Financial Account Fixed costs for manufacturing a certain product are $100,000 per year.Variable costs are $25 per unit. The product can be purchased fromanother manufacturer for a flat rate of $48 per unit. The number of unitsthat must be used each year in order for the manufacture and purchaseof alternatives to break even is closest to

To determine the break-even quantity, we need to find the number of units where the total cost of…

Answered: Fixed costs for manufacturing a certain…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 4P

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Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22 each in the coming year. Total variable costs equal 1,086,800. Total fixed costs equal 8,000,000. (Round all ratios to four significant digits, and round all dollar amounts to the nearest dollar.) Required: 1. What is the contribution margin per unit? What is the contribution margin ratio? 2. Calculate the sales revenue needed to break even. 3. Calculate the sales revenue needed to achieve a target profit of 245,000. 4. What if the average price per unit increased to 23.50? Recalculate: a. Contribution margin per unit b. Contribution margin ratio (rounded to four decimal places) c. Sales revenue needed to break even d. Sales revenue needed to achieve a target profit of 245,000
Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. The information they will use to consider these changes is shown here.
Fixed costs for manufacturing a certain product are $100,000 per year. Variable costs are $25 per unit. The product can be purchased from another manufacturer for a flat rate of $48 per unit. The number of units that must be used each year in order for the manufacture and purchase of alternatives to break even is closest to
Calculate the total incremental cost of making 78,000 and buying 78,000 units. Should the company continue to manufacture the part, or should it buy the part from the outside supplier?
Process A has a fixed cost of $160,000 per year and a variable cost of $50 per unit. For Process B, 10 units can be produced in 1 day at a cost of $200. If the company’s MARR is 10% per year, what will the annual fixed cost have to be for Process B in order for the two alternatives to have the same annual total cost at a production rate of 1000 units per year?
A specified part can be obtained by either of two methods. Method 1 will have fixed costs of $75,000 per year and a variable cost of $25 per unit. Method 2 will have fixed costs of $90,000 per year and a variable cost of $17 per unit. The number of units that must be produced each year for the two methods to be equally attractive is closest to _.
Process A has a fixed cost of $16,000 per year and a variable cost of $40 per unit. For process B, 5 units can be produced in 1 day at a cost of $125. If the company's MARR is 10% per year, the fixed cost of process B that will make the two alternatives have the same annual cost at a production rate of 1000 units per year is closest to: Oa. $18,000 O b. $27.000 O C. Over $30,000 Od. Less than $10,000
Compute the contribution margin per unit?
MicroCam produces a single product. Variable cost per unit is $25, and fixed costs are $95,000 per year. If the firm sells 5,000 units per year, what price should be charged for each unit to earn $35,000?
A certain product sells for $55. It has variable costs of $33 per unit and fixed costs of $300,000 per year. How many products must the company manufacture to break even?(Round your answer to nearest unit number)
Goldberg Company currently manufactures 52,000 units per year of a key component for its manufacturing process. Variable costs are $4.05 per unit, fixed costs related to making this component are $69,000 per year, and allocated fixed costs are $70,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.70 per unit. Calculate the total incremental cost of making 52,000 units and buying 52,000 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier? Complete this question by entering your answers in the tabs below. Outside Costs to Make Costs to Buy Supplier Should it continue to manufacture the component, or should it buy this component from the outside supplier? Should Gelb make the part or purchase it from the outside supplier?
Halifax Products sells a product for $75. Variable costs per unit are $50, and monthly fixed costs are $75,000. Answer the following questions: Required: What is the break-even point in units? What unit sales would be required to earn a target profit of $200,000? Assuming Halifax achieve the level of sales required in part b, what is the margin of safety in sales dollars?

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