Question
In: Accounting
A manufacturer has a fixed cost of $120 million to produce x million of computer chips...
A manufacturer has a fixed cost of $120 million to produce x million of computer chips and estimates its variable cost as $160 for x million compute chips. The manufacturer sells each chip for 165% more than its average cost per chip.
a. What is the manufacturer's average cost per x million computer chip?
b. What is the manufacturer's price x million computer chips?
c. What is the manufacturer's break-even quantity?
Solutions
Expert Solution
Fixed cost = $120 Million
Variable cost = $160 for x million computer chips
Selling price = 165% more than its average cost per chip.
Total cost for x million compuetr chips= Fixed cost + Variable cost = $120+$160 = $280
Per chip cost = $280/x
Average cost per x million chip =$(280/x)*x= $280
Profit is assumed to be 165% as it is stated that Seller sells each chip for 