The projected profit of a hi-tech recording disks retailer is Birr 200,000 for the current year based on sale volume of 200,000 units. The company has been selling the disks for $16 each; variable costs consist of the Birr 10 purchase price and Birr 2 handling cost. The retailer’s annual costs are Birr 600,000. Required: a. Calculate the breakeven point for the current year in units. b. What will be the company’s profit for the current year if there is a 10% increase in projected unit sales volume?
The projected profit of a hi-tech recording disks retailer is Birr 200,000 for the current year based on sale volume of 200,000 units. The company has been selling the disks for $16 each; variable costs consist of the Birr 10 purchase price and Birr 2 handling cost. The retailer’s annual costs are Birr 600,000. Required: a. Calculate the breakeven point for the current year in units. b. What will be the company’s profit for the current year if there is a 10% increase in projected unit sales volume?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The projected profit of a hi-tech recording disks retailer is Birr 200,000 for the current year based on sale volume of 200,000 units. The company has been selling the disks for $16 each;
variable costs consist of the Birr 10 purchase price and Birr 2 handling cost. The retailer’s
annual costs are Birr 600,000.
Required:
a.
Calculate the breakeven point for the current year in units. b.
What will be the company’s profit for the current year if there is a 10% increase in
projected unit sales volume? c.
Management is planning for the coming year when it expects that the unit purchase price of the disks will increase by 30%. What volume of dollar sales must the retailer
achieve in the coming year to maintain the current year’s profit if the selling price
remains constant at Birr 16
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