Donna Starke worked for the athletic Department at Normal University, a large Division I institution in the
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Question:
The school year was to begin with a concert by one of the most popular college bands out on tour. The 14,000-seat convocation center sold-out 2 weeks before the event. On Wednesday, 3 days before the concert, Donna received a disturbing phone call. One of the local senior-citizen communities had provided individuals who managed the main concession stand for the past 6 years. Apparently, a contagious viral infection had incapacitated the individuals who had assisted in the past, and the home was unable to provide staff for the concert. After several frantic calls, Donna was able to convince the intramural department of the local community college to work one of the concession stands during the concert as a fundraiser. To simplify their training and reduce potential problems, Donna placed the new group at the 'Beers of the World' stand that only sold draft beer.
Monday, after the concert, Donna was calculating the 'cost of goods' (COG) for the event. Donna had estimated a COG of 22% for the draft beer stand and was shocked to find out that the actual COG was much higher. After checking her records she determined the following. The stand had supposedly sold 5 kegs of beer. Each keg cost the university $80.00. Donna knew from past experience that each keg held 15.5 gallons, which translated into 1,984 ounces per keg. The stand sold beer only in 16-ounce cups. The records of the intramural club showed that they had sold a total of 450 cups of beer at $3.00 per cup, grossing $1,350.
QUESTION 1
How many cups should the Intramural Club have sold per keg?
QUESTION 2
How many total cups should they have sold?
QUESTION 3
What should their "total revenue" have been?
QUESTION 4
What was the "cost of goods" COG percentage for the beer that the intramural club sold?
***Instructors note: Round up or down to the nearest percentage***
QUESTION 5
2-part Question 1: How many cups were "left over" (2-points) and 2: what was the total "revenue shortfall"?
Related Book For
Auditing a risk based approach to conducting a quality audit
ISBN: 978-1133939153
9th edition
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg
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