Pearson eText Principles of Operations Management: Sustainability and Supply Chain Management -- Instant Access (Pearson+)
Pearson eText Principles of Operations Management: Sustainability and Supply Chain Management -- Instant Access (Pearson+)
11th Edition
ISBN: 9780135639221
Author: Jay Heizer, Barry Render
Publisher: PEARSON+
bartleby

Concept explainers

Question
Book Icon
Chapter 7.S, Problem 26P

a)

Summary Introduction

To determine: The break-even point in dollars per month.

Introduction:

Break-even point (BEP):

The break-even point is measured in units or in sales term to identify the point in a business which is required to cover with the total costs. The total profit at break-even point is 0.

a)

Expert Solution
Check Mark

Answer to Problem 26P

The break-even point in dollars per month is $7,584.83

Explanation of Solution

Given information:

Selling Price (P) Variable Cost (VC) Volume (V)
Drinks 1.50 0.75 30,000
Meals 10.00 5.00 10,000
Desserts 2.50 1.00 10,000
Sandwiches 6.25 3.25 20,000

Fixed cost=Rent, utilities cost+Entertainment cost=$1,800+$2,000=$3,800 / month

Formula to calculate Revenue:

Revenue=Selling price×Volume

Calculation of Revenue:

The revenue is calculated by multiplying the selling price with volume.

Drinks:

Revenue=$1.50×30,000=$45,000

Meals:

Revenue=$10×10,000=$100,000

Desserts:

Revenue=$2.50×10,000=$25,000

Lunch:

Revenue=$6.25×20,000=$125,000

Formula to calculate total revenue:

Total revenue=Individual revenue

Calculation of total revenue:

The total revenue is calculated by summing all the individual revenue.

Total revenue=$45,000+$100,000+$25,000+$125,000=$295,000

Formula to calculate percent of total revenue:

Percent of total revenue=Individual revenueTotal revenue

Calculation of percent of total revenue:

The percent of total revenue is calculated by dividing the individual revenue with the total revenue.

Drinks:

Percent of total revenue=$45,000$295,000=0.153

Meals:

Percent of total revenue=$100,000$295,000=0.339

Desserts:

Percent of total revenue=$25,000$295,000=0.085

Sandwiches:

Percent of total revenue=$125,000$295,000=0.423

Formula to calculate total percent of total revenue:

Total of percent of total revenue=Percent of total revenue

Calculation of Total percent of total revenue:

The total of percent of total revenue is calculated by summing all the individual percent of total revenue.

Total of percent of total revenue=0.153+0.339+0.085+0.423=1.000

Calculation of VCP :

The value is calculated by dividing the variable cost by selling price.

Drinks:

Drinks=0.751.50=0.50

Meals:

Meals=5.0010.00=0.50

Desserts:

Desserts=1.002.50=0.40

Sandwiches:

Sandwiches=3.256.25=0.52

Calculation of 1-VCP :

The value is calculated by subtracting 1 with VCP .

Drinks:

Drinks=1-0.50=0.50

Meals:

Meals=1-0.50=0.50

Desserts:

Desserts=1-0.40=0.60

Sandwiches:

Drinks=1-0.52=0.48

Calculation of 1-VCP×Percent of total revenue :

The value is calculated multiplying the percent of total revenue with the value of 1-VCP .

Drinks:

Drinks=0.50×0.153=0.077

Meals:

Meals=0.50×0.339=0.170

Desserts:

Desserts=0.60×0.085=0.051

Sandwiches:

Sandwichess=0.48×0.423=0.203

Formula to calculate total value of 1-VCP×Percent of total revenue :

Total=1-VCP×Percent of total revenue

Calculation of total value of 1VCP×Percent of total revenue :

The value is calculated by summing all the individual values of 1VCP×Percent of total revenue .

Total=0.077+0.170+0.051+0.203=0.501

Formula to calculate break-even point (BEP) in dollars:

BEP$=Fixed cost1VCP×Percent of total revenue

Calculation of Break-even point (BEP) in dollars:

The Break-even point is calculated by dividing the fixed cost with the value of 1-VCP×Percent of total revenue .

