Question

1. A company that makes cell phones has the following cost structure. The have fixed costs of $145 000 per period and manufacturing costs of $15.16 per cell phone. Advertising is expected to be $25 000 per period and a special promotional contest will involve providing a free case for a cost of $5.30 per cell phone. Each cell phone sells for $49.95. What is the break-even point in the number of phones?

2. A pen manufacturer makes luxury pens. The pen case costs $7.26 each, the ink holder costs $1.26 each, the spring costs $.07 each and the velvet pen case costs $0.91 each. The plant has general and administrative costs of $55 000 and fixed selling expenses of $37 500. The pens sell of $39.95 each. Plant capacity is 4 000 pens per period. At what percentage of capacity is the break-even point?

3. A local health care facility has fixed costs per month of $187 400. They also have patient costs of $4.15 per day per patient for linen and cleaning, medication costs are $23.32 per patient per day and lab tests cost $75.61 per patient per day. The government is considering allowing the health care facility to charge each patient and amount to recover his or her costs and to make a "profit" of $15 000 per month. The health care facility averages 690 patients per month. The VP-Finance for the facility wants you to calculate the daily rate charge per patient. Your answer is:

4. A company that makes optical computer input devices has calculated their revenue and costs as follows for the most recent fiscal period:

Sales ​$522 000

Costs:

​Fixed Costs​ $145 000

​Variable Costs ​208 800

Total Costs ​353 800

Net Income ​$168 200

​What is the break-even point in sales dollars?

5. A company that makes environmental measuring devices has calculated their revenue and costs as follows for the most recent fiscal period:

Sales ​$750 000

Costs:

​Fixed Costs​ $200 000

​Variable Costs ​250 000

Total Costs ​450 000

Net Income ​$300 000

​What is the break-even point in sales dollars?

6. A company that makes audio computer input devices has calculated their revenue and costs as follows for the most recent fiscal period:

Sales ​$723 000

Costs:

​Fixed Costs ​$345 000

​Variable Costs ​404 880

Total Costs ​749 880

Net Income (Loss) ​$(26 880)

The company has a target level of profitability of $35,000 per fiscal period. What sales dollar volume do they have to achieve in order to achieve their goal?

7. A company that makes basketballs has calculated their revenue and costs as follows for the most recent fiscal period:

Sales ​$623 000

Costs:

​Fixed Costs ​$???????

​Variable Costs ​404 880

Total Costs ​???????

Net Income (Loss) ​$(26 880)

What are the company's fixed costs per fiscal period?

8. A company that makes customized pens has calculated their revenue and costs as follows for the most recent fiscal period:

Sales ​$100,000

Costs:

​Fixed Costs ​$???????

​Variable Costs ​15 000

Total Costs ​???????

Net Income (Loss) ​$(20,000)

What are the company's fixed costs per fiscal period?

9. A local toolmaker makes the best hammers on the market. The head of the hammer costs $12.11 and the handle costs $4.37. It takes 1.4 minutes to assemble the hammer and the hourly cost is $90.00 for assembly time. The company has fixed operating costs of $22 310 per month. They sell the hammers for three times their total variable cost. The company wants to make a monthly profit of $5000. How many hammers must they sell?

10. A local restaurant has the best meals in town. The average variable cost per meal is $22.74 and the desserts are $5.24. Only half of the patrons order desserts. The restaurant has fixed operating costs of $112 714 per month. They sell the meals and desserts for four times their average variable cost per meal. They company wants to make a monthly profit of $75 000. How many meals must they sell?

11. A local college hospitality restaurant has the best meals in town. The average variable cost per meal is $10.25 and the desserts are $1.25. The restaurant has fixed operating costs of $110 500 per month. They sell the meals and desserts for three times their average variable cost per meal. The college wants to make a monthly profit of $50 000. How many meals must they sell (Round up to nearest whole meal)?

12. A company has variable costs that are 3/8 the value of their sales revenues. Total net income for the most recent period was a profit of $123 400 and sales were $400 000. The company has started a new marketing campaign that they hope will increase sales, but it will require additional advertising of $11 200. How many sales dollars does the company have to generate in order to remain at the same level of profitability as before the new ad campaign?

13. A company has variable costs that are 1/8 the value of their sales revenues. Total net income for the most recent period was a profit of $50 400 and sales were $500 000. The company has started a new marketing campaign that they hope will increase sales, but it will require additional advertising of $15 000. How many sales dollars does the company have to generate in order to remain at the same level of profitability as before the new ad campaign?

14. A company has variable costs that are 4/7 the value of their sales revenues. Total net income for the most recent period was a profit of $53 770 and sales were $420 000. The company has started a new marketing campaign that they hope will increase sales, but it will require additional advertising of $6400. How many sales dollars does the company have to generate in order to remain at the same level of profitability as before the new ad campaign?

15. Excel hardware is introducing a new product on a new product line of capacity 800 units per week at a production cost of $50 per unit. Fixed costs are $22,400 per week. Variable selling and shipping costs are estimated to be $20 per unit. Excel plan to market the new product at $110 per unit. What is the break-even capacity per week?

16. Excel hardware is introducing a new product on a new product line of capacity 800 units per week at a production cost of $50 per unit. Fixed costs are $22 400 per week. Variable selling and shipping costs are estimated to be $20 per unit. Excel plan to market the new product at $110 per unit. What would be the weekly net income at 90% of the capacity?

17. Sala pipe fittings produce pipe elbows and reducers from stainless steel. The company can process up to 20 000 tonnes of stainless steel sheets in a year. The company pays the steel company $800 per tonne of stainless steel sheets and each tonne is used to manufacture $2000 worth of elbows and reducers. Variable processing costs are $470 per tonne and fixed processing costs $3.4 million per year at all production levels. Administrative overhead is $3 million per year regardless of the volume of the production. Marketing and transportation costs work out to be $230 per tonne. Determine the break-even volume in terms of percent capacity utilization.

18. Last year, Terrific Copying had total revenue of $475 000, while operating at 60% of capacity. The total of its variable cost is $150 000. Fixed costs were $180 000. What is Terrific's contribution rate?

19. Last year, Terrific Copying had total revenue of $475 000, while operating at 60% of capacity. The total of its variable cost is $150 000. Fixed costs were $180 000. What is Terrific's break-even point expressed in dollars of revenue?

20. Last year, Terrific Copying had total revenue of $475 000, while operating at 60% of capacity. The total of its variable cost is $150 000. Fixed costs were $180 000. If the current selling price, variable costs, and fixed costs are the same as last year, what net income can be expected from revenue of $500 000 in the current year

Answer 1

1.

Fixed Cost = $145,000
Manufacturing Cost = $15.16 per cellphone
Advertising Cost = $25000
Promotional Cost = $5.30 per cellphone
Selling Price = $49.95

Now, if they make number of cell phones

Total Cost =
Total Revenue =

For break-even, they should be equal. Therefore,

Thus, to break even 576 cellphones must be produced.

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2.

Pen Case cost = $7.26 per piece
Ink Holder cost = $1.26 per piece
Spring cost = $0.07 per piece
Velvet case cost = $0.91 per piece
Administrative cost = $55000
Selling Expense = $37500
Selling Price = $39.95

Let be the number produced

Total Cost of Production =
Total Revenue =

Therefore, at breakeven point

Now, the plant capacity is .

Therefore, percent capacity utilization

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3.

Let be the daily rate charge per patient

Now,

Total Cost = Fixed Cost + Variable Cost x Number of Patients x 30 ( Assuming 30 days in a month)

Thus,

Total Cost =
Total Revenue =

For a profit of $15,000 we require

Total Revenue - Total Cost = 15000

Therefore,

Therefore, the daily charge per patient is

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4. Contribution Margin = Sales - Variable Cost =

Break-even Point =

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Only 4 parts can be answered in 1 question