Purchase Solution

Break even analysis : Graphical

Not what you're looking for?

Ask Custom Question

Draw two break-even graphs-one for a conservative firm using labor-intensive production and another for a capital-intensive firm. Assuming these companies compete within the same industry and have identical sales, explain the impact of changes in sales volume on both firms' profits.
Although no example is provided in the textbook problem, we suggest you use these assumptions to create an Excel line chart (break-even chart).

Labor Capital
Intensive Intensive
Selling price $12.00 $12.00
Variable cost per unit $8.00 $5.00
Fixed costs $250,000 $300,000

Solution
Problem 5-7
Instructions

Complete the tables below for both the Labor Intensive and capital intensive firms.

Labor Intensive Company
Units 0 25,000 50,000 75,000
Total Revenue
Variable costs
Contribution margin
Fixed Costs $250,000
Total Costs
Profit

Capital Intensive Company

Units 0 25,000 50,000 75,000
Total Revenue FORMULA FORMULA FORMULA FORMULA
Variable costs FORMULA FORMULA FORMULA FORMULA
Contribution margin FORMULA FORMULA FORMULA FORMULA
Fixed Costs $300,000 FORMULA FORMULA FORMULA
Total Costs FORMULA FORMULA FORMULA FORMULA
Profit FORMULA FORMULA FORMULA FORMULA

Explain the impact of changes in sales volume on both firms' profits.

Purchase this Solution
Solution Summary

This posting contains BEA of a Labor intensive firm and a capital intensive firm

Purchase this Solution
Free BrainMass Quizzes
Probability Quiz

Some questions on probability

Graphs and Functions

This quiz helps you easily identify a function and test your understanding of ranges, domains , function inverses and transformations.

Multiplying Complex Numbers

This is a short quiz to check your understanding of multiplication of complex numbers in rectangular form.

Geometry - Real Life Application Problems

Understanding of how geometry applies to in real-world contexts

Know Your Linear Equations

Each question is a choice-summary multiple choice question that will present you with a linear equation and then make 4 statements about that equation. You must determine which of the 4 statements are true (if any) in regards to the equation.

View More Free Quizzes
Related BrainMass Solutions

  • Break-even Analysis :sample question

    b) use a graphical procedure to determine the breakeven point for Q(i.e., the quantity at which both options yield the same cost) c) use an algebraic procedure to determine the break-even for Q Please see the attached file Break-even analysis is exemplified

  • Break-even analysis and degree of operating leverage

    71232 Break-even analysis and degree of operating leverage Hi there I am trying to work out the 2 questions below, and after reading my test book on break-even analysis, I am having a problem with doing this either by the algebraic and graphical methods

  • degree of financial leverage,degree of combined leverage,BEP

    87002 Graphical break-even analysis Draw two break-even graphs-one for a conservative firm using labor-intensive production and another for a capital-intensive firm.

  • Fine Manufacturing: Break even analysis to produce or sell the new product

    It can be easily understood by anyone with a basic understanding of Break Even Analysis.

  • Break-even and Other CVP Analysis

    452405 Slick Pads break even for new printers; Fine Manufacturing break even for selling price of new product line Business, Project Management - Year 4 u02a1 Break Even Analysis (Attempt 1 ) I. u02a1 Break Even Analysis (Attempt 1 ) 1.

  • Break Even & Contribution to Profit

    If the company sells the product at a price of $25, how many units of product have to be sold in order to break even? Use both the algebraic and graphical approaches. b.

  • Break-Even Point - Algebra

    The solution explains the graphical and algebraic method for determination of the break-even point.

  • Clear Optics break even for new product

    If the selling price of each new product is set at $100, how many units need to be produced and sold to break even? Use both the graphical and algebraic approaches. b.

  • Multiple choice questions

    point b. increases the break-even point c. keeps the break-even point same d. increases the variable costs Answer: a. decreases the break-even point Question 13 The term ____________ refers to testing

  • Break-even Analysis & Probability

    The solution provides step by step method for the calculation of break-even analysis and probability using binomial and normal distributions. Formula for the calculation and Interpretations of the results are also included.

View More Related Solutions