Meyersons Bakery is considering the addition of a new line of pies to its product offerings. It is expected that each pie will sell for $10 and the variable cost per pie will be $3. Total fixed operating costs are expected to be $20,000. Meyerson's faces a marginal tax rate of 35%, will have interest expenses associated with this line of $3,000, and expects to sell about 2,500 pies in the first year.
a. Put together an income statement for the pie line's first year. Is the line expected to be profitable?
b. Calculate the operating break-even point in both units and dollars.
c. How many pies would Meyerson's need to sell in order to achieve earnings, before interest and taxes, of $15,000?© BrainMass Inc. brainmass.com October 25, 2018, 5:27 am ad1c9bdddf
Meyersons Bakery is considering the addition of a new line of pies to its product offerings.
Meyersons Bakery is considering the addition of a new line of pies to its product offerings. It is ...
Solution explains the operating break-even point in both units and dollars
Breakeven point, Operating profit, Exchange rate
1. Howard Beal Co. manufactures molds for casting aluminum alloy test samples. Fixed costs amount to $20,000 per year.
Variable costs for each unit manufactured are $16. Sales price per unit is $28.
a. What is the contribution margin of the product?
b. Calculate the breakeven point in unit sales and dollars
c. What is the operating profit (loss) if the company manufactures and sells
(i) 1,500 units per year
(ii) 3,000 units per year
d.Plot a breakeven chart using the foregoing figures
2. John is planning on purchasing his dream car directly from the manufacturer in Germany. In order to do so, he must first convert his dollars to euros. His dream car has a price tag of 55,150 euros. How much does he need in U.S. dollars to purchase this car if the exchange rate is .9800 euros to the dollar?
3. Mrs.Pittner owns 100 shares of stock in Nokia valued at 16.5 euros per share. What is the value (in U.S. dollars) of Mrs. Pittner's share of stock when the exchange rate is
a. .9188? =1$
b. .70? = 1$
c. 1.212? = 1$