Question
Q#1 Auto Tires, Inc. sells tires to service stations for an average of $45 each. The variable costs of each tire is $30 and monthly
Q#1 Auto Tires, Inc. sells tires to service stations for an average of $45 each. The variable costs of each tire is $30 and monthly fixed manufacturing costs total $15,000. Other monthly fixed costs of the company total $12,000.
Required:
a. What is the break-even level in tires?
b. What is the margin of safety, assuming sales total $90,000?
c. What is the break-even level in tires, assuming variable costs increase by 20 percent?
d. What is the break-even level in tires, assuming the selling price goes up by 10 percent, fixed manufacturing costs decline by 10 percent and other fixed costs decline by $150?
Q#1 Auto Tires, Inc. sells tires to service stations for an average of $45 each. The variable costs of each tire is $30 and monthly fixed manufacturing costs total $15,000. Other monthly fixed costs of the company total $12,000.
Required:
a. What is the break-even level in tires?
b. What is the margin of safety, assuming sales total $90,000?
c. What is the break-even level in tires, assuming variable costs increase by 20 percent?
d. What is the break-even level in tires, assuming the selling price goes up by 10 percent, fixed manufacturing costs decline by 10 percent and other fixed costs decline by $150?
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Corporate Finance Principles and Practice
Authors: Denzil Watson, Antony Head
7th edition
978-1292103037
