calculate the break-even point using the formula R ($) = (Total $ Fixed Costs)/(%Contribution Margin). Based on those calculations, the break-even point (in dollars) should be $400,000. Do you think that that break-even point of $400,000 is achievable? Explain.

calculate the break-even point using the formula R ($) = (Total $ Fixed Costs)/(%Contribution Margin). Based on those calculations, the break-even point (in dollars) should be $400,000. Do you think that that break-even point of $400,000 is achievable? Explain.

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

See similar textbooks

Related questions

Q: If breakeven point is 1,100 units, each unit sells for $32, and fixed costs are $20,000, then on a…

A: The objective of the question is to understand the representation of the breakeven point, selling…

Q: Reid Company is considering the production of a new product. The expected variable cost is $27 per…

A: Break-even point (BEP): Breakeven is the point where total expenses are equal to total revenue. at…

Q: What is the profit per day of Machine A? 2. What is the profit per day of Machine B? 3. What…

A: When we have two alternatives and we have to select one alternative, then we compare both of the…

Q: True or false: The breakeven point in dollars can be computed by dividing the contribution margin…

A: Solution Concept Breakeven point is the point at which the contribution generated covers the fixed…

Q: What is the incremental profit?

A: Introduction:- CVP analysis is used to identify the changes in costs and volume affect a…

Q: You are consldering a new product launch. The project will cost $2,400,000, have a four- year life,…

A: Hi, Thanks for posting the question. But per Q&A guidelines, the solution for the first three…

Q: Estimate the best case scenario for total variable costs for a project with the following base case…

A: Step 1: To estimate the best case scenario for the total variable costs, we need to compute for the…

Q: What is the internal rate of return on an investment with the following cash flows? Year 10 1 2 13…

A: The IRR is a measure of a project’s profitability. It uses the NPV formula to find the maximum…

Q: Calculate the per-unit contribution margin of a product that has a sale price of $200 if the…

A: The contribution margin is calculated as the difference between the sales and variable costs. The…

Q: lo Company distributes a single product. The company's sales and expenses for last month follow:…

A: The contribution margin is calculated as difference between sales and variable costs. The break even…

Q: In the month of March, Blossom Salon services 620 clients at an average price of $120. During the…

A: Variable costs are costs that varies with the change in the level of output whereas fixed costs are…

Q: Cost Analysis is based on the time value of money. This means a dollar today is worth more than a…

A: Cost Analysis is based on Time value of money. This means a dollar today is worth more than a dollar…

Q: Questions: 1.) How many people should attend the seminar to break-even? 2.) Given this BEP number,…

A: We will use the BEP analysis here. BEP analysis refers to breakeven point analysis.

Q: Consider a market with the following supply and demand. (It may help to draw a graph for these…

A: Solution- External cost=$3 Efficient quantity= 500 Because External cost of $3 raises the supply…

Q: The contribution margin per unit is P5, while the direct fixed costs are P30,000 and the allocated…

A: The break-even formula is calculated by dividing the total fixed costs associated with production by…

Q: Find the contribution profit margin based on the following information: cash fixed costs = $60,000;…

A: Sales = $100,000 Fixed cost = $60,000 Variable cost = $70,000 To calculate the contribution margin…

Q: How do you calcuate the Lower-of-Cost-or-Market ? Problem : If cost is $13 Replacement…

A: Answer and calculations are given below

Q: a. Calculate the project's NPV, IRR, MIRR, and payback. Do not round intermediate calculations.…

A: Net present value is determined by deducting the initial investment from the current value of cash…

Q: a. How can the mathematical equation for break-even sales show both sales units and sales dollars?

A: The analysis for cost, volume and profit in an organization is called Cost-Volume-Profit analysis.…

Q: A public works project has an initial cost of P2M, benefits with a present worth of P3M and…

A: The present worth of a project is a method of finding out the profitability of a project.

Q: If contribution margin is zero, while fixed expenses are $1000, what will be the net operation…

A: The contribution margin is used to show the amount of sales left to cover the fixed expenses and…

Q: Holding other factors constant, a company's contribution margin per unit will increase with: O a.…

A: Answer

Q: In determining the number of Break Even (B-E) units to sell in order to obtain the amount of…

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

Q: uct is public good, analy

A: Demand Function- Demand function is what describes a relationship among one variable and its…

Q: Suppose the wage rate is $10 and the rental rate on capital is $20. Consider the total cost line…

A: Solution- Vertical axis intercept=Total CostCapital Price…

Q: Ritz Furniture has a contribution margin ratio of 0.17. If fixed costs are $166,600, how many…

A: Formula: Break even point in sales dollars = Fixed cost / Contribution margin ratio Division of…

Q: How do I find the contribution margin per unit when the maximum capacity with present facilities =…

A: The contribution margin can be calculated by deducting the variable cost per unit from sales price…

Q: When fixed costs are $18,000 and the contribution margin per unit is $4, the breakeven point is

A: Breakeven point is the point at which total revenue is equal to total costs. It is calculated as:…

Q: Calculate the per-unit contribution margin of a product that has a sale price of $200 if the…

A: Introduction: Per unit contribution margin: It tells the margin remaining after deducting all the…

Q: If the variable cost is P15/unit, fixed cost is 265,000; and Sales is P55. Find the BEPs, and BEPx.…

A: Profit analysis equation With units sold (Q), variable cost per unit (VC), Fixed cost (FC) and price…

Q: QUESTION 2 REQUIRED Study the information provided below and answer the following questions…

Q: Two alternatives are being considered: First cost Uniform annual benefit Useful life, in years A…