BEP$=3,8000.501=$7,584.83

Hence, the Break-even point (BEP) in dollarsis$7,584.83.

b)

Summary Introduction

To determine: The break-even units per day if it is open for 30 days a month.

Introduction:

Break-even point (BEP):

The break-even point is measured in units or in sales term to identify the point in a business which is required to cover with the total costs. The total profit at break-even point is 0.

b)

Expert Solution
Check Mark

Answer to Problem 26P

The break-even units per day if it is open for 30 days a month is 9 / day.

Explanation of Solution

Given information:

Selling Price (P) Variable Cost (VC) Volume (V)
Drinks 1.50 0.75 30,000
Meals 10.00 5.00 10,000
Desserts 2.50 1.00 10,000
Sandwiches 6.25 3.25 20,000

Fixed cost=Rent, utilities cost+Entertainment cost=$1,800+$2,000=$3,800 / month

Formula to calculate Revenue:

Revenue=Selling price×Volume

Calculation of Revenue:

The revenue is calculated by multiplying the selling price with volume.

Drinks:

Revenue=$1.50×30,000=$45,000

Meals:

Revenue=$10×10,000=$100,000

Desserts:

Revenue=$2.50×10,000=$25,000

Lunch:

Revenue=$6.25×20,000=$125,000

Formula to calculate total revenue:

Total revenue=Individual revenue

Calculation of total revenue:

The total revenue is calculated by summing all the individual revenue.

Total revenue=$45,000+$100,000+$25,000+$125,000=$295,000

Formula to calculate percent of total revenue:

Percent of total revenue=Individual revenueTotal revenue

Calculation of percent of total revenue:

The percent of total revenue is calculated by dividing the individual revenue with the total revenue.

Drinks:

Percent of total revenue=$45,000$295,000=0.153

Meals:

Percent of total revenue=$100,000$295,000=0.339

Desserts:

Percent of total revenue=$25,000$295,000=0.085

Sandwiches:

Percent of total revenue=$125,000$295,000=0.423

Formula to calculate total percent of total revenue:

Total of percent of total revenue=Percent of total revenue

Calculation of Total percent of total revenue:

The total of percent of total revenue is calculated by summing all the individual percent of total revenue.

Total of percent of total revenue=0.153+0.339+0.085+0.423=1.000

Calculation of VCP :

The value is calculated by dividing the variable cost by selling price.

Drinks:

Drinks=0.751.50=0.50

Meals:

Meals=5.0010.00=0.50

Desserts:

Desserts=1.002.50=0.40

Sandwiches:

Sandwiches=3.256.25=0.52

Calculation of 1VCP :

The value is calculated by subtracting 1 with VCP .

Drinks:

Drinks=10.50=0.50

Meals:

Meals=10.50=0.50

Desserts:

Desserts=10.40=0.60

Sandwiches:

Drinks=10.52=0.48

Calculation of 1VCP×Percent of total revenue :

The value is calculated multiplying the percent of total revenue with the value of 1-VCP .

Drinks:

Drinks=0.50×0.153=0.077

Meals:

Meals=0.50×0.339=0.170

Desserts:

Desserts=0.60×0.085=0.051

Sandwiches:

Sandwichess=0.48×0.423=0.203

Formula to calculate total value of 1VCP×Percent of total revenue :

Total=1-VCP×Percent of total revenue

Calculation of total value of 1VCP×Percent of total revenue :

The value is calculated by summing all the individual values of 1VCP×Percent of total revenue .

Total=0.077+0.170+0.051+0.203=0.501

Formula to calculate break-even point (BEP) in dollars:

BEP$=Fixed cost1VCP×Percent of total revenue

Calculation of Break-even point (BEP) in dollars:

The Break-even point is calculated by dividing the fixed cost with the value of 1VCP×Percent of total revenue .

BEP$=$3,8000.501=$7,584.83

The Break-even point (BEP) in dollars is $7,584.83.

Formula to calculate Dollar volume:

Dollar volume=Percent of total revenue×BEP$

Calculation of dollar volume:

The dollar volume is calculated by multiplying percent of total revenue with the BEP in dollars.

