Shock Electronics sells portable heaters for $75 per unit, and the variable cost to produce them is $42. Mr. Amps estimates that the fixed costs are $165,000.
a.
Compute the break-even point in units.
Break-even point
units
b.
Fill in the following table (in dollars) to illustrate that the break-even point has been achieved. (Leave no cells blank - be certain to enter "0" wherever required.)
Sales
$
Total variable costs
Fixed costs
Net profit (loss)
$
Air Purifier Inc. computes its break-even point strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $2,520,000, but 20 percent of this value is represented by depreciation. Its contribution margin (price minus variable cost) for each unit is $54. How many units does the firm need to sell to reach the cash break-even point? (Round your answer to the nearest whole number.)
Cash break-even point
units
The Hartnett Corporation manufactures baseball bats with Pudge Rodriguezâs autograph stamped on them. Each bat sells for $47 and has a variable cost of $25. There are $36,960 in fixed costs involved in the production process.
a.
Compute the break-even point in units.
Break-even point
units
b.
Find the sales (in units) needed to earn a profit of $18,480.
Sales quantity needed
units
Boise Timber Co. computes its break-even point strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $8,300,000, but 20 percent of this value is represented by depreciation. Its contribution margin (price minus variable cost) for each unit is $27. How many units does the firm need to sell to reach the cash break-even point?
Cash break-even point
units
Shawn Pen & Pencil Sets Inc. has fixed costs of $421,400. Its product currently sells for $18 per unit and has variable costs of $8.20 per unit. Mr. Bic, the head of manufacturing, proposes to buy new equipment that will cost $440,000 and drive up fixed costs to $563,500. Although the price will remain at $18 per unit, the increased automation will reduce costs per unit to $5.75.
a.
Compute the following break-even points. (Do not round intermediate calculations. Round your answers to the nearest whole number.)
Current break-even point
units
Proposed new break-even point
units
b.
As a result of Bicâs suggestion, will the break-even point go up or down?
The break-even point will go down.
The break-even point will go up.
Therapeutic Systems sells its products for $9 per unit. It has the following costs:
Rent
$
125,000
Factory labor
$
2.00
per unit
Executives under contract
$
126,100
Raw material
$
.80
per unit
Separate the expenses between fixed and variable costs per unit. Using this information and the sales price per unit of $9, compute the break-even point. (Do not round intermediate calculations. Round your answer to the nearest whole number.)
Break-even point
units
7)
Calloway Cab Company determines its break-even strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $650,000, but 5 percent of this value is represented by depreciation. Its contribution margin (price minus variable cost) for each unit is $6.10. How many units does the firm need to sell to reach the cash break-even point? (Round your answer to the nearest whole number.)
Cash break-even point
units
8)
Eaton Tool Company has fixed costs of $494,400, sells its units for $102, and has variable costs of $54 per unit.
a.
Compute the break-even point. (Round your answer to the nearest whole number.)
Break-even point
units
b.
Ms. Eaton comes up with a new plan to cut fixed costs to $380,000. However, more labor will now be required, which will increase variable costs per unit to $57. The sales price will remain at $102. What is the new break-even point? (Round your answer to the nearest whole number.)
New break-even point
units
c.
Under the new plan, what is likely to happen to profitability at very high volume levels (compared to the old plan)?
Profitability will be less
Profitability will be more
| Shock Electronics sells portable heaters for $75 per unit, and the variable cost to produce them is $42. Mr. Amps estimates that the fixed costs are $165,000. |
| a. | Compute the break-even point in units. |
| Break-even point | units |
| b. | Fill in the following table (in dollars) to illustrate that the break-even point has been achieved. (Leave no cells blank - be certain to enter "0" wherever required.) |
| Sales | $ |
| Total variable costs | |
| Fixed costs | |
| Net profit (loss) | $ |
| Air Purifier Inc. computes its break-even point strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $2,520,000, but 20 percent of this value is represented by depreciation. Its contribution margin (price minus variable cost) for each unit is $54. How many units does the firm need to sell to reach the cash break-even point? (Round your answer to the nearest whole number.) |
| Cash break-even point | units |
| The Hartnett Corporation manufactures baseball bats with Pudge Rodriguezâs autograph stamped on them. Each bat sells for $47 and has a variable cost of $25. There are $36,960 in fixed costs involved in the production process. |
| a. | Compute the break-even point in units. |
| Break-even point | units |
| b. | Find the sales (in units) needed to earn a profit of $18,480. |
| Sales quantity needed | units |
| Boise Timber Co. computes its break-even point strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $8,300,000, but 20 percent of this value is represented by depreciation. Its contribution margin (price minus variable cost) for each unit is $27. How many units does the firm need to sell to reach the cash break-even point? |
| Cash break-even point | units |
| Shawn Pen & Pencil Sets Inc. has fixed costs of $421,400. Its product currently sells for $18 per unit and has variable costs of $8.20 per unit. Mr. Bic, the head of manufacturing, proposes to buy new equipment that will cost $440,000 and drive up fixed costs to $563,500. Although the price will remain at $18 per unit, the increased automation will reduce costs per unit to $5.75. |
| a. | Compute the following break-even points. (Do not round intermediate calculations. Round your answers to the nearest whole number.) |
| Current break-even point | units |
| Proposed new break-even point | units |
| b. | As a result of Bicâs suggestion, will the break-even point go up or down? | ||||
|
| Therapeutic Systems sells its products for $9 per unit. It has the following costs: |
| Rent | $ | 125,000 | |
| Factory labor | $ | 2.00 | per unit |
| Executives under contract | $ | 126,100 | |
| Raw material | $ | .80 | per unit |
| Separate the expenses between fixed and variable costs per unit. Using this information and the sales price per unit of $9, compute the break-even point. (Do not round intermediate calculations. Round your answer to the nearest whole number.) |
| Break-even point | units |
7)
| Calloway Cab Company determines its break-even strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $650,000, but 5 percent of this value is represented by depreciation. Its contribution margin (price minus variable cost) for each unit is $6.10. How many units does the firm need to sell to reach the cash break-even point? (Round your answer to the nearest whole number.) |
| Cash break-even point | units |
8)
| Eaton Tool Company has fixed costs of $494,400, sells its units for $102, and has variable costs of $54 per unit. |
| a. | Compute the break-even point. (Round your answer to the nearest whole number.) |
| Break-even point | units |
| b. | Ms. Eaton comes up with a new plan to cut fixed costs to $380,000. However, more labor will now be required, which will increase variable costs per unit to $57. The sales price will remain at $102. What is the new break-even point? (Round your answer to the nearest whole number.) |
| New break-even point | units |
| c. | Under the new plan, what is likely to happen to profitability at very high volume levels (compared to the old plan)? | ||||
|
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