PROBLEM SOLVING: (show step by step solution) Break-even and target profits. Analysis of the operations of FAST Company shows the fixed costs to be P200,000 and the variable costs to be P8 per unit. Selling price is P16 per unit. Derive the break-even point expressed in units. How many units must the firm sell to earn a profit of P280,000? What would profits be if revenue from sales were P2,000,000?

PROBLEM SOLVING: (show step by step solution) Break-even and target profits. Analysis of the operations of FAST Company shows the fixed costs to be P200,000 and the variable costs to be P8 per unit. Selling price is P16 per unit. Derive the break-even point expressed in units. How many units must the firm sell to earn a profit of P280,000? What would profits be if revenue from sales were P2,000,000?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: The following pertained to Lomi Inc.: Product Sales Price Unit Variable…

A: There are two forms of costs that are being used and incurred by the business. These are known as…

Q: Sales Beer sales Food sales Other sales Total sales Less cost of sales Gross margin Less marketing…

A: Break even sales cover all fixed and variable costs and at this point, the business earns neither…

Q: Suppose Morrison Corp.'s breakeven point is revenues of $1,100,000. Fixed costs are $660,000. 1.…

A: “Since you have posted a question with many sub-parts, we will solve three sub-parts for you. To get…

Q: A company's fixed operating costs are $310,000, its variable costs are $3.65 per unit, and the…

A: Break even is the point at which the revenue generated becomes equal to the total costs. Fixed Cost…

Q: Levi Company has revenues of P500,000, variable costs of P300,000, and pretax profit of P150,000. If…

A: Solution:- calculation of the new breakeven point (in pesos) as follows under:- The following…

Q: Log Co has an operating gearing ratio of 33.33%. Its sales are currently $100m and its operating…

A: The operating gearing ratio, also known as the operating leverage ratio, measures the extent to…

Q: 43) Determine the break-even point of sales if: Sales is $100,000, Variable cost is $ 50,000 and…

A: At Break-Even Point of Sales Profit is Zero it means Sales equal to Expenses Profit = Sales -…

Q: Cantor Products sells a product for $81. Variable costs per unit are $44, and monthly fixed costs…

A: Solution a: Contribution margin per unit = Selling price per unit - Variable cost per unit = $81 -…

Q: REQUIRED Use the information provided below to answer the following questions independently: 3.2.1…

A: The income is calculated as the difference between the revenue and expenses. The contribution margin…

Q: 7. the maximum that they can increase the fixed cost? Company ET 's fixed costs were $40 000,…

A: Approach: Let FC be the fixed cost, VC as the variable cost, S as the sales, TC as the total cost,…

Q: Currently, a company has fixed costs of P32,500, a contribution ratio of 65%, and is selling its…

A: Breakeven sales: It the level of sales at which the business does not make any profit nor does it…

Q: equirement 1. If SnowDreams cannot reduce its costs, what profit will it earn? State your answer…

A: Income statement has been prepared in the current case, where concept of variable costing has been…

Q: You are the general manager of a firm with fixed costs of $50,000. Your varla are $80 per unit and…

A: Formulas, Breakeven Volume(units) = Fixed Costs / Contribution per unit Volume at which firm would…

Q: Maple Company has sales of P550,000 and has variable costs of P330,000.Fixed costs are P180,000. a.…

A: Contribution margin = Sales - Total variable cost = P550,000 - P330,000 = P220,000 Contribution…

Question

PROBLEM SOLVING: (show step by step solution)

Break-even and target profits. Analysis of the operations of FAST Company shows the fixed costs to be P200,000 and the variable costs to be P8 per unit. Selling price is P16 per unit.