A: Incremental cash flows consist of initial incremental cash outflow, incremental annual benefit and…

Q: If the selling price per unit is $47. Total fixed costs are 55,500 and breakeven volume of sales are…

A: Variable costs are production expenses that fluctuate according to changes in a company's production…

Q: TRUE OR FALSE. 1. Margin of safety = sales - break-even sales

A: Solution:- Introduction:- Sales means actual sales of company. Breakeven sales, where total revenue…

Q: Suppose that when the output is 0, the total cost is 40. However, when the firm produces the first…

A: Cost of production: It is the cost incurred in producing the goods or providing the services It can…

Q: The linear cost function is C(x) =

A: Linear equation form:C (x) = mx + bm = Marginal cost = $60x = No. of units = 120 itemsC(x) = Total…

Q: If selling price is $150 per unit, variable cost is $81 per unit, and fixed cost is $240, calculate…

A: Given the following information: Selling price: $150 per unit Variable cost: $81 per unit Fixed…

Q: The leading candidate for location will have a monthly fixed cost of $21,000 and variable costs of…

A: Cost-volume-profit analysis is a technique that is used to determine the impact of costs and sales…

Q: Consider a market with the following supply and demand. (It may help to draw a graph for these…

A: Financial Management: Financial management comprises of two words i.e. Finance and management.…

Q: Henderson Farms reports the following results for the month of November: Sales (10,000 units)…

A: Income statement is a financial statement that shows profitability, total revenue and total expenses…

Question

calculate the break-even point using the formula R ($) = (Total $ Fixed Costs)/(%Contribution Margin). Based on those calculations, the break-even point (in dollars) should be $400,000. Do you think that that break-even point of $400,000 is achievable? Explain.

Revenues (net)
Less: variable cost
Contribution margin
Less: fixed cost
Operating income
$500,000
(350,000)
$150,000
_(120,000)
$30,000
% of Revenue
100%
70%
30%

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Assume the following (1) selling price per unit = $30, (2) variable expense per unit = $18, and (3) total fixed expenses = $52,200. Given these three assumptions, the unit sales needed to achieve a target profit of $10,200 is:
Where does the opportunity cost should go when calculating the NPV of the project? is that in the CFO or at the beginning of the statement? because I'm not sure where it should be calculate when you calculate the NPV of the project. meaning if I can open a restaurant on my parking spot and use all the area I'll generate 300 sales, but if I use just half of it I can rent it for 5K per year. So how do I take into account this opportunity cost when calcuting NPV?
Answer with formula for upvotes?
B\ If the variable cost per unit is (10) and the fixed costs of production are (2000), draw a diagram of the total variable costs, fixed costs, and total costs if production is (100 units, 200, 300, 400 and 500).
Solve the quantitative analysis problembelow: Formulas: BEP : Fixed cost / (selling price per unit)-(variable cost per unit) : f / s - v profit : sX - f - vX (selling price per unit)(number of units sold) - [fixed cost + ( variable costs per unit)(number of units sold)] Jacob&Zach Co is a company that offers financial advice for people want to plan their retirement ahead of time. This company offers seminars and trainings on important topics related to retirement planning. For every seminar, the company rents a conference hall for P5,000.00. The company also spends a total of P7,500.00 to cover the cost of advertising and other expenses related to the conduct of the seminar. In every seminar, the company gives token to all attendees and each token costs P85.00. Lastly, the companycharges P350.00 per person who wants to attend seminar. Questions:1.) How many people should attend the seminar to break-even? 2.) Given this BEP number, how much is the a. revenue?b.…
The contribution margin is defined as the percent of each sales dollar that remains after satisfying fixed operating costs.
If the total fixed costs Omr 75000, variable cost per unit Omr 15, contribution margin (CM) Omr 30 and sales 350000 Omr. The Margin of safety with value (OMR) is:
Imagine that you could increase the price for a product that has a profit margin of 8% on its price. If you could increase the price by 1% AND simultaneously keep the sales volume (in unit terms) at the same level as before the price increase, calculate the impact of this price increase on the profit margin. (For this question, assume there are no fixed costs. You just need to calculate the PERCENTAGE CHANGE in profit margin)
Which of the alternatives do you think Barry should select? Why? (Select the best choice below.) A. Alternative B should be selected because it has the highest NPV. B. This cannot be determined from the information provided. C. Alternative B should be selected because its equivalent annual cost is less per year than the annual equivalent cost for Alternative A. D. Alternative A should be selected because its equivalent annual cost is less per year than the annual equivalent cost for Alternative B.
4. What if the average price per unit increased to $25.50? Recalculate the following: a Contribution margin per unit. Round your answer to the nearest cent. b. Contribution margin ratio. Enter your answer as a decimal value (not a percentage), rounded to four decimal places. C. Sales revenue needed to break even. In your computations, use your rounded answer from part (4-b) above for the contribution margin ratio, and round your final answer to the nearest dollar. d. Sales revenue needed to achieve a target profit of $240,000. In your computations, use your rounded answer from part (4-b) above for the contribution margin ratio, and round your final answer to the nearest dollar.
Analysis of a project: In determining the annual profit of a project the following information is used: Variable costs are S /. 10 per unit, fixed costs vary according to the level of production in the following image: If the sale price is S /. 24 and sales of 15,000 units are expected, in addition, an annual profit of S /. 140,000. How many additional units must be sold at a price of S /. 20?
Where did the $30,000 for the annual benefits come from? Also, I though the formula for the payback method was payback method = (cost of implementing solution) / (annual financial benefits – annual costs). Is this what was used here?

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS