3. A firm has production capacity of 500 refrigerators per month andits fixed costs are P2,750,000 a month. The variable cost per unitis P11,500 and each unit can be sold for P20,000. Economicmeasures are instituted to reduce the fixed costs by 10% and thevariable costs by 15%.a. Determine the old and new breakeven points.b. Determine the old and new profits at 100% capacity.

The break even sales are the sales where business earns no profit no loss during the period. The…

Answered: 3. A firm has production capacity of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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KF1. The Poseidon Swim Company produces swim trunks. The average selling price for one of their swim trunks is $70.43. The variable cost per unit is $19.96, Poseidon Swim has average fixed costs per year of $5,278. Assume that current level of sales is 320 units. What will be the resulting percentage change in EBIT if they expect units sold to changes by -1.1 percent? (You should calculate the degree of operating leverage first). (Write the percentage sign in the "units" box). Round the answer to two decimal places.
If the objective of the firm is to get 25% profit, how many units does the firm need to sell if the price per unit is $250? Given information: Annual fixed costs are 114,000, CTO is .65, breakeven point is 175,384.62.
Answer any four questions. 4x10=40 8. A Ltd. Maintains a MOS of 37.5% with an overall contribution to the sales ratio of 40%. Its fixed costs amount to Rs.5,00,000. Calculate the following: a) Break-Even Sales b) Total Sales c) Total variable cost d) Current profit e) New MOS if sales volume is increased by7.5%
Weber Inc., sells its one product for $40 per unit. The variable cost per unit is $24. The fixed cost per year is $16,000a. What is the break-even point in units?b. What is the break-even point in dollars?c. If Weber would like to have $1,000 profit, how many units should be sold?d. If the selling price changes to $34 per unit, what is the new break-even point in units?
A product sells for $30 per unit and has variable costs of $20 per unit. The fixed costs are $720,000. If the variable costs per unit were to decrease by 18%, if fixed costs increase to $900,000, and the selling price increases by 25%, what would be the breakeven point in units?
Charlevoix Cases makes mobile phone cases. The company has collected the following price and cost characteristics: Sales price $ 12.00 per case Variable costs 5.50 per case Fixed costs 403,000 per year Assume that the company plans to sell 77,000 units annually. Consider requirements (b), (c), and (d) independently of each other. Required: What will be the operating profit? What is the impact on operating profit if the sales price decreases by 20 percent? Increases by 10 percent? Note: Do not round intermediate calculations. What is the impact on operating profit if variable costs per unit decrease by 20 percent? Increase by 10 percent? Note: Do not round intermediate calculations. Suppose that fixed costs for the year are 20 percent lower than projected and variable costs per unit are 20 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much? Note: Do not round intermediate…
A company wants to expand by offering a new product. Expected cost and revenue data for this product are: Annual sales 5,000 units Unit selling price ? Unit variable costs: Production $ 30.20 Selling 6. Incremental fixed costs per year: 32:16 Production $35,000 Selling $45,000 If the company adds this new product, sales of its other product lines will be impacted, causing the contribution margin of other product lines to drop by $18,500 per year. What is the lowest price the company could charge for its new product without affecting the company's total profits? Multiple Choice $39.90 $52.20
Finch Corporation produces products that it sells for $20 each. Variable costs per unit are $5, and annual fixed costs are $318,000. Finch desires to earn a profit of $51,000. Required a. Use the equation method to determine the break-even point in units and dollars. b. Determine the sales volume in units and dollars required to earn the desired profit. a. Break-even point in units a. Break-even point in dollars b. Sales volume in units b. Sales in dollars Prev 1 of 16 Next >
Dishman Ltd plans to sell 200,000 items a year for £15 each. Fixed costs are £360,000 a year and variable costs are £12 per unit. What is the margin of safety? Select one: a. 66.7% b. 25.0% c. 11.1% d. 40.0%
Lindon Company is the exclusive distributor for an automotive product. The product sells $40 per unit and has a CM ratio of 30%. The company's fixed expenses are $180,000 per year. Required: 1. What are the variable expenses per unit? 2. Using the equation method: a. What is the break-even point in units and sales dollars? b. What sales level in units and in sales dollars is required to earn an annual profit of $60,000? c. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $4 per unit. What is the Company's new break-even point in units and in sales dollars? 3. Repeat (2) above using the unit contribution method.

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