Drinks:

Dollar volume=0.153×$7,584.83=$1,160.48

Meals:

Dollar volume=0.339×$7,584.83=$2,571.26

Desserts:

Dollar volume=0.085×$7,584.83=$644.71

Lunch:

Dollar volume=0.423×$7,584.83=$3,208.38

Formula to calculate BEP units per month:

BEP=Dollar volumeSellingprice

Drinks:

BEP=$1,160.48$1.50=774 units / month

Meals:

BEP=$2,571.26$10.00=258 units / month

Desserts:

BEP=$644.71$2.50=258 units / month

Sandwiches:

BEP=$3,208.28$6.25=514 units / month

Formula to calculate BEP per day:

BEPday=BEP/month30 days / month

Drinks:

BEPday=77430=25.8=26

Meals:

BEPday=25830=8.6=9

Desserts:

BEPday=25830=8.6=9

Sandwiches:

BEPday=51430=17.13=18

Hence, the BEP unit per day is9 units.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Management of the Toys R4U Company needs to decide whether to introduce a certain new novelty toy for the upcoming Christmas season, after which it would be discontinued. The total cost required to produce and market this toy would be $500,000 plus $15 per toy produced. The company would receive revenue of $35 for each toy sold. Assuming that every unit of this toy that is produced is sold, write an expression for the profit in terms of the number produced and sold. Then find the break-even point that this number must exceed to make it worthwhile to introduce this toy. Now assume that the number that can be sold might be less than the number produced. Write an expression for the profit in terms of these two numbers. Formulate a spreadsheet that will give the profit in part b for any values of the two numbers. Write a mathematical expression for the constraint that the number produced should not exceed the number that can be sold.
DS You are a fruit vendor in the Coronation Market in Kingston Jamaica. You are facing the decision to purchase 100, 120 or 130 bags of oranges for resale each week. However, you are not sure of the demand-per week. You also consider that you can move around the market, depending on the number of bags, selling for different prices you have and you can also sell surplus for a reduced price. The payoff table below gives the details of the possible profit for each of these combinations. What is the optimal decision, using the Maximin criterion? Payoff Table Profits($) Weekly Demand (State of Nature) Average Decision (Purchase) Below Robust Par 75000 90000 110000 50000 55000 100 Bags 120 Bags 130 Bags 65000 75000 45000 65000 Select one: O a. Purchase 100 bags (expected profit = $50,000) O b. Purchase 120 bags (expected profit = $65,000) O c. Purchase 130 bags (expected profit = $45,000) o d. Purchase 130 bags (expected profit = $65,000) 9:25 AM Ca ) ENG 12/16/2021 85°F
Andy’s Bicycle Company (ABC) has the hottest new  product on the upscale toy market—boys’ and girls’ bikes in  bright fashion colors, with oversize hubs and axles; shell design  safety tires; strong padded frames; chrome-plated chains, brackets, and valves; and non-slip handlebars. Due to the seller’s market for high-quality toys for the newest baby boomers, ABC can  sell all the bicycles it manufactures at the following prices: boys’  bikes, $220; girls’ bikes, $175. This is the price payable to ABC at  its Orlando plant.  The firm’s accountant, V. R. Dondeti, has determined that  direct labor costs will be 45% of the price that ABC receives for  the boys’ model and 40% of the price received for the girls’ model.  Production costs, other than labor but excluding painting and  packaging, are $44 per boys’ bicycle and $30 per girls’ bicycle.  Painting and packaging are $20 per bike, regardless of model.  The Orlando plant’s overall production capacity is 390 bicycles per day. Each boys’…

Chapter 7 Solutions

Pearson eText Principles of Operations Management: Sustainability and Supply Chain Management -- Instant Access (Pearson+)

