Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please (really I do begg you :D) is anyone able to help me in sloving the questions to this case ? I would be very

Please (really I do begg you :D) is anyone able to help me in sloving the questions to this case ? I would be very grateful.

image text in transcribed STRATSIM Break-even Analysis Break-even analysis attempts to determine the volume of sales necessary for a manufacturer to cover costs, or to make revenue equal costs. It is helpful in setting prices, estimating profit or loss potentials, and determining the discretionary costs that should be incurred. The general formula for calculating break-even units is: Break-even Units = In StratSim, total fixed costs can be broken into discretionary marketing expenditures, and fixed costs for plant and overhead. The selling price is the MSRP less the dealer discount, and the cost of materials and labor make up the variable cost. In this assignment, you will allocate fixed costs across a portfolio of products and calculate the break-even units for each product. A firm's production capacity is 1.5 million units, with annual fixed costs of $3.2 billion for depreciation, plant maintenance, corporate marketing, and general overhead. Additional values for the three vehicles produced and sold by the firm are shown in the table below: MSRP Dealer Discount Variable Cost Adv. & Promo. Prev. Unit Sales VEHICLE X $15,999 10% $11,799 $35 million 400 thousand VEHICLE Y $20,999 12% $13,599 $50 million 600 thousand VEHICLE Z $25,999 15% $16,899 $70 million 300 thousand 1. How will you allocate the fixed costs across the products? 2. Calculate the break-even units for each product, showing the intermediate calculations for the allocated fixed costs and selling price (dealer invoice). Continued on Next Page . . . STRATSIM (Cont'd.) 3. What impact does a 10% drop in MSRP have on the break-even point for each vehicle? 4. Using the original MSRP, recalculate break-even if advertising and promotion expense for each product is doubled. 5. What impact might the introduction of a new product in your vehicle line have on fixed costs and the break-even calculation

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Robert Libby, Patricia Libby, Daniel G Short, George Kanaan, Maureen Sterling

6th Canadian edition

73208140, 1259105695, 978-1259105692

More Books

Students also viewed these Accounting questions

Question

What is the typical class size?

Answered: 1 week ago

Question

Behaviour: What am I doing?

Answered: 1 week ago