Bill French Case

QUESTION 4: Kai decides to add color and keep his price the same. This will increase variable costs by $0.40 per issue. What will be the new unit volume (copies per issue) required to maintain $500 profits and cover the increased fixed and variable costs?

Breakeven Analysis for Product Tylenol Approach 1 - Same price as Tylenol Approach 2a - Cheaper than Tylenol Approach 2b - Cheaper w/lowered trade cost $ $ $ $ Unit Cost (Variable Cost) 0.60 0.60 0.60 0.60 Trade Cost (Selling Price to Retailers) $ 1.69 $ 1.69 $ 1.05 $ 0.70 Fixed Cost (Advertising) 2,000,000 6,000,000 6,000,000 6,000,000 Break-Even Quantity [Fixed Cost/(Trade Cost-Unit Cost)] 1,834,862 5,504,587 13,333,333 60,000,000 Contribution Margin (Unit) 64% 64% 43% 14%

My son, Pierre Brent, a student that recently transferred from S.T.N Community College, is being held liable for a portion of the Title IV funds that he was eligible to receive for the spring 2013 semester that had allegedly been refunded to him in error by the school. The financial administration has not resolved the matter, therefore, I am escalating this matter to your office for a solution.

4. Calculate each of the three product’s break-even points using the data in Exhibit 3. Why is the sum of these three volumes not equal to the 1,100,000 units aggregate break-even volume?

In our second assumption, instead of using the cost of goods per cases in 1986, we try to use the percentage it counts in the total expenses which is 50.4% and to find the sales needed to break-even. The detail of the calculation is shown in the answer for questions d. The result is that 95,635, a little bit higher than the estimated sales of 90,000.

“Two hundred fifty years of slavery. Ninety years of Jim Crow. Sixty years of separate but equal. Thirty-five years of racist housing policy. Until we reckon with our compounding moral debts, America will never be whole (Coates, 2014).”

My client William Harvey is being thrown in jail because he discovered that we are mostly made out of blood, not air. He found his discovery by cutting ari venes of animals and finding out that blood spilled out of the air vinens not air. He also proved that the heart pumps blood not creates ari by showing us that the only way the book could move is if the heart was pumping it no He proved this so he is not being a heretic.

Roger Nelson felt euphoria from the reversal in fortunes his new job offered. The job seemed a good fit—comporting to skills honed in the military—for him. Among the perks was a trip to Mazatlán. More gratifying, he had come into some disposable income. Margarita Mason paid the bill for his plane ticket and hotel accommodations. For equipment to do his job, he didn’t have to worry: He could procure whatever items he needed—for the right amount bucks, of course.

This question gives students an opportunity to exercise their ability to interpret break-even analyses. Key teaching points should include explaining the preparation of a break-even chart, the interpretation of the break-even volume (938,799 hectoliters [HL]), and the comparison of the break-even volume to the current volume (1,173,000 HL). Another key point is that the chart in case Exhibit 5 is relevant only for the current cost structure of the company—if variable costs increase or the plant expansion is approved, the break-even volume will rise. Finally, students should be aided in understanding that “break-even” refers to operating profit, not free cash flow. The typical use of the break-even chart ignores taxes, investments, and the depreciation tax shield.

Question 4: Calculate each of the three products’ break even points using the data. Why is the sum of these three volumes not equal to the 1,100,000 unit’s aggregate break-even volume?

This is a simple calculation to figure a good day’s sales when it is running at full capacity:

As an example, if fixed costs are $100, price per unit is $10, and variable costs per unit are $6, then the break-even quantity is 25 ($100 ÷ [$10 − $6] = $100 ÷$4). When 25 units are produced and sold, each of these units will not only have covered its own marginal (variable) costs, but will have also have contributed enough in total to have covered all associated fixed costs. Beyond these 25 units, all fixed costs have been paid, and each unit contributes to profits by the excess of price over variable costs, or the contribution margin. If demand is estimated to be at least 25 units, then the company will not experience a loss. Profits will grow with each unit demanded above this 25-unit break-even level.

Based on the real world functioning of businesses, every organization that deals with the process of manufacturing of certain products operates in accordance with the main principle of maximizing its profits. During the performance of daily activities, many business managers face a series of questions related to planning, control and decision making. In order to give answers to all these questions, an additional analysis needs to be considered. It is very important for managers to plan carefully how they are going to generate sufficient money to pay down costs and, in this way to result with a profit. As managers are interested in having the adequate information about the influence that certain actions might have on the profitability of the business, "Cost Volume and Profit" analysis plays a significant role by being a potential tool in facilitating the process of making the right decisions regarding planning and control in order to add value to the company. (Trifan and Anton, 2011). To further illustrate the essential impact that CVP analysis has on management authorities in making better decisions, I will refer to and analyze the case of the Hampshire Company which follows as below.

This allows Maria to meet the exact sales target for the month and earn an overall operating profit. If the break-even point for the new facility increases to 650,000 packs instead of 535,000 packs, the existing facility would be forces to reduce volume as producing at maximum capacity would exceed the monthly production target. The increase in the break-even point means that there will also be increase in variable costs. Although Maria would still be making a profit, she would not be maximizing her profit making ability. Since the contribution margin still allows fix cost to be covered, leaving the firm with a profit, Maria should still purchase the plant.

This equation is solved for the sales volume in units. c. In the graphical approach, sales revenue and total expenses are graphed. The break-even point occurs at the intersection of the total revenue and total expense lines. 8-2 The term unit contribution margin refers to the contribution that