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UBC Company: Cost Volume Profit Questions

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UBC Company, a competitor of Howard Beal Co. in problem 13-5 has a comparatively labor intensive process with old equipment. Fixed costs are $10,000 per year and variable costs are $20 per unit. Sales price is the same, $28 per unit.
(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.

The following is a list of currency exchange rates for selected countries:
Country U.S. $ Equivalent
Britain (pound) 1.6428
Mexico (peso) 0.0731
Canada (dollar) 0.8910
Japan (yen) 0.0107
Euro 1.4090
(a) How many dollars would it take to buy one euro?
(b) Calculate the amount of each of the following currencies you could have bought with $100,000 US dollars.
(1) Japan (yen)
(2) Britain (pound)
(3) Canada (dollar)
(4) Mexico (peso)
21-13 Sony sells its 50-inch projection screen TV's in Japan for 230,000 yen. In the United States, this same television sells for $2,000. What should the exchange rate be in order for purchasing power parity to exist?

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Solution Summary

The solution determines the cost volume profit for the UBC company.