Ch. 7.S - Prob. 11DQCh. 7.S - Prob. 12DQCh. 7.S - What are the techniques available to operations...Ch. 7.S - Amy Xias plant was designed to produce 7,000...Ch. 7.S - For the post month, the plant in Problem S7.1,...Ch. 7.S - Prob. 3PCh. 7.S - Prob. 4PCh. 7.S - Prob. 5PCh. 7.S - The effective capacity and efficiency for the next...Ch. 7.S - Southeastern Oklahoma State Universitys business...Ch. 7.S - Prob. 8PCh. 7.S - Prob. 9PCh. 7.S - Prob. 10PCh. 7.S - The three-station work cell illustrated in Figure...Ch. 7.S - The three-station work cell at Pullman Mfg., Inc....Ch. 7.S - The Pullman Mfg., Inc., three-station work cell...Ch. 7.S - Prob. 14PCh. 7.S - 10 minutes per unit. Part 2 is simultaneously...Ch. 7.S - Prob. 16PCh. 7.S - Prob. 17PCh. 7.S - Using the data in Problem S7.17: a) What is the...Ch. 7.S - Prob. 19PCh. 7.S - Prob. 20PCh. 7.S - Prob. 21PCh. 7.S - Prob. 22PCh. 7.S - Prob. 23PCh. 7.S - Prob. 24PCh. 7.S - Prob. 25PCh. 7.S - Prob. 26PCh. 7.S - Prob. 27PCh. 7.S - Prob. 28PCh. 7.S - Prob. 29PCh. 7.S - Prob. 30PCh. 7.S - Prob. 31PCh. 7.S - Prob. 32PCh. 7.S - Prob. 33PCh. 7.S - Prob. 34PCh. 7.S - Prob. 35PCh. 7.S - Prob. 36PCh. 7.S - Prob. 37PCh. 7.S - Prob. 38PCh. 7.S - Prob. 39PCh. 7.S - Prob. 40PCh. 7.S - Prob. 41PCh. 7.S - Prob. 42PCh. 7.S - Prob. 43PCh. 7.S - Prob. 44PCh. 7.S - Prob. 45PCh. 7.S - Prob. 1VCCh. 7.S - a capacity expansion plan and a new 11-story...Ch. 7.S - a capacity expansion plan and a new 11-story...Ch. 7 - Ethical Dilemma For the sake of efficiency and...Ch. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - Prob. 3DQCh. 7 - Prob. 4DQCh. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - Prob. 8DQCh. 7 - Prob. 9DQCh. 7 - Prob. 10DQCh. 7 - Prob. 11DQCh. 7 - Prob. 12DQCh. 7 - Prob. 13DQCh. 7 - Prob. 14DQCh. 7 - Prob. 15DQCh. 7 - Prob. 16DQCh. 7 - Prob. 17DQCh. 7 - Prob. 18DQCh. 7 - Prob. 19DQCh. 7 - Prob. 1PCh. 7 - Usingthedatain Problem 7.1, determinethemost...Ch. 7 - Prob. 3PCh. 7 - Refer to Problem 7.1. If a contract for the second...Ch. 7 - Stan Fawcetts company is considering producing a...Ch. 7 - Prob. 6PCh. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Metters Cabinets, Inc., needs to choose a...Ch. 7 - Prob. 10PCh. 7 - Nagle Electric. Inc., of Lincoln, Nebraska, must...Ch. 7 - Stapleton Manufacturing intends to increase...Ch. 7 - Prepare a flowchart for one of the following: a)...Ch. 7 - Prepare a process chart for one of the activities...Ch. 7 - Prob. 15PCh. 7 - Prob. 16PCh. 7 - Prob. 17PCh. 7 - Prob. 1CSCh. 7 - Prob. 2CSCh. 7 - Prob. 3CSCh. 7 - Process Strategy at Wheeled Coach Wheeled Coach,...Ch. 7 - Prob. 1.2VCCh. 7 - Prob. 1.3VCCh. 7 - Prob. 1.4VCCh. 7 - Alaska Airlines: 20-Minute Baggage...Ch. 7 - Prob. 2.2VCCh. 7 - Prob. 2.3VCCh. 7 - Prob. 2.4VCCh. 7 - Prob. 2.5VCCh. 7 - Prob. 3.1VCCh. 7 - Prob. 3.2VCCh. 7 - Prob. 3.3VCCh. 7 - Prob. 3.4VC
Knowledge Booster
Background pattern image
Operations Management
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,