Exam 6: Break-Even and Cost-Volume-Profit Analysis

A company has variable costs that are 3/8 the value of their sales revenues. Total net income for the most recent period was a profit of $123 400 and sales were $400 000. The company has started a new marketing campaign that they hope will increase sales, but it will require additional advertising of $11 200. How many sales dollars does the company have to generate in order to remain at the same level of profitability as before the new ad campaign?

The Excellent DVD Company sells DVDs for $62 each. Manufacturing cost is $22.70 per DVD; marketing costs are $7.75 per DVD; and royalty payments are 15% of the selling price. The fixed cost of preparing the DVDs is $227 300. Capacity is 20 000 DVDs. a) Draw a detailed break-even chart. b) Compute the break-even point (i) in units; (ii) in dollars; (iii) as a percent of capacity. c) Determine the break-even point in units if fixed costs are increased by $3300 while manufacturing cost is reduced $1.65 per DVD. d) Determine the break-even point in units if the selling price is increased by 10% while fixed costs are increased by $2900.

A company has variable costs that are 4/7 the value of their sales revenues. Total net income for the most recent period was a profit of $53 770 and sales were $420 000. The company has started a new marketing campaign that they hope will increase sales, but it will require additional advertising of $6 400. How many sales dollars does the company have to generate in order to remain at the same level of profitability as before the new ad campaign?

Olfert Greenhouses has compiled the following estimates for operations. Sales $150 000 Fixed cost $45 200 Variable costs 67 500 112 700 Net income $37 300 Capacity is a sales volume of $175 000. Perform a break-even analysis showing a) an algebraic statement of (i) the revenue function; (ii) the cost function; b) a detailed break-even chart.

A local health care facility has fixed costs per month of $187 400. They also have patient costs of $4.15 per day per patient for linen and cleaning, medication costs are $23.32 per patient per day and lab tests cost $75.61 per patient per day. The government is considering allowing the health care facility to charge each patient and amount to recover his or her costs and to make a "profit" of $15 000 per month. The health care facility averages 690 patients per month. The VP- Finance for the facility wants you to calculate the daily rate charge per patient. Your answer is:

A local toolmaker makes the best hammers on the market. The head of the hammer costs $12.11 and the handle costs $4.37. It takes 1.4 minutes to assemble the hammer and the hourly cost is $90.00 for assembly time. The company has fixed operating costs of $22 310 per month. They sell the hammers for three times their total variable cost. The company wants to make a monthly profit of $5000. How many hammers must they sell?

A company that makes cell phones has the following cost structure. The have fixed costs of $145 000 per period and manufacturing costs of $15.16 per cell phone. Advertising is expected to be $25 000 per period and a special promotional contest will involve providing a free case for a cost of $5.30 per cell phone. Each cell phone sells for $49.95. What is the break-even point in the number of phones?

A company has variable costs that are 1/8 the value of their sales revenues. Total net income for the most recent period was a profit of $50 400 and sales were $500 000. The company has started a new marketing campaign that they hope will increase sales, but it will require additional advertising of $15 000. How many sales dollars does the company have to generate in order to remain at the same level of profitability as before the new ad campaign?

A local college hospitality restaurant has the best meals in town. The average variable cost per meal is $10.25 and the desserts are $1.25. The restaurant has fixed operating costs of $110 500 per month. They sell the meals and desserts for three times their average variable cost per meal. The college wants to make a monthly profit of $50 000. How many meals must they sell (Round up to nearest whole meal)?

A company that makes customized pens has calculated their revenue and costs as follows for the most recent fiscal period: Sales $100 000 Costs: Fixed Costs $??????? Variable Costs 15 000 Total Costs ??????? Net Income (Loss) $(20 000) What are the company's fixed costs per fiscal period?

A company that makes environmental measuring devices has calculated their revenue and costs as follows for the most recent fiscal period: Sales $750 000 Costs: Fixed Costs $200 000 Variable Costs 250 000 Total Costs 450 000 Net Income $300 000 What is the break-even point in sales dollars?

Last year a printing company had total sales of $37 500. The total of its variable costs was $15 000, and fixed costs were $18 000. Capacity is at sales maximum of $50 000. a) Calculate the break-even point in (i) dollars of sales (ii) as a percent of capacity b) Draw a detailed break-even chart

A pen manufacturer makes luxury pens. The pen case costs $7.26 each, the ink holder costs $1.26 each, the spring costs $.07 each and the velvet pen case costs $0.91 each. The plant has general and administrative costs of $55 000 and fixed selling expenses of $37 500. The pens sell of $39.95 each. Plant capacity is 4 000 pens per period. At what percentage of capacity is the break-even point?

A company that makes basketballs has calculated their revenue and costs as follows for the most recent fiscal period: Sales $623 000 Costs: Fixed Costs $??????? Variable Costs 404 880 Total Costs ??????? Net Income (Loss) $(26 880) What are the company's fixed costs per fiscal period?

A company that makes optical computer input devices has calculated their revenue and costs as follows for the most recent fiscal period: Sales $522 000 Costs: Fixed Costs $145 000 Variable Costs 208 800 Total Costs 353 800 Net Income $168 200 What is the break-even point in sales dollars?

Priest and Sons, a local manufacturer of a product that sells for $13.50 per unit. Variable cost per unit is $7.85 and fixed cost per period is $1 220. Capacity per period is 1100 units. Perform a break-even analysis showing a) an algebraic statement of (i) the revenue function; (ii) the cost function; (iii) calculate the break-even point in units. b) a detailed break-even chart.

A manufacturer plans to introduce a new type of shirt based on the following information. The selling price is $57.00; variable cost per unit is $18.00; fixed costs are $7800.00; and capacity per period is 500 units. a) Calculate the break-even point (i) in units (ii) in dollars (iii) as a percent of capacity b) Draw a detailed break-even chart. c) Calculate the break-even point (in units) if fixed costs are reduced to $7020.00 d) Calculate the break-even point (in dollars) if the selling price is increased to $78.00

A local restaurant has the best meals in town. The average variable cost per meal is $22.74 and the desserts are $5.24. Only half of the patrons order desserts. The restaurant has fixed operating costs of $112 714 per month. They sell the meals and desserts for four times their average variable cost per meal. The company wants to make a monthly profit of $75 000. How many meals must they sell?

The gas division of Power-U-Up plans to introduce a new gas delivery system based on the following accounting information. Fixed costs per period are $4 236; variable cost per unit is $168; selling price per unit is $211; and capacity per period is 450 units. a) Draw a detailed break-even chart b) Compute the break-even point (i) in units; (ii) as a percent of capacity; (iii) in dollars. c) Determine the break-even point as a percent of capacity (i) if fixed costs are reduced to $3 788; (ii) if fixed costs are increases to $5 577 and variable costs are reduced to 75% of the selling price; (iii) if the selling price is reduced to $191.

Trevor, the new owner of the vehicle accessory shop is considering buying sets of winter tires for $299 per set and selling them at $520 each. Fixed costs related to this operation amount to $3 250 per month. It is expected that 18 sets per month could be sold. How much profit will Trevor make each month?