Purchase Solution

Break Even & Growth Rate Questions

Not what you're looking for?

Ask Custom Question

See the attached file.
I.
A company has fixed cost of $200,000. The sales price of its output is $56 per unit. It has variable costs of $31 per unit. The company is going to install new equipment which will cut the fixed costs to $150,000 but which will increase variable costs to $34 per unit. The sales price will remain at $56.

1)Find the break even point in the original situation.
2)Find the break even point after the cost change (round to a whole number).

Show ALL work (all formulas & calculations)

II.
A company produces machinery and equipment used to lift and move equipment. During the last 20 years sales revenues have increased from $2,335,000 to $20,000,000.

1)Find the company's growth rate using the constant growth model with annual compounding.
2)Derive a forecast for seven years in the future.

Show ALL work (all formulas & calculations).

Attachments
Purchase this Solution
Solution Summary

The solution explains some questions relating to breakeven and growth rate.

Solution Preview

Please see the attached file.

I.
A company has fixed cost of $200,000. The sales price of its output is $56 per unit. It has variable costs of $31 per unit. The company is going to install new equipment which will cut the fixed costs to $150,000 but which will increase variable costs to $34 per unit. The sales price will remain at $56.

1) Find the break even point in the original situation.

Breakeven point = Fixed cost/Unit contribution margin
Unit contribution margin = selling price - variable cost
= 56-31 = ...

Purchase this Solution
Free BrainMass Quizzes
Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

View More Free Quizzes
Related BrainMass Solutions

  • Capital Budgeting-NPV

    The company is somewhat unsure about the assumption of a 6% growth rate in its cash flows. At what constant growth rate would the company just break even if it still required a 13% return on investment?

  • Investment: Growth Rate and Breaking Even

    The solution discusses the minimum growth rate needed to break even.

  • Budgetings: Break-even Analysis and Planning

    What is the growth rate in sales for the past three years? Are revenues and expenses growing at the same rate? What was the experience in the past few years? What is the current growth rate in the economy? How are the competitors doing esp.

  • Multiple Choice

    C) B has a lower break-even point than A, but A's profit grows faster after break-even. D) B has a lower break-even point than A, and profit grows the same rate for both companies after the breakeven point. 2.

  • Operating & Financial leverage: break even analysis, varied industries, risk, interest rate

    31685 Operating & Financial leverage: break even analysis, varied industries, risk, interest rate I need your help on how to discuss the various uses for break-even analysis.

  • Time value of money - calculator operations

    What is the accounting break-even level of sales in terms of number of diamonds sold? Break-even sales b. What is the NPV break-even level of sales assuming a tax rate of 30%, a 10-year project life, and a discount rate of 12%?

  • Question about Use of financial leverage

    Using this information and the sales price per unit of $6, compute the break-even point. Discussion Questions: 1, 2, 3, 5 and 7 1. Discuss the various uses for break-even analysis. 2.

  • Finance question

    What is the accounting break-even level of sales in terms of number of diamonds sold? b. What is the NPV break-even sales assuming a tax rate of 35 percent, a 10-year project life and a discount rate of 12 percent?

  • Dime a Dozen Diamonds - Accounting Break-Even Level and NPV Break-Even Level

    What is the accounting break-even level of sales in terms of number of diamonds sold? b. What is the NPV break-even sales assuming a tax rate of 35 percent, a 10-year project life and a discount rate of 12 percent?

View More Related Solutions