Question
A company has the capacity to generate a revenue of $3,000,000 a year. The break even revenue is $2,000,000 a year. From the breakeven point
A company has the capacity to generate a revenue of $3,000,000 a year. The break even revenue is $2,000,000 a year. From the breakeven point every $100 extra revenue generates $40 extra profit and every $100 decrease in revenue results in $40 extra loss. The costs consist of fixed cost , variable costs which are linear related to the revenue. 1-calculate the fix cost 2-calcualte the variable cost at revenue of $1,500,000 a year. The company decides to purchase another machine, which results in an increase of capacity to 4,000,000 a year. The fixed cost of this expansion is 200,000 a year, and the variable costs are 40$ for 100% revenue. The normal revenues is 4,000,000 a year, and the actual revenues is also $4,000,000. 3- calculate the breakeven point after the expansion. 4- calculate the full cost per dollar revenue after the expansion
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