Handy-Maid Cleaning Service is considering off ering anadditional line of services to include professional offi ce cleaning.Annual fi xed costs for this additional service are estimated tobe $9000. Variable costs are estimated at $50 per unit of service.If the price of the new service is set at $80 per unit of service,how many units of service are needed for Handy-Maid to breakeven?10. Easy-Tech Soft ware Corporation is evaluating theproduction of a new soft ware product to compete with thepopular word processing soft ware currently available. Annualfi xed costs of producing the item are estimated at $150,000, andthe variable cost is $10 per unit. Th e current selling price of theitem is $35 per unit, and the annual sales volume is estimated at50,000 units.(a) Easy-Tech is considering adding new equipment thatwould improve soft ware quality. Th e negative aspect ofthis new equipment would be an increase in both fi xedand variable costs. Annual fi xed costs would increase by$50,000 and variable costs by $3. However, marketingexpects the better-quality product to increase demandto 70,000 units. Should Easy-Tech purchase this newequipment and keep the price of their product the same?Explain your reasoning
Breakeven Analysis
Break Even Analysis is a term used in business, cost accounting and economics. It refers to a point where the total cost incurred becomes equal to the total revenue earned. Break Even Analysis determines the number of units to be sold to earn the revenue required to cover the total costs. Total cost is a sum total of fixed and variable costs.
Process analysis
The term process analysis can be defined as breakdown of production process into different phases that converts inputs into output. A series of routine activities are incorporated using organizational resources with a view to achieve operational excellence.
Handy-Maid Cleaning Service is considering off ering an
additional line of services to include professional offi ce cleaning.
Annual fi xed costs for this additional service are estimated to
be $9000. Variable costs are estimated at $50 per unit of service.
If the price of the new service is set at $80 per unit of service,
how many units of service are needed for Handy-Maid to break
even?
10. Easy-Tech Soft ware Corporation is evaluating the
production of a new soft ware product to compete with the
popular word processing soft ware currently available. Annual
fi xed costs of producing the item are estimated at $150,000, and
the variable cost is $10 per unit. Th e current selling price of the
item is $35 per unit, and the annual sales volume is estimated at
50,000 units.
(a) Easy-Tech is considering adding new equipment that
would improve soft ware quality. Th e negative aspect of
this new equipment would be an increase in both fi xed
and variable costs. Annual fi xed costs would increase by
$50,000 and variable costs by $3. However, marketing
expects the better-quality product to increase demand
to 70,000 units. Should Easy-Tech purchase this new
equipment and keep the price of their product the same?
Explain your reasoning
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