In a plant operating at 80% of its annual production capacity, gross profit is 2.35M. Cost of raw materials represent 40% of the total variable cost and is 80% of the fixed cost. Fixed cost is equivalent to 90% of the depreciation cost of the depreciable asset on the 7th year. Depreciable asset amount to 20M while the salvage value is 3M. The annual depreciation should not exceed or limited to a maximum of 2M each year. If the annual plant capacity is 0.5 M kg (Use Sum of the years digit or declining balance method). Determine: (a) Breakeven point (b) Unit Selling Price (c) If the Selling Price is increased by 15% and Fixed costs increase by 10%, find the new breakeven point.
In a plant operating at 80% of its annual production capacity, gross profit is 2.35M. Cost of raw materials represent 40% of the total variable cost and is 80% of the fixed cost. Fixed cost is equivalent to 90% of the depreciation cost of the
Determine:
(a) Breakeven point
(b) Unit Selling Price
(c) If the Selling Price is increased by 15% and Fixed costs increase by 10%, find the new breakeven point.
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