sales volume.3- To what extent can the sales volume be increased if the company wants to achieve net profits that increase?(25%) of the profit achieved under the current prevailing situation, that is, in light of the current sales volume?4- To what extent can fixed costs be reduced, if the company wants to achieve net profits that increase? (20) percent of the profit achieved under the current prevailing situation, that is, in light of the current sales volume?
sales volume.3- To what extent can the sales volume be increased if the company wants to achieve net profits that increase?(25%) of the profit achieved under the current prevailing situation, that is, in light of the current sales volume?4- To what extent can fixed costs be reduced, if the company wants to achieve net profits that increase? (20) percent of the profit achieved under the current prevailing situation, that is, in light of the current sales volume?
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
Related questions
Question
Please answer point 3 and 4
Transcribed Image Text:Stepl
a)
The amount of revenue at which a company
makes a profit of zero is known as break-
even sales. This sales number encompasses
all of a business's fixed expenses as well as
any variable expenses related to sales.
Step2
b)
Computation:
A
1 Particulars
Amount
=27000/(140-60)
=((140-60) *8000)-27000
4 Sales volume that can be increased to increase profits (27000+(B3*125%))/(140-60)
2 Break-even size
3 Profit
Result:
В
1 Particulars
Amount
2 Break-even size
337.5
3 Profit
4 Sales volume that can be increased to increase profits
613000
9916
Transcribed Image Text:Your company has reviewed its new
product that it introduced last year, and
it has been found that the annual salesIt
amounts to (8,000) units, the unit selling
price is (140) dinars, and annual fixed costs
are (27,000)dinars and the variable cost of
the unit (60) dinars. You are asked to answer
the following, using an analysisTie level at
it:1- What is the current break-even size,
calculate it algebraically and graphically.
2- Calculate the profit under the current
sales volume.3- To what extent can the sales
volume be increased if the company wants
to achieve net profits that increase?(25%)
of the profit achieved under the current
prevailing situation, that is, in light of the
current sales volume?4- To what extent
can fixed costs be reduced, if the company
wants to achieve net profits that increase?
(20) percent of the profit achieved under
the current prevailing situation, that is, in
light of the current sales volume?
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