1. An ice cream producer has fixed costs of $70,000 per month, and it can produce up to 15,000 icecream tubs per month. Each tub costs $10 in the market while the producer faces variable costs of $3per tub. (a) What is the economic breakeven level of production? (b) Calculate the ice cream producer'smonthly profits at full capacity. What would happen to the monthly profits if another ice creamproducer entered the market, driving the price of the ice cream tubs down to $7 per unit? Support yourcalculations graphically.

Break even point production level is where there is no profit and no loss for Company.

Answered: am tubs per month. Each tub costs $10…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A compnay distributes a single product whose selling price is $16 per unit and whose variable expense is $12 per unit. The compnays monthly fixed expense is $10,800. Calculate the company's break even point in unit sales. Calculate the copmany's break even point in dollar sales. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? in dollar sales? Break-Even point in unit sales _________________baskets Break-Even point in dollar sales Break-Even point in unit sales _________________baskets Break-Even point in dollar sales
A firm has fixed operating costs of $100,000 and variable costs of$4 per unit. If it sells the product for $6 per unit, what is the breakeven quantity? (50,000)
Zeke Company sells a single product. The selling price per unit is $32 and unit variable cost is $24. Fixed costs for the year are $100,200. What if selling price goes up by 13%, variable costs go up by 11% and fixed costs go up by 13%? What is the new breakeven point in units? Do not round any intermediate calculations. Round your final answer up to the nearest whole number.
Saucier & Co. currently sells 1,400 units a month for total monthly sales of $98,500. The company is considering replacing its current cash only credit policy with a net 30 policy. The variable cost per unit is $18 and the monthly interest rate is 1.1 percent. What is the switch break-even level of sales? Assume the selling price per unit and the variable costs per unit remain constant. A. 1,743 units B. 1,467 units C. 1,421 units D. 1,406 units E. 1,548 units
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The management of Kunkel Company is considering the purchase of a $21,000 machine that would reduce operating costs by $5,000 per year. At the end of the machine’s five-year useful life, it will have zero salvage value. The company’s required rate of return is 12%. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table. Required: 1. Determine the net present value of the investment in the machine. 2. What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine?
Kumolo Co. is selling 1,200 units of rice cooker per year. The selling price per unit is P800 with 60% variable cost. At the currentyearly sale, the company is experiencing a loss of P12,800 at a fixed cost of P396,800. 1. How much is the amount of contribution margin for 1,200 units?2. How much is the contribution margin per unit?3. How much is the new selling price per unit to increase sales by 5%?4. How many units that sales will be increased?5. What is the new Variable Cost Ratio after reduction of Variable Cost by 5%?6. What is the Variable Cost per unit after the reduction of 5%?7. How much is the amount of Sales under the business strategy?8. How much is the amount of Contribution Margin under the business strategy?9. How much is the adjusted Total Fixed Cost under the business strategy?10, How much is the Operating Income or Loss under the business strategy?
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Calculating breakeven point in units, contribution margin ratio given Ocean Company sells a product with a contribution margin ratio of 80%. Fixed costs are $2,800 per month. What amount of sales (in dollars) must Ocean Company have to break even? If each unit sells for $30, how many units must be sold to break even?
Outback Outfitters sells a small camp stove for $150 per unit. Variable expenses are $105 per unit, and fixed expenses total $184,500 per month. Required: 1. What is the break-even point in unit sales and in dollar sales? 2. If the variable expenses per stove increase as a percentage of the selling price, will it result in a higher or a lower break-even point? (Assume the fixed expenses remain unchanged.) 3. At present, the company is selling 10,000 stoves per month. The sales manager is convinced a 10% reduction in the selling price would result in a 25% increase in unit sales. Prepare two contribution format income statements, one under present operating conditions, and one as operations would appear after the proposed changes. 4. Refer to the data in Required 3. How many stoves would have to be sold at the new selling price to attain a target profit of $79,000 per month? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Break-even…
A CERTAIN PRODUCT SELLS FOR $55. IT HAS VARIABLE COSTS OF $33 PER UNIT AND FIXED COSTS OF $300,000 PER YEAR. HOW MANY THE PRODUCTS MUST COMPANY MANUFACTURE TO BREAK EVEN?
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