Question

In: Economics

Given: the following information Variable cost per unit = $1.25 Selling price per unit = $1.00...

Given: the following information

Variable cost per unit = $1.25

Selling price per unit = $1.00

Fixed Cost/Month     = $40,000

Solve for:

A.) How many units per month must be produced to break-even (Q)?

Given:

The following information:

Variable cost per unit = $1.25

Q = Breakeven quantity units per month solved in part a .

Fixed Cost/Month     = $40,000

New selling price = ?? (Solve for)

Solve for:

B.) What should the new selling price must be in order to make $10,000 monthly profit by monthly production quantity (Q) at the breakeven level, variable cost per unit at $1.25/unit, and monthly fixed cost at $40,000 per month?

Solutions

Expert Solution

Q-A :: ANSWER :: -160000 unit

=> Break-Even Point = Fixed Cost/ [ Price - Variable Cost ]

= $40000/[ $1.00 - $1.25 ]  

= $40000/ -0.25

= -160000 Unit

Q-B :: ANSWER ::0.93

=> Break Even Point = Fixed Cost + Profit/ [ Price - Variable Cost ]

If We Assume That Price Is X Then

-160000 = $40000+$10000/[ X - $1.25 ]

-160000 = $50000 / X - $1.25

-160000x + 200000 = 50000

So - 160000x = 50000-200000

-160000x = -150000

X = -150000/-160000

X = 0.93

=> 0.93 should Be the new selling price must be in order to make $10,000 monthly profit by monthly production quantity (Q) at the breakeven level

Rahul Sunny answered 2 years ago
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