Purchase Solution

Calculating Breakeven Point and Profits

Not what you're looking for?

Ask Custom Question

The fixed costs at Harley Motors are $1 million annually. The main product has revenue of $8.50 per unit and $4.25 variable cost. Determine the following.

(a) Breakeven quantity per year.

(b) Annual profit if 200,000 units are sold and in 350,000 units are sold. Plot total revenue and costs at these levels of activity.

Purchase this Solution
Solution Summary

The solution describes the methodology to find out breakeven quantity and profits associated with given output levels. The fixed costs at Harley Motors investments are examined.

Solution Preview

Please refer attached file for graph.

Solution:

(a) Breakeven quantity per year.

Fixed Costs=F=$1,000,000
Price per unit=P=$8.50
Variable Cost per unit=V=$4.25
Breakeven Quantity=F/(P-V)=235,294

Breakeven quantity per year is 235294 units

(b)

Case 1 - ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
  • "Thank you"
  • "Really great step by step solution"
  • "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
  • "Thanks Again! This is totally a great service!"
  • "Thank you so much for your help!"
Purchase this Solution
Free BrainMass Quizzes
Basics of Economics

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

Elementary Microeconomics

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

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economic Issues and Concepts

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

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

  • margin of safety measure

    How much revenue can we lose before we drop below the breakeven point Calculating the margin of safety measure will help a firm answer which of the following questions?

  • Term Break-Even Analysis

    ://my.safaribooksonline.com/book/finance-accounting/9780470055182/breakeven-analysis/ch09lev1sec5 The above Break-Even Case Study has to do with calculating profits when there is an increase in sales.

  • CVP Problem

    Calculate the breakeven point.

  • Breakeven Point

    as before) The solution explains how to calculate the breakeven point.

  • Contribution Margin

    At breakeven, all fixed costs have been met. After breakeven, all contribution margin goes to profits The solution explains the impact on profits of contribution margin in excess of breakeven point.

  • Calculating breakeven point for two product lines

    376927 Calculating breakeven point for two product lines Please open attached file CH5 for the problem, and also use attached file P5-27A for your solution.

  • Calculating the Break-Even Point

    At the point both functions are equal, we have an breakeven point. (Note I said "an breakeven", not "the breakeven" point. Technically, complicated Revenue and/or Cost functions could intersect more than one and offer mulitple breakeven points.

  • Breakeven and Target Profit

    Beyond the breakeven all contribution margin goes for profits.

  • Financial modeling: Roseville Brewing Company

    This solution is comprised of detailed calculation of breakeven point in sales and in units. This solution will also strengthen the students' knowledge as pertain to product mix, operating profit, and breakeven point.

View More Related Solutions