The Hammer Company has the following cost structure: fixed costs of Birr 70,000 per month and variable costs of Birr50 per unit. The Horn green Company has the following cost structure: fixed costs of Birr 60,000 per month and variable costs of Birr 60 per unit. Both companies make the same product, which sells for Birr 100 per unit. There is a sales level at which these two companies earn the same profits. What is that sales level? Which company is more profitable as sales volume exceeds this sales level?

The Hammer Company has the following cost structure: fixed costs of Birr 70,000 per month and variable costs of Birr50 per unit. The Horn green Company has the following cost structure: fixed costs of Birr 60,000 per month and variable costs of Birr 60 per unit. Both companies make the same product, which sells for Birr 100 per unit. There is a sales level at which these two companies earn the same profits. What is that sales level? Which company is more profitable as sales volume exceeds this sales level?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 5BE

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