Bundle: Fundamentals Of Financial Management, 15th + Mindtap Finance, 2 Terms (12 Months) Printed Access Card
Bundle: Fundamentals Of Financial Management, 15th + Mindtap Finance, 2 Terms (12 Months) Printed Access Card
15th Edition
ISBN: 9781337609838
Author: Eugene F. Brigham, Joel F. Houston
Publisher: Cengage Learning
Question
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Chapter 14, Problem 6P

a.

Summary Introduction

To determine: The firm’s gain or loss at sales of 9,000 watches and at sales of 15,000 watches.

Introduction:

Break-even Analysis:

Break-even analysis is a type of tool used by the cost accountant professionals to find out the number of unit produced when the total cost is equal to the company revenue.

b.

Summary Introduction

To determine: The break-even point by means of chart.

c.

Summary Introduction

To determine: The break-even point when selling price is $33.

d.

Summary Introduction

To determine: The break-even point when selling price is $33 and variable cost is $ 24 per unit.

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The Weaver Watch Company sells watches for $25, the fixed costs are $140,000, and variable costs are $15 per watch.a. What is the firm’s gain or loss at sales of 8,000 watches? at 18,000 watches? b. What is the breakeven point? Illustrate by means of a chart.c. What would happen to the breakeven point if the selling price was raised to $31? What is the significance of this analysis?
Quantitative ProblemsSuppose QuickCharge Corporation manufactures phone chargers. They sell their chargers for $20. Their fixed operating costs are $100,000 and their variable operating costs are $10 per charger. Currently they are selling 30,000 chargers per year.What is QuickCharge’s EBIT (earnings before interest and taxes) at current sales of 30,000?What is QuickCharge’s breakeven point?Calculate the EBIT if QuickCharge’s sales increase 50% to 45,000 chargers. What is the percent of change in EBIT under this increase in sales? Also, calculate the EBIT if the company's sales decrease 50% to 15,000 chargers. What is the percent of change in EBIT under this decrease in sales?What is QuickCharge’s degree of operating leverage? Based on your computation, what does its operating leverage say about QuickCharge’s business risk?The StayDry Umbrella Corporation will have an EBIT of $100,000 if there is a normal amount of rain this year. But if there is a drought, they will have an EBIT of…
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