Breakeven analysis Barry Carter is considering opening a used-book store. He wants to estimate the number of books he must sell to break even. The books will be sold for $13.83 each,variable operating costs are $9.69 per book, and annual fixed operating costs are $73,100.a. Find the operating breakeven point in number of books.b. Calculate the total operating costs at the breakeven volume found in part (a).c. If Barry estimates that at a minimum he can sell 2,060 books per month, should he go into the business?d. How much EBIT will Barry realize if he sells the minimum 2,060 books per month noted in part (c)?a. The operating breakeven point isunits. (Round to the nearest integer.)

Cost volume profit analysis is the technique used by management for decision making. The methods…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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ne Breakeven analysis Barry Carter is considering opening a used-book store. He wants to estimate the number of books he must sell to break even. The books will be sold for $14.49 each, variable operating costs are $9.66 per book, and annual fixed operating costs are $73,100. a. Find the operating breakeven point in number of books. b. Calculate the total operating costs at the breakeven volume found in part (a). c. If Barry estimates that at a minimum he can sell 2,050 books per month, should he go into the business? d. How much EBIT will Barry realize if he sells the minimum 2,050 books per month noted in part (c)? ts a. The operating breakeven point is units. (Round to the nearest integer.) Text a Librai Calculat Cesource Enter your answer in the answer box and then click Check Answer. Study Check Answer 4 parts remaining Clear All ication Tools > Question 11 (0/1) Ouestion 12 (0/1). Ouestion 9 (0/1) Ouestion 10 (0/1) Type here to search
Derby Phones is considering the introduction of a new model of headphones with the following price and cost characteristics. Sales price $ 18 per unit Variable costs 7 per unit Fixed costs 27,000 per month Assume that the projected number of units sold for the month is 7,000. Consider requirements (b), (c), and (d) independently of each other. Required: a. What will the operating profit be? b. What is the impact on operating profit if the sales price decreases by 10 percent? Increases by 20 percent? c. What is the impact on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent? d. Suppose that fixed costs for the year are 10 percent lower than projected, and variable costs per unit are 10 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much?
Derby Phones is considering the introduction of a new model of headphones with the following price and cost characteristics. Sales price $ 21 per unit Variable costs 7 per unit Fixed costs 27,000 per month Assume that the projected number of units sold for the month is 7,000. consider requirements (b), (c), and (d) independently of each other. Required: a. What will the operating profit be? B. What is the impact on operating profit if the sales price decreases by 10 percent? Increases by 20 percent? c. What is the impact on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent? d. suppose that fixed costs for the year are 10 percent lower than projected, and variable costs per unit are 10 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much? complete this question by entering your…
Derby Phones is considering the introduction of a new model of headphones with the following price and cost characteristics. Sales price $ 21 per unit Variable costs 7 per unit Fixed costs 27,000 per month Assume that the projected number of units sold for the month is 7,000. consider requirements (b), (c), and (d) independently of each other. Required: a. What will the operating profit be? B. What is the impact on operating profit if the sales price decreases by 10 percent? Increases by 20 percent? c. What is the impact on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent? d. suppose that fixed costs for the year are 10 percent lower than projected, and variable costs per unit are 10 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much? complete this question by entering your…
4. Assume you are the logistics manager of Apple and need to get 2000 latest MacBook (Retails at $2000 each) to market. Choices include: Rail, cost $1000 and takes a week Air, cost $5000 and take a day Which would you choose? Assume the yearly profit as 10% of sales. Hint – Find cost incurred by the manufacturer per day based on yearly profit. Use that value to find the total cost for each shipping method (shipping charge plus daily costs).
1. ABC Taxi has an average fixed cost of $8,000 a year for each car. Each mile driven has variable cost $.40 and collect fares of $.60. How many miles a year does each car have to travel before making profit? a. ABC company is contemplating adding a new line of product, which will require leasing new equipment for a monthly payment of $12,000. Variable costs would be $15.00 per product, and selling price per product is $40. What would be profit or loss if business sell 600 of these products? b. If 800 quantity of products can be sold, and a profit target is $10,000, what price should be charged for each product?
Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings. Type of Sales Price Variable Cost Bookshelf per Unit per Unit Basic Deluxe Type of Bookshelf $5.00 9.00 The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called "Combined," the unit contribution margin for the Combined product would be $2.31. Fixed costs for the upcoming year are estimated at $341,880. Recall that the totals of all the sales mix percents must be 100%. Determine the amounts to complete the following table. Basic Deluxe Percent of Sales Mix $1.75 8.10 60% 40% Break-Even Sales in Units Break-Even Sales in Dollars Target Profit Refer again to the income statements for Cover-to-Cover Company and Biblio…
1. Perform a break-even analysis for the following scenario. Assume you sell children toys. Basic information are as follows: item money fixed costs total $6,000 manufacturing and shipping cost $3.5 for each toy sell $11 for each toy Answering two questions according to the given information above: (1) Question 1: List and calculate the three financial elements of break-even analysis in this scenario. (2) Question 2: What is your break-even point? How many toys do you have to sell to realize a net profit of $7500?
Calculate the number of package tours that must be sold to break even.The general manager at Lifetime Escapes proposes to increase the price of the package tour to $8,200 to decrease the breakeven point in units. Using information in the original problem, calculate the new breakeven point in units. What factors should the general manager consider before deciding to increase the price of the package tour?
Breakeven point-Algebraic Kate Rowland wishes to estimate the number of flower arrangements she must sell at $24.72 to break even. She has estimated fixed operating costs of $11,740 per year and variable operating costs of $16.36 per arrangement. How many flower arrangements must Kate sell to break even on operating ne costs? The operating breakeven point is units. (Round to the nearest integer.) ts Text dia Librai Calculat Resource Enter your answer in the answer box and then click Check Answer. c Study Check Answer Clear All All parts showing unication Tools > Ouestion 10 (0/1) Question 11 (0/1) Question 12 (0/1). Question 9 (0/1) Type here to search
A book publisher has fixed costs of $360,000 and variable costs per book of $11.00. The book sells for $27.00 per copy. a. How many books must be sold to break even? (Roundup your answer to the next whole number.) b. If the fixed cost increased, would the new break-even point be higher or lower? Higher Lower It would remain the same There is insufficient information to answer this question c. If the variable cost per unit decreased, would the new break-even point be higher or lower? Higher Lower It would remain the same There is insufficient information to answer this question
You are considering opening a copy service in thestudent union. You estimate your fixed cost at $15,000 and thevariable cost of each copy sold at $.01. You expect the sellingprice to average $.05.a) What is the break-even point in dollars?b) What is the break-even point in units? PX• • S7.23 An electronics firm is currently manufacturing anitem that has a variable cost of $.50 per unit and a selling priceof $1.00 per unit. Fixed costs are $14,000.

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