Derive the break-even point expressed in units.
How many units must the firm sell to earn a profit of P280,000?
What would profits be if revenue from sales were P2,000,000?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

6. (MARGINAL ANALYSIS) A perfectly competitive industry currently has 100 firms, all of which have fixed costs of $16 and average variable cost as follows: Quantity 1 Average Variable Cost $1 Total Cost Marginal Cost Average Total Cost 2 2 3 3 4 4 5 6 5 6 a) Compute TC, MC and ATC and fill in columns above. Hint: this is done most easily by calculating TC first, right? b) The price is currently $10. Would this profit-maximizing firm shut down in the short run, or continue to produce? If it continues to produce, how much would this firm produce? c) As the market that this firm belongs to makes the transition to its long-run equilibrium, will the price rise or fall? Will the quantity demanded rise or fall? Will the quantity supplied by each firm rise or fall? Briefly explain why these changes occur in transition to the long run. Try to illustrate this with a graph of the firm and market it belongs to!
If the company wants to earn a profit of $35,000 instead of breaking even, what is the amount of sales the company must achieve? Given information: Fixed Expenses Rent = $ 24,000 Salaries = $ 40,000 Depreciation = $ 13,000 Variable Expenses Cost of Goods Sold = 28% of sales Supplies = 17% of sales Sales Commissions = 10% of sales
a. What is McDonald's contribution margin? Round to the nearest million. (Give answer in millions of dollars.) $4 million b. What is McDonald's contribution margin ratio? % c. How much would operating income increase if same-store sales increased by $1,500 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million. million
Help me please
Use the following information about Rat Race Home Security, Inc. to answer the questions: Average selling price per unit $324. Variable cost per unit $187 Units sold 449 Fixed costs $8,589 Interest expense 17,204 Based on the data above, what will be the resulting percentage change in earnings per share of Rat Race Home Security, Inc. if they expect operating profit to change 4.2 percent? (You should calculate the degree of financial leverage first). (Write the percentage sign in the "units" box).
A company's fixed operating costs are $740,000, its variable costs are $2.25 per unit, and the product's sales price is $4.65. What is the company's break-even point; that is, at what unit sales volume will its income equal its costs? Round your answer to the nearest whole number. units
Carla Vista Company is considering two alternatives. Alternative A will have sales of $154,800 and costs of $100,100. Alternative B will have sales of $181,400 and costs of $131,800. Compare alternative A with alternative B showing incremental revenues, costs, and net income. (If an amount reduces the net income then enter with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).) Revenues Costs Net income $ Alternative A is better than Alternative A Alternative B eTextbook and Media $ Alternative B $ Net Income Increase (Decrease)
Clockmaker Ltd. makes a product called wallet. Managers from Clockmaker Ltd. want to achieve a profit of £82, 800. The wallet price equals £82 per unit. Each unit of wallet has a cost of £36 and annual total fixed costs equal £147, 200. Considering this information, which of the following statements is true? O a. To achieve the desired profit, Clockmaker Ltd. needs to sell 5, 000 units of wallet. O b. Clockmaker Ltd. would need to sell more than 3, 200 units of wallet to have positive profits. O c. Contribution per unit equals £46. O d. All the answers are true.
The current situation of XZ company is as follows: Variable costs are 84% of sales and fixed costs are $40 000. a) A suggestion is made to improve the profit by increasing the contribution margin. If the contribution margin can be improved by 6% of sales by increasing fixed costs by $10 000, will the break even point be lower? b) If sales are currently $300 000, will the profit be better, assuming no increase in sales?
1. Fixed costs are P 240,000 and contribution margin ratio is 48%. What is breakeven point peso sales? (Answer the figures only; no decimal places) 2. A business has selling price of P 129.50 with an average variable cost of P 54.40. Fixed costs are P 1,400,000. Calculate the following: What is the break-even units? Answer the figures only; no decimal places)
1.) what is the break-even in dollar sales? 2.) what is the margin of safety percentage? 3.) what is the degree of operating leverage ? (Round your answer to 2 decimal places.) 4.) using the degree of operating leverage and without changing anything, calculate the percentage change in net operating income if unit sales increase by 20% ?
A company is making a loss of Rs. 40,000 and relevant information is as follows: Sales Rs. 1, 20,000; Variable Costs Rs. 60,000; Fixed costs Rs. 1, 00,000.Loss can be made good either by increasing the sales price or by increasing sales volume. What are Break even sales if (a) Present sales level is maintained and the selling price is increased. (b) If present selling price is maintained and the sales volume is increased. What would be sales if a profit of Rs. 1, 00,000 is required?