Farmer Ned wants to cash in on the increased demand for ethanol. Accordingly, he purchased a corn farm in Iowa. Ned believes his corn crop can be sold to an ethanol plant for $9.60 per bushel. Variable cost associated with growing and selling a bushel of corn is $7.60. Ned’s annual fixed cost is $158,400. a. (1) What is the break-even point in sales dollars and bushels of corn? Break-even point in sales dollars $ Break-even in bushels of corn (2) If Ned’s farm is 720 acres, how many bushels must he produce per acre to break even? ______ Bushels per acre b. If Ned actually produces 104,400 bushels, what is the margin of safety in bushels, in dollars, and as a percentage? Margin of safety in bushels ______ bushels Margin of safety in dollars $______ Margin of safety as a percentage ______%
Farmer Ned wants to cash in on the increased demand for ethanol. Accordingly, he purchased a corn farm in Iowa. Ned believes his corn crop can be sold to an ethanol plant for $9.60 per bushel. Variable cost associated with growing and selling a bushel of corn is $7.60. Ned’s annual fixed cost is $158,400.
a. (1) What is the break-even point in sales dollars and bushels of corn?
| Break-even point in sales dollars | $ |
| Break-even in bushels of corn |
(2) If Ned’s farm is 720 acres, how many bushels must he produce per acre to break even? ______ Bushels per acre
b. If Ned actually produces 104,400 bushels, what is the margin of safety in bushels, in dollars, and as a percentage?
Margin of safety in bushels ______ bushels
Margin of safety in dollars $______
Margin of safety as a percentage ______%
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