# Bu385 Sos Material - Midterm 2

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BU385 Midterm 2 Tutors: Dylan Cowley Greg Krikorian Coordinator: Jason Liou Some images used from course and textbook slides. 1 Did you know that… • Your donation DIRECTLY supports an education development project in Latin America? • AND you can go build the project funded THIS SUMMER with us? How to Apply! • www.lauriersos.com: – Visit the ‘Trips’ section to see upcoming opportunities at your school – Click the trip and fill out the online application form. • With questions e-mail outreach@lauriersos.com – If the dates don’t work, e-mail outreach@studentsofferingsupport.ca to see if there is a trip that can work! Interested in an Outreach Trip? • • • • • Come to an information session: Tuesday, November 5th at 10pm…show more content…
– Breakeven, payback period, NPV 20 Breakeven Example Franklin & Bash are looking to calculate the number of cases they will have to take this month to break even. Their fixed costs are \$45000, their labour costs are \$5/case, research materials cost \$2/case and they charge \$1000 per case. How many should they take to breakeven? = FC/(R-VC) = \$45000/[1000-(5+2)] = 45.32 21 Make or Buy? Oceanic airlines is trying to decide whether they should make or buy their airplanes. They could make them for \$500 000 with cost for labour at \$20 000 per week. A supplier’s price is \$6 700 000 for 10 planes. Cost is then reduced to \$7 500 per week. Make or buy? 22 Solution Make: v = 500 000 F = 20 000 Buy: v = 6 700 000/10 = 670 000 F = 7 500 X = point of indifference 500000x + 20 000 = 670000x + 7500 12500 = 170000x X = 0.0735 If demand is variable cost 24 More  • Cash flow – (cash received) – (cash outflow for labour, material, etc.) • Present Value – Sum (current value) of all