A retail shop has monthly costs of $2,000 selling the best-selling product for $20 per unit....

A retail shop has monthly costs of $2,000 selling the best-selling product for $20 per unit. Variable costs are 1/3 of the unit price.

Find the BEP

What profit (or loss) would result by selling 3,000 units?

How many units were sold if the total profit per one year was $16,000?

What is the variable cost for the quantity of (c)?

Expert Solution

1. BEQ = FIXED COST / PRICE PER UNIT - VARIABLE COST

FIXED COST = 2000
VARIABLE COST = 6.66666666666667
PRICE PER UNIT = 20

BREAK EVEN UNITS = 2000 / (20 - 6.66666666666667) = 150

2. PROFIT = UNITS * CONTRIBUTION MARGIN - FIXED COST
PROFIT = (3000 * (20 - 6.66666666666667)) - 2000 = 38000

3. PROFIT = 16000

VOLUME = (PROFIT + FIXED COST) / CONTRIBUTION MARGIN
VOLUME = (16000 + 2000) / (20 - 6.66666666666667) = 1350

4. VARIABLE COST = 1350 * 6.66666666666667 = 9000

keosha answered 2 years ago

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