Peter, a president of a company produces power transformers for personal computer manufacturers. Peter's choice of the various methods by which a new model of transformer can be built has been narrowed to 3 choices. He estimates the product life of the transformer to be one year. Marketing has estimated that it can sell 5,000 of these new transformers within the time period. The 3 alternatives are:

1. Use existing equipment and fixtures, and hire high
-skilled machinists and technicians at $16.00 per hour (including benefits). With this method, each transformer will require 2 labor hours to assemble.

2. Use existing equipment, but invest $30,000 in new fixtures and instruction manuals to simplify some of the more complicated operations. Semiskilled workers can be employed at $12.00 per hour (including benefits), with each transformer requiring 1 labor hour to complete.

3. Invest $75,000 in new equipment, fixtures, and instruction manuals. This approach would eliminate all of the complicated procedures, thereby requiring only unskilled labor, which could be hired for $6.00 an hour (including benefits). With this method, each transformer would require 20 labor minutes to complete.

These are the questions that I am completely lost on. I have to do this in Excel.

A. Make a break-even chart using total cost versus volume for the above processes.

B. Calculate the 2 break-even volumes (i.e., those volumes at which you shift from one process to another).

C. Which alternatives would choose and why?

Solution Summary

This posting provides details on calculating break-even volume and preparing break-even chart.

A 2.00 increase in a product's variable expense per unit accompanied by a 2.00 increase in its selling price per unit will:
decrease the contribution margin.
have no effect on the contribution margin ratio.
have no effect on the break-evenvolume.
decrease the degree of operating leverage.

Total fixed costs $500,000.00
Unit variable costs $50.95
Unit selling price $68.50
a. Compute the contribution margin per unit
b. Compute the contribution-margin ratio
c. Compute the break-even point in units
d. Compute the break-evenvolume in dollars

The Rolling Creek Textile Mill produces denim. The fixed monthly cost is $21,000, and the variable cost per yard of denim is $0.45. The mill sells a yard of denim for $1.30. If the maximum operating capacity of the Rolling Creek Textile Mill described in problem 3 is 25,000 yards of denim per month, determine the break even volu

The following data pertain to service offered in a fee-for service setting:
Fixed Cost = $9000
Variable Cost = $300
Charge $450
Target profit = $6000
1. Determine the contribution margin for this service
2. Determine the accounting break-even point in terms of volume.
3. Determine the economic break-even point in

Explain cost-volume-profit analysis, including an explanation of the calculation and the components. In what three ways can the contribution margin be useful in cost-volume-profit analysis? What does the term break-even point mean? Name the two ways it can be measured.

The Retread Tire Company recaps tires. The fixed annual cost of the recapping operation is $60,000. The variable cost of recapping a tire is is $9. The company charges $25 to recap a tire.
Graphically illustrate the break even volume for the Retread Tire Company.

What happens at a company's break-even point? How can you compute the break-even point for a company? How can a change in costs for a product or service be incorporated into the break-even calculation?

Please help with the following calculations. '
1) If the sales price per unit is $100, the unit variable cost is $75 and total fixed cost are $150,000 then the break even volume in dollar sales is?
2) Company produce dolls. Each doll sells for $20.00. Variable cost is per unit total is $14.00 of which is direct material and