Exam 5: Cost-Volume-Profit Analysis and Break-Even

Olfert Greenhouses has compiled the following estimates for operations. Perform a break-even analysis showing a)an algebraic statement of (i)the revenue function; (ii)the cost function; b)a detailed break-even chart.

Tarfex Tech intended to sell a new product in order to keep up with customer demands. The product was to be sold to consumers at $620, creating a contribution margin of $150 per unit. They spent $9800 on advertising and were able to sell 1,200 units on the first day. Determine the resulting profit.

A company that makes basketballs has calculated their revenue and costs as follows for the most recent fiscal period: What are the company's fixed costs per fiscal period?

A company that makes optical computer input devices has calculated their revenue and costs as follows for the most recent fiscal period: What is the break-even point in sales dollars?

A local toolmaker makes the best hammers on the market. The head of the hammer costs $12.11 and the handle costs $4.37. It takes 1.4 minutes to assemble the hammer and the hourly cost is $90.00 for assembly time. The company has fixed operating costs of $22 310 per month. They sell the hammers for three times their total variable cost. The company wants to make a monthly profit of $5000. How many hammers must they sell?

A company has variable costs that are 4/7 the value of their sales revenues. Total net income for the most recent period was a profit of $53 770 and sales were $420 000. The company has started a new marketing campaign that they hope will increase sales, but it will require additional advertising of $6400. How many sales dollars does the company have to generate in order to remain at the same level of profitability as before the new ad campaign?

A manufacturer plans to introduce a new type of shirt based on the following information. The selling price is $57.00; variable cost per unit is $18.00; fixed costs are $7800.00; and capacity per period is 500 units. a)Calculate the break-even point (i)in units (ii)in dollars (iii)as a percent of capacity b)Draw a detailed break-even chart. c)Calculate the break-even point (in units)if fixed costs are reduced to $7020.00 d)Calculate the break-even point (in dollars)if the selling price is increased to $78.00

Raider Corporation made $130 000 in sales last year. They had fixed costs of $29 300 and variable costs of $26 000. What is the breakeven point if their capacity is at $160 000? Provide algebraic statements of the revenue and cost functions, as well as a breakeven point in sales dollars.

Last year, Terrific Copying had total revenue of $475 000, while operating at 60% of capacity. The total of its variable cost is $150 000. Fixed costs were $180 000. What is Terrific's contribution rate?

Citizen sells a watch for $35 at a variable cost of $15 per unit and fixed cost of $1 million per annum. Recent recession has seen jump in material cost by $7. What is the change in profit due to recession if Citizen produces and sells 100 000 watches in a year?

A company that makes cell phones has the following cost structure. The have fixed costs of $145 000 per period and manufacturing costs of $15.16 per cell phone. Advertising is expected to be $25 000 per period and a special promotional contest will involve providing a free case for a cost of $5.30 per cell phone. Each cell phone sells for $49.95. What is the break-even point in the number of phones?

A company that makes audio computer input devices has calculated their revenue and costs as follows for the most recent fiscal period: The company has a target level of profitability of $35,000 per fiscal period. What sales dollar volume do they have to achieve in order to achieve their goal?

Excel hardware is introducing a new product on a new product line of capacity 800 units per week at a production cost of $50 per unit. Fixed costs are $22,400 per week. Variable selling and shipping costs are estimated to be $20 per unit. Excel plan to market the new product at $110 per unit. What is the break-even capacity per week?

A pen manufacturer makes luxury pens. The pen case costs $7.26 each, the ink holder costs $1.26 each, the spring costs $.07 each and the velvet pen case costs $0.91 each. The plant has general and administrative costs of $55 000 and fixed selling expenses of $37 500. The pens sell of $39.95 each. Plant capacity is 4 000 pens per period. At what percentage of capacity is the break-even point?

The operating budget of the Omega Twelve Company contains the following information. a)Draw a detailed break-even chart. b)Compute the break-even point as a percent of capacity. c)Determine the break-even point in dollars if fixed costs are reduced by $11 200 while variable costs are changed to 62% of sales.

A local health care facility has fixed costs per month of $187 400. They also have patient costs of $4.15 per day per patient for linen and cleaning, medication costs are $23.32 per patient per day and lab tests cost $75.61 per patient per day. The government is considering allowing the health care facility to charge each patient and amount to recover his or her costs and to make a "profit" of $15 000 per month. The health care facility averages 690 patients per month. The VP-Finance for the facility wants you to calculate the daily rate charge per patient. Your answer is:

A local college hospitality restaurant has the best meals in town. The average variable cost per meal is $10.25 and the desserts are $1.25. The restaurant has fixed operating costs of $110 500 per month. They sell the meals and desserts for three times their average variable cost per meal. The college wants to make a monthly profit of $50 000. How many meals must they sell (Round up to nearest whole meal)?

Sunbeam wants to sell microwaves at a unit contribution margin of $42 and a unit contribution rate of 60%. What should be the break even volume if the total cost of production is kept below $10 000.

The gas division of Power-U-Up plans to introduce a new gas delivery system based on the following accounting information. Fixed costs per period are $4 236; variable cost per unit is $168; selling price per unit is $211; and capacity per period is 450 units. a)Draw a detailed break-even chart b)Compute the break-even point (i)in units; (ii)as a percent of capacity; (iii)in dollars. c)Determine the break-even point as a percent of capacity (i)if fixed costs are reduced to $3 788; (ii)if fixed costs are increases to $5 577 and variable costs are reduced to 75% of the selling price; (iii)if the selling price is reduced to $191.

Last year, Terrific Copying had total revenue of $475 000, while operating at 60% of capacity. The total of its variable cost is $150 000. Fixed costs were $180 000. If the current selling price, variable costs, and fixed costs are the same as last year, what net income can be expected from revenue of $500 000 in the current year