Management believes it can sell a new product for $8.50. The fixed costs of production are estimated to be $6,000, and the variable costs are $3.20 a unit. Complete the following table at the given levels of output and the relationships between quantity and fixed costs, quantity and variable costs, and quantity and total costs. Quantity Total Revenue Variable Costs Fixed Costs Total Costs Profits (Loss) 0 500 1,000 1,500 2,000 2,500 3,000 Determine the break-even level using the above table and use the following Equation to confirm the break-even level of output. PQB = FC + VQB PQB - VQB = FC QB (P-V) = FC QB = FC P-V What would happen to the total revenue schedule, the total cost schedule, and the break-even level of output if management determined that fixed costs would be $10,000 instead of $6,000?
Management believes it can sell a new product for $8.50. The fixed costs of production are estimated to be $6,000, and the variable costs are $3.20 a unit. Complete the following table at the given levels of output and the relationships between quantity and fixed costs, quantity and variable costs, and quantity and total costs. Quantity Total Revenue Variable Costs Fixed Costs Total Costs Profits (Loss) 0 500 1,000 1,500 2,000 2,500 3,000 Determine the break-even level using the above table and use the following Equation to confirm the break-even level of output. PQB = FC + VQB PQB - VQB = FC QB (P-V) = FC QB = FC P-V What would happen to the total revenue schedule, the total cost schedule, and the break-even level of output if management determined that fixed costs would be $10,000 instead of $6,000?
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
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Management believes it can sell a new product for $8.50. The fixed costs of production are estimated to be $6,000, and the variable costs are $3.20 a unit.
- Complete the following table at the given levels of output and the relationships between quantity and fixed costs, quantity and variable costs, and quantity and total costs.
|
Quantity |
Total Revenue |
Variable Costs |
Fixed Costs |
Total Costs |
|
|
0 |
|
|
|
|
|
|
500 |
|
|
|
|
|
|
1,000 |
|
|
|
|
|
|
1,500 |
|
|
|
|
|
|
2,000 |
|
|
|
|
|
|
2,500 |
|
|
|
|
|
|
3,000 |
|
|
|
|
|
- Determine the break-even level using the above table and use the following Equation to confirm the break-even level of output.
PQB = FC + VQB
PQB - VQB = FC
QB (P-V) = FC
QB = FC
P-V
- What would happen to the total revenue schedule, the total cost schedule, and the break-even level of output if management determined that fixed costs would be $10,000 instead of $6,000?
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1. The table containing respective values with are calculated as below:
VIEWExcel Workings:
VIEW2. Calculation of Break-Even Level of Output:
VIEW3. The table containing respective values with are calculated at $10,000 is shown below:
VIEWExcel Workings:
VIEWCalculation of Break-Even Level of Output at $10,000:
VIEWAnswers:
VIEW
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