Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The manufacturer of a product that has a variable cost of $2.60 per unit and total fixed cost of $142,000 wants to determine the level

The manufacturer of a product that has a variable cost of $2.60 per unit and total fixed cost of $142,000 wants to determine the level of output necessary to avoid losses.

  1. What level of sales is necessary to break-even if the product is sold for $4.50? Round your answer to the nearest whole number.

    units

    What will be the manufacturers profit or loss on the sales of 96,000 units? Round your answer to the nearest dollar.

    $

  2. If fixed costs rise to $178,000, what is the new level of sales necessary to break-even? Round your answer to the nearest whole number.

    units

  3. If variable costs decline to $2.30 per unit, what is the new level of sales necessary to break-even? Round your answer to the nearest whole number.

    units

  4. If fixed costs were to increase to $178,000, while variable costs declined to $2.30 per unit, what is the new break-even level of sales? Round your answer to the nearest whole number.

    units

  5. If a major proportion of fixed costs were noncash (depreciation), would failure to achieve the break-even level of sales imply that the firm cannot pay its current obligations as they come due? Suppose $103,000 of the above fixed costs of $142,000 were depreciation expense. What level of sales would be the cash break-even level of sales? Use the initial variable cost in your calculations. Round your answer to the nearest whole number.

    units

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

International Finance Theory And Policy

Authors: Steven Michael Suranovic

1st Edition

193612646X, 9781936126460

More Books

Students also viewed these Finance questions