A company has a production capacity of 500 units per month and its fixed costs are P250,000 a month. The variable costs per unit are P1,150 and each unit can be sold for P2,000. Economy measures are instituted to reduce the fixed costs by 10 percent and the variable costs by 20 percent. Determine the old and the new break-even points. What are the old and the new profit at 100 percent capacity?
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- ABC Corporation manufactures a certain product that sells for P5,000 each. The company’s maximum production capacity is 360 units per year. At present it is able to produce and sell 280 units a year. The cost to manufacture each product is P2,400 and the fixed operating cost per year is P520,000.1. What is the break – even sales volume of the product per year?2. What is the profit per year based on the present production – sales status?3. What is the loss if only 150 units were produced and sold in a year?The following are data from a production, calculate; The Break-even point in terms of sales value and in . The production demand is at 20,000 units. What is the cw1ent production profit? If the management decides to lower dow11its selling price by 50% given the same demand, will this be a sound decision? Justify. Monthly Fixed Factory Overhead Cost = P600,000 Monthly Fixed Selling Overhead Cost = Pl20,000 Va1iable Manufacturing Cost per Unit = P220 Va1iable Selling Cost per Unit = P30 Variable Distribution Cost per Units = P50 Selling Price per limit = P400Lulu hypermarket estimates daily demand of 18 kgs for a product. It costs RO 100 to make and receive an order, and it takes 16 workdays to receive it. The annual holding cost is 25 % of purchase price. The price RO 2 per kg. The company is operating 5 days per week, and a total of 210 workdays in one year. What is the minimum annual total holding and ordering cost in RO? Round-up to the nearest integer
- M. P. VanOyen Manufacturing has gone out on bid for a regu lator component. Expected demand is 700 units per month. The item can be purchased from either Allen Manufacturing or Baker Manufacturing. Their price lists are shown in the table. Ordering cost is $50, and annual holding cost per unit is $5. a) What is the economic order quantity?b) Which supplier should be used? Why?c) What is the optimal order quantity and total annual cost of ordering, purchasing, and holding the component?Investors put up $520,000 to construct a building and purchase all equipment for a new restaurant. The investors expect to earn a minimum return of 10 per cent on their investment. The restaurant is open 52 weeks per year and serves 900 meals per week. The fixed costs are spread over the 52 weeks (i.e. prorated weekly). Included in the fixed costs is the 10% return to the investors and $1,000 per week in other fixed costs. Variable costs include $1,000 in weekly wages and $600 per week for materials, electricity, etc. The restaurant charges $5 on average per meal. If the restaurant were to shut down, what would losses per week?A company manufacturing medical personal protective equipment (PPE) in your province is regulated by the provincial government. The firm has total assets of $500,000. The revenue function for its output has been estimated as:R (Q) = 250Q – $0.15Q2. The cost function is estimated as:TC = $25,000 + $10Qa. If the company were unregulated, what price would it charge, what outputwould it produce, what would its profit be, and what rate of return would it earn over its assets? What will be its marginal revenue at the unregulated price? (Note: You can obtain the inverse demand equation from the revenue function realizing that price equals revenue (R (Q) per unit).b. Thefirmhasproposedchargingapriceof$100foreachunitofoutput.Ifthis price is charged, what will be the total profits and the rate of return earned on the firm’s asset base?c. The government has ordered the firm to charge a price that will provide the firm no more than a 10 percent return on its assets. What price should the firm…
- The publishing company is publishing a book for business economics for which it has estimated the following total fixed and average variable cost: Total fixed cost $100,000 Average Variable Cost $ 20 Selling Price $ 30 a) Determine the breakeven output and total sales revenues. b) Determine the output that would generate a total profit of $ 60000 and total sales revenue at that output level. c) If total fixed cost reduced to $ 40,000 then what is the breakeven point. How much units they have to sale if they require to have a profit of $ 60,000. d) Find out the publisher breakeven point if fixed cost remain same at $ 100,000 but the variable cost reduced to $10. Also find out the breakeven point if profit of $60,000 has to be earned. e) Find out the breakeven and sales at required profit of $60,000 if all cost remain same but the price per unit increased to $40.A company has determined that the price and the monthly demand of one of its products are related by the equation D = √(400 − p), where p is the price per unit in dollars and D is the monthly demand. The associated fixed costs are $1,125/month, and the variable costs are $100/unit. Use this information to answer, Which of the following values of D represents the breakeven point? (a) 10 units (b) 15 units (c) 20 units (d) 25 units.The publishing company is publishing a book for business economics for which it has estimated the following total fixed and average variable cost: Total fixed cost $ 100,000 Average Variable Cost $ 20 Selling Price $ 30 Determine the breakeven output and total sales revenues. Determine the output that would generate a total profit of $ 60000 and total sales revenue at that output level. If total fixed cost reduced to $ 40,000 then what is the breakeven point. How much units they have to sale if they require to have a profit of $ 60,000. Find out the publisher breakeven point if fixed cost remain same at $ 100,000 but the variable cost reduced to $10. Also find out the breakeven point if profit of $60,000 has to be earned. Find out the breakeven and sales at required profit of $60,000 if all cost remain same but the price per unit increased to $40.
- Eastman Publishing Company is considering publishing a paperback textbook on spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design,and production setup is estimated to be $160,000. Variable production and material costsare estimated to be $6 per book. The publisher plans to sell the text to college and universitybookstores for $46 each.1. What is the breakeven point? 2. What profit or loss can be anticipated with a demand of 3800 copies? 3. With a demand of 3800 copies, what is the minimum price per copy that the publisher must charge to break even? 4. If the publisher believes that the price per copy could be increased to $50.95 and not affect the anticipated demand of 3800 copies, what action would you recommend?What profit or loss can be anticipated?The Rocky Mountain Publishing Company isconsidering introducing a new morning newspaper inDenver. Its direct competitor charges $0.25 at retailwith $0.05 going to the retailer. For the level of newscoverage the company desires, it determines the fixedcost of editors, reporters, rent, pressroom expenses,and wire-service charges to be $300,000 per month.The variable cost of ink and paper is $0.10 per copy,but advertising revenues of $0.05 per paper will begenerated. To print the morning paper, the publisherhas to purchase a new printing press, which will cost$600,000. The press machine will be depreciatedaccording to a seven-year MACRS class. The pressmachine will be used for 10 years, at which time itssalvage value would be about $100,000. Assume 300issues per year, a 40% tax rate, and a 13% MARR.How many copies per day must be sold to break evenat a retail selling price of $0.25 per paper?The fixed costs incurred by a small genetics research lab are $200,000 per year. Variable costs are $12,500 per research project. a. If the revenue per project is $30,000, what is the breakeven number of projects of this lab in a year to sustain its operations? b. Currently, the lab works on 20 projects a year. What is their profit at this level? c. If variable costs increase to $13,000 per research project, what is the new BEP? By how much will their profit increase or decrease?