Question

In: Finance

A. A firm has the capacity to produce 988,272 units of a product each year. At...

A. A firm has the capacity to produce 988,272 units of a product each year. At present, it is operating at 24 percent of capacity. The firm's annual revenue is $1007128. Annual fixed costs are $599333 and the variable costs are $0.65 per unit. What s the firm's annual profit or loss?

B. A firm has the capacity to produce 1,386,753 units of a product each year. At present, it is operating at 62 percent of capacity. The firm's annual revenue is $1364010. Annual fixed costs are $500,217, and the variable costs are $0.49 per unit. what is the price for each unit

C. A firm has the capacity to produce 1,273,209 units of a product each year. At present, it is operating at 63 percent of capacity. The firm's annual revenue is $788,755. Annual fixed costs are $388, 229, and the variable costs are $0.67 per unit. what is the price of each unit?

D. A firm has the capacity to produce 1,273,209 units of a product each year. At present, it is operating at 63 percent of capacity. The firm's annual revenue is $788,755. Annual fixed costs are $388,229, and the variable costs are $0.67 per unit. At what volume of sales does the firm break even?

Expert Solution

A.Annual Profit/(Loss) = Revenues – Variable costs – Fixed costs

= 1007128 – 988272*24%*0.65 – 599333

= $253,624.57

B. Price for Each unit = Revenue/Units sold

= 1,364,010/1,386,753*62%

= $1.5865

C. Price for Each unit = Revenue/Units sold

= 788,755/1,273,209*63%

= $0.9833 per unit

D.Price per unit = 0.9833

Contribution Margin per unit = Selling price per unit – Variable cost per unit

= 0.9833 – 0.67

= $0.3133

Break even volume = Fixed costs/Contribution Margin per Unit

= 388,229/0.3133

= 1,239,160.55 units

jeff jeffy answered 2 years ago

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