is 50 cents per hour; the aerage customer parks two hours ....

stop-n-Shop operates a downtown parking lot containing 800 parking spaces. The lot is
open 2500 hours per year. The parkingcharge per car is 50 cents per hour; the aerage

customer parks two hours . Stop-n-Shop rents the lot for $7250 per month. The lot supervisor
is paid $24,000 per year. Five employees who handle the parking of cars are paid $300
per week for 50 weeks, plus $600 each for the two-week vacation period. Emplyees rotate vactaions during the slow months
when four emplyeees can handle the reduced load of traffic. Lot maintenance, payroll taxes

other costs of operating the parking lot include fixed costs of $30,000 per month and variable costs
of 5 cents per parking-space hour.


Instruction
a. Draw a cost-volume-profit graph for stop-n-shop on an annual basis. Use thousands of parking-space
hours as the measure of volume of activity.(Stop-n-shop has an annual capacity of 2 million parking-space
hours (800 spaces X 2,500 hours per years))
b. What is th contrivution margin ratio? What is the annual break-even point in dollars of parking revenue?