Exam 5: Cost-Volume-Profit Analysis and Break-Even

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:

Last year, Terrific Copying had total revenue of $475 000, while operating at 60% of capacity. The total of its variable cost is $150 000. Fixed costs were $180 000. If the current selling price, variable costs, and fixed costs are the same as last year, what net income can be expected from revenue of $500 000 in the current year

Last year, Terrific Copying had total revenue of $475 000, while operating at 60% of capacity. The total of its variable cost is $150 000. Fixed costs were $180 000. What is the expected revenue this year at full capacity?

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?

Sala pipe fittings produce pipe elbows and reducers from stainless steel. The company can process up to 20 000 tonnes of stainless steel sheets in a year. The company pays the steel company $800 per tonne of stainless steel sheets and each tonne is used to manufacture $2000 worth of elbows and reducers. Variable processing costs are $470 per tonne and fixed processing costs $3.4 million per year at all production levels. Administrative overhead is $3 million per year regardless of the volume of the production. Marketing and transportation costs work out to be $230 per tonne. Determine the break-even volume in terms of percent capacity utilization.

The operating budget of the Omega Twelve Company contains the following information. a) Draw a detailed break-even chart. b) Compute the break-even point as a percent of capacity. c) Determine the break-even point in dollars if fixed costs are reduced by $11 200 while variable costs are changed to 62% of sales.

Citizen sells a watch for $35 at a fixed cost of $1 million per annum. Recent recession has seen jump in material cost to $20. What is the new break-even volume of watches per year?

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. They 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. a) Draw a detailed break-even chart b) Compute the break-even point c) Determine the break-even point as a percent of capacity

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 $6400. 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?

Sunbeam wants to sell microwaves at a unit contribution margin of $42 and a unit contribution rate of 60%. What should be the break even volume if the total cost of production is kept below $10 000.

Victor plans to set up an online business selling software applications that he develops and supports. He believes that a price of $130 for his product including the technical support would be competitive. His monthly fixed expenses amount to $850. Victor would hire some college students to provide the technical support of the application paying them for 3 hours at $15 per hour for each client. a) How many clients does Victor need to acquire to break even? b) If he wants to achieve a target profit of $500 monthly, how many clients does he need?

Elaine's business budget included sales of $350 000 and fixed costs of $52 600. If the total contribution margin for the business was $125 000, what are the sales needed to break even?

Raider Corporation made $130 000 in sales last year. They had fixed costs of $29 300 and variable costs of $26 000. What is the breakeven point if their capacity is at $160 000? Provide algebraic statements of the revenue and cost functions, as well as a breakeven point in sales dollars.

Samsung sell refrigerators at $900 per unit. Their variable cost is estimated to be $550 per unit and their fixed costs are estimated to be $8.75 million per annum. Calculate the minimum number of units, Samsung should produce every year to make a profit?

Barb has a hot-dog stand near the ferry terminal for Centre Island. She pays $500 per month as rent and $3000 per month in wages for the hired help. Variable costs per hot dog come out to be $1.30 and she sells each hotdog for $3.00. In summer months, she is able to sell 4500 hotdogs in a month. To increase her sales, she added a free soda can which increased her variable costs by 20 cents. However, it increased her monthly sales to 5000 units. What is the change in her monthly net income due to these recent changes.

Given the following chart, calculate the cost function. Interpret the function to calculate variable costs and fixed costs:

A company that makes environmental measuring devices has calculated their revenue and costs as follows for the most recent fiscal period: Costs: What is the break-even point in sales dollars?

Caroline needs to put some money in her pocket this winter, so she plans on removing snow from driveways. She will need to pay $560 for a snow-blower to make her job easier. A variable cost of $3 per job for supplies would also be required. She estimates that she could clean 40 driveways a month. What price should she charge the customers for the service in order to make a profit of $1200?

Excel hardware is introducing a new product on a new product line of capacity 800 units per week at a production cost of $50 per unit. Fixed costs are $22 400 per week. Variable selling and shipping costs are estimated to be $20 per unit. Excel plan to market the new product at $110 per unit. What would be the weekly net income at 90% of the capacity?