Rancor Electronics sells 5,000 mp3 players and earns Tk.2.5 million in revenues. Rancor’s variable costs are Tk.600,000 and its fixed operating costs are Tk.1.52 million. How many mp3 players does Rancor have to sell recover all its operational costs? Can Rancor earn a larger increase in operating income by making a

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter18: The Management Of Accounts Receivable And Inventories

Section: Chapter Questions

Problem 10P

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Question

Rancor Electronics sells 5,000 mp3 players and earns Tk.2.5 million in revenues. Rancor’s variable costs are Tk.600,000 and its fixed operating costs are Tk.1.52 million. How many mp3 players does Rancor have to sell recover all its operational costs? Can Rancor earn a larger increase in operating income by making a smaller increase in sales? Suppose Rancor has Tk.1 million in debts at a 10 percent rate of interest and is subject 38 percent tax rate. How many mp3 players will Rancor have to sell in order attain its financial breakeven point?

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