CVP analysis-Breakeven Analysis
Not what you're looking for?
JetSet Machinations, Inc. expects to become very successful in the manufacture and sales of its fuel-efficient high speed airplane, the S2S-900. This plane will be sold at about $70 million per plane. JMI executive staff has asked you to provide them a slide presentation in the next staff meeting which gives calculations for profit and break-even. This presentation will be the basis of the meeting discussion.
Assume that JMI's annual fixed costs for the S2S-900 are $950 million, and its variable cost per airplane is $45 million.
1. Compute JMI's break-even point for the number of S2S-900 airplanes and dollars of sales.
2. Suppose JMI plans to sell forty-two S2S-900 airplanes in 2002. Compute JMI's projected operating profit.
3. Suppose JMI increased its fixed costs by $84 million and reduced variable costs per airplane by $2 million. Compute its operating profit if forty-two S2S-900 airplanes are sold. Compute the break-even point. Comment on your results.
4. Next, ignore requirement 3. Suppose fixed costs do not change, but variable costs increase by 10% before deliveries of S2S-900 airplanes begin for the year. Compute the new break-even point.
Individual portion- Build your own spreadsheet for these calculations:
1. What would happen to expected cash flows under different discount rates?
2. How will the present value of the project vary according to cash flows different from a set forecast?
3. Create test numbers to show the effects under varying circumstances.
Purchase this Solution
Solution Summary
Answers to questions on Breakeven Analysis.
Purchase this Solution
Free BrainMass Quizzes
Change and Resistance within Organizations
This quiz intended to help students understand change and resistance in organizations
Employee Orientation
Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.
Transformational Leadership
This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.
Paradigms and Frameworks of Management Research
This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.