Question
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
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 |
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The Hartnett Corporation manufactures baseball bats with Pudge Rodriguezs 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.) |
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Current break-even point | units |
Proposed new break-even point | units |
b. | As a result of Bics suggestion, will the break-even point go up or down? | ||||
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Therapeutic Systems sells its products for $9 per unit. It has the following costs: |
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Rent | $ | 125,000 |
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Factory labor | $ | 2.00 | per unit |
Executives under contract | $ | 126,100 |
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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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