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Firm's Annual Profit or Loss

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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)What is the firm's annual profit or loss?

b)At what volume of sales does the firm break even?

c)What will be the profit or loss at 70%, 80%, and 90% of capacity on the basis of constant income per unit and constant variable cost per unit?
Thanks for your help!

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Solution Summary

A firm's annual profit or loss is explicated.

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Hi,

Get the answer with attachment.

Regards

Answer:
Capacity to produce: 650,000
Quantity Produced 650,000*65%=422,500
Annual Revenue $416,000
Less: Variable ...

Solution provided by:
Jayant Kumar, MBA
Education
  • MBA, Indian Institute of Finance
  • Bsc, Madras University
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