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Break-Even Analysis

Firm's Annual Profit or Loss

Hello, I have the following problem: A manufacturing firm has the capacity to produce 650,000 units of an electronic product per year. At present, it is operating at 65% of capacity yielding the firm's estimated annual income of $416,000. Annual fixed costs are $192,000 and the variable costs are $0.38 per unit of product. a)

Break-even point for a Multi product Company

Please see the attached problem. Amazing Products markets to computer games: Predator and Runway. A contribution format income statement for a recent month for the two games appears below: Predator Runway Total Sales $112,000 $56,000 $168,000 Variable expenses 27,880 5,720 33,600 Contribution margin $ 84,120

Break-even charting and cost-plus formula

The level of fixed costs (salaries, rent, and utilities) necessary to run my coffee shop on a monthly basis is $9,000. In addition, a cup of coffee sells for $1.25 costs $0.25 for the bulk coffee, filters, and water. The contribution margin of a cup of coffee is, therefore, $1.00. I can now calculate how many cups of coffee I h

Calculating break-even sales in dollars

Mckee corporation has annual fixed costs of $12 million. Its variable costs ratio is 0.60. a) determine the company's break even dollar sales volume. b) determine the dollar sales volume required to earn target profit of $ 3 million.

Calculating Breakeven Units

Jesse, Inc., located in Mesa, Arizona, manufactures high-end baby chairs. The firm's cost accountant, Lisa, has been assigned by the CEO to determine how many baby chairs Jesse, Inc., needs to make and sell in order to break even. She is given the following data: Baby chair sales price = $15.00 Variable cost per baby chair =

Divesting companies

Assume you are the owner-manager of an innovative software company, and your latest product is so revolutionary and superb that it has resulted in your company controlling 98% of the industry in terms of total sales. Should your company be broken up into smaller companies by the government in an effort to foster greater compe

Break-even Analysis - The Barber Shop

The peace barber shop employs four barbers. One barber, who also serves as the manager, is paid a salary of $1,800 per month. The other barbers are paid 1,300 per month. In addition, each barber is paid a commission of $4 per haircut. Other monthly costs are: store rent $800 plus 60 cents per haircut, depreciation on equipment $

Product Costing - Wakefield, Inc

Wakefield, Inc., offers a CPA review course in cities throughout the eastern United States. Wakefield hires local CPA's to do the teaching. Each instructor is paid $120 an hour to teach the course; a course consists of 12 weeks of instruction with sessions taking place 4 evenings a week for 2 hours at each session. The other ins

Product Costing and C-V-P Analysis

Product Costing and C-V-P Analysis Wakefield, Inc., offers a CPA review course in cities throughout the eastern United States. Wakefield hires local CPAs to do the teaching. Each instructor is paid $120 an hour to teach the course; a course consists of 12 weeks of instruction with sessions taking place four evenings a week for

Decision Analysis

7. A small manufacturer uses an industrial boiler in its production process. A new boiler can be purchased for $10,000. As the boiler gets older, its maintenance expenses increase while its resale value declines. Since the boiler will be exposed to heavy use, the probability of a breakdown increases every year. Assume t

Decision Analysis

You are contemplating an investment project that has two phases. As currently planned, the first phase of the project requires an investment of $100,000 today. One year from now, the project will deliver either $120,000 or $80,000, with equal probabilities. When these Phase I payouts occur, you will be able to invest an additi

Pivot Table

The database DISH.XLS contains a transaction history describing more than 4,000 purchases of detergent at a number of stores in a grocery chain over a period of several weeks. a. Compile a pivot table that gives a tabulation of sales (in cases) by brand (Dove, Sunlight etc.) b. Compile a pivot table that gives a tabulation o

Business Valuation

"3) Answer the questions in the Sable Systems case. This case gives you a badly flawed attempt to value a business. Your task is to find and remove the flaws from all of Ted's valuation attempts, and come up with a sound set of valuations for the subject business. 4) You should correct all 7 of Ted's valuations, and add furth

Breakeven Analysis

The Weaver Watch Company sells watches for $25; the fixed costs are $140,000; and variable costs are $15 per watch. a.) What is the firm's gain or loss at sale of 8,000 watches? At 18,000 watches? b.) What is the breakeven point? Illustrate by means of a chart. c.) What would happen to the breakeven point if the selling pri

