Question
The Goode and Cooke Company produces several models of frying pans. There is little difference in the production time required for the various models; the
The Goode and Cooke Company produces several models of frying pans. There is little
difference in the production time required for the various models; the plant is designed to
produce 160 frying pans per eight-hour shift, and there are two shifts per working day.
However, the plant does not operate for the full eight hours: the employees take two 12-
minute breaks in each shift, one in the first four hours and one in the second four hours; two
hours per week are devoted to cleaning the factory and performing maintenance on the
machines; one four-hour period every four weeks is devoted to the meeting of the quality
circle. The plant usually produces about 3,500 frying pans per four-week period. You may
ignore holidays in solving this problem. The selling price of the product is $199.95. The
variable costs per unit are:
Labor $60.25
Raw material 25.70
Purchased component 21.50
Variable overhead 17.50
The fixed costs total $300,000 per year. Perform a breakeven analysis of this company.
a. What is the actual output?
b. What is the revenue at the breakeven point?
c. Estimate the profit when 9,000 units of the product are sold in a year.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started