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Completing a Break Even Analysis

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A company has $50 per unit in variable costs and $1,200,000 per year in fixed costs. Demand is estimated to be 110,000 units annually. What is the price if a markup of 40% on total cost is used to determine the price?

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Solution Summary

This answer find out the selling price per unit.

$2.19
See Also This Related BrainMass Solution

Break-even analysis, relevant vs. non-relevant costs, allocated costs and activity-based costing

PART 1
Select an organization with one of the following critera:
- A non-profit organization with available financial statements
- A for-profit business organization -- you may select any public business by searching GOOGLE
Select your organization, give a short description of that organization.

PART 2
Identify any activity in your organization where you can apply breakeven analysis. You must be able to define:
- A unit of measurement for the activity
- Revenue per unit for the activity
- Variable costs for the activity
- Fixed costs for the period in the activity
If you cannot identify specific actual amounts, make a reasonable estimate and apply the tool as if the data were factual.
Your report should include
- The name and nature of the organization
- The activity and time period you used
- The inputs you used
- Your results
- Any implications from your results

Part 3
Identify a decision that has recently been made or will be made in the near future in your organization. Identify two relevant and two non-relevant costs in this decision. Support your answers using CM calculations.
If you cannot identify specific actual amounts, make a reasonable estimate and apply the tool as if the data were factual.
Your report should include
- The name and nature of the organization
- The activity and time period you used
- The inputs you used
- Your results
- Any implications from your results

Part 4
Review your organization and its treatment of allocated costs.
Retrieve any report in the organization that allocates common costs to a division, product, or service. Recast that report with unallocated costs and comment on the usefulness of that revised report.
If you cannot identify specific actual amounts, make a reasonable estimate and apply the tool as if the data were factual.
If you are unable to identify any report with allocated costs, create a report that you think may apply to your organization and treat the data as if it were factual.
Your report should include
- The name and nature of the organization
- The activity and time period you used
- The inputs you used
- Your results
- Any implications from your results

Part 5

Review your organization and its applicability for Activity Based Costing (ABC).
Identify a product or service in your organization that could use ABC. Then identify at least two activities for ABC and the appropriate cost drivers for those activities. Estimate the application rates for each cost driver.
If you cannot identify specific actual amounts, make a reasonable estimate and apply the tool as if the data were factual.
Your report should include
- The name and nature of the organization
- The activity and time period you used
- The inputs you used
- Your results
- Any implications from your results

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