Break-Even & Profit

The Last Outpost is a tourist stop in a western resort community. Kerry Yost, the owner of the shop, sells hand-woven blankets for an average price of $30 per blanket. Kerry buys the blankets from weavers at an average cost of $21. In addition, he has selling expenses of $3 per blanket. Kerry rents the building for $300 per mont

Financial Economics: ROA/ROE, butterfly spread , option strategy

1. Firm A and Firm B have the same ROA, yet firm A's ROE is higher. How can you explain this? 2. A butterfly spread is the purchase of one call at exercise X1, the sale of two calls at exercise price X2, and the purchase of one call at exercise X3. Assume that X1 = 20, X2 = 25, and X3 = 30. Graph the payoff structure to t

What happens at a company's break-even point?

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?

corporate research and development laboratories

To many managers, corporate research and development laboratories are "black boxes" staffed by "cone heads," since very little is known about their activities and success. How can such laboratories be successfully managed so that they receive the proper levels of funds and support from the corporations?

Break-even point and profit/loss

Money Corporation produces class rings. The rings sell for $75 each and cost $35 each to produce. Money's fixed costs are $50,000. a) What is Money's break-even point in rings? b) How much profit or loss will Money have if it sells 8,000 rings?

Margin of Safety Ratio

Breakeven sales in units: 5X = 2X + 900000 (Sales Price *X= Variable cost *X+ Fixed Cost) $3X = $900000   X = 300000 units (2) Breakeven sales in dollars: 300000 units X $5 per unit = $1500000 (c) (1) Margin of safety in dollars: $2000000 - $1500000 = $500000 (Actual Sales-Breakeven

difference between Economic and Normal profits

Question 5B is complete once you find the output for the firm, that answer will help you find out if the firm is making a profit. 5. Market price is $50. The firm's marginal cost curve is given by MC = 10 + 2Q a. Find the profit-maximizing output for the firm. b. At this output, is the firm making a profit? Explain you

'break even point'

A perfectly competitive firm has the cost function: TC = 1000 + 2Q + 0.1Q (squared) What is the lowest price at which this firm can break even? draw a diagram and use numerical calculations to support your answer.

Homework Questions

4. Break-Even Analysis 5. Ratio Analysis Required: Calculate the requested ratios using the financials below: Income Statement (figures in millions of dollars) Net sales 16,725 Cost of goods sold 5,372 Other expenses 5,105 Depreciation 1,823 Earnings before interest and taxes (EB

In order to just break even, how much will the company have to charge for each set? How much will it have to charge per set to obtain this profit? If the company wants to earn a markup of 50 percent on its variable costs, how many sets will it have to sell?

Writers' Pleasure, Inc. produces gold-plated pen and pencil sets. It has a fixed annual cost of $50,000, and the average variable cost is $20. It expects to sell 5,000 sets next year. a. In order to just break even, how much will the company have to charge for each set? b. Based on its plant investment, the company require

Decision Making Cost Concepts

Please show me how to arrive at the correct answers. Product A: Selling Price $10 Variable Costs $5 Fixed Costs $2000 Product B: Selling Price $12 Variable Costs $10.00 Fixed Costs $6 Q. [a] If these products are sold in the ratio of 4a to 3b, what is break even point? what about 5a to 5b? In order to maximiz

History of Enron and the Enron Scandal

Using the history of Enron and the Enron Scandal answer the following questions: 1. Indicate whether or not accounting theory and regulation adequately addresses professional ethic...why or why not? 2. indicate the impact the reduced number of pension benefits has on former employees

Richard's Breakeven Point Calculations

Rewrite the formula above, to make it appropriate for breakeven calculations All these ques. refer to data listed: Where is Richard's breakeven point" Fixed costs $20,000 Variable costs 33% of sales avg sellings price is $10,000 a. as a % of sales, what is its variable or contribution margin? b. I

decomposing personal income into wealth income

I've been asked to find data on aggregate income. However, I also need to find data on labour and wealth income dis-aggregated. I assume this means find variables that could be used to represent total labour income and wealth income (to compare against total income; ie. GDP). What possible variables could be used? Eg. for

Externalities Affecting Management

a. What is an externality? b. Why might externalities lead a firm to discharge too much pollution into a river? c. Congress has passed a law that limits the level of cotton dust within textile factories. Why might a textile firm allow too much cotton dust within its workplace?