Question

An ice cream store sells a pint of ice cream for $4.00 each. The shop incurs a monthly fixed cost of $2,000 which includes salaries and rental. The variable cost per pint of ice cream is $1.50. The company is currently selling 600 pints per month.

A. How many pints per month does the store need to sell to break-even?

B. Using Goal Seek what is the new selling price per pint to achieve a profit of $10,000, if the company continues to sell 600 units

C. Using Goal Seek what is the new quantity that the store must sell to achieve a profit of $10,000, if the price remains at $4

Known parameters:
Selling price per unit
Fixed cost
Variable cost per unit
Input Data
Number of units
Results
Total revenue
Fixed cost
Total variable cost
Total cost
Profit
BEP
BEP$
B.
Known parameters:
Selling price per unit
Fixed cost
Variable cost per unit
Input Data
Number of units
Results
Total revenue
Fixed cost
Total variable cost
Total cost
Profit
BEP
BEP$
C
Known parameters:
Selling price per unit
Fixed cost
Variable cost per unit
Input Data
Number of units
Results
Total revenue
Fixed cost
Total variable cost
Total cost
Profit
BEP
BEP$

Answer 1

The store needs to sell 800 pints per month to break-even.

b.

The new selling price will be $21.50 per pint.

c.

The new quantity will be 4800 units.

 

Known parameters:
Selling price per unit	$4.00
Fixed cost	$2,000.00
Variable cost per unit	$1.50
Input Data
Number of units	600
Results
Total revenue	$2,400.00
Fixed cost	$2,000.00
Total variable cost	$900.00
Total cost	$2,900.00
Profit	-$500.00
BEP	800
BEP$	$3,200.00
B.
Known parameters:
Selling price per unit	$21.50
Fixed cost	$2,000.00
Variable cost per unit	$1.50
Input Data
Number of units	600
Results
Total revenue	$12,900.00
Fixed cost	$2,000.00
Total variable cost	$900.00
Total cost	$2,900.00
Profit	$10,000.00
BEP	100
BEP$	$2,150.00
C
Known parameters:
Selling price per unit	$4.00
Fixed cost	$2,000.00
Variable cost per unit	$1.50
Input Data
Number of units	4800
Results
Total revenue	$19,200.00
Fixed cost	$2,000.00
Total variable cost	$7,200.00
Total cost	$9,200.00
Profit	$10,000.00
BEP	$800.00
BEP$	$3,200.00

 

Skill Required:

Corporate Finance

Question Price:

0 PKR

Answer Submitted:

11 months ago

 

 

 

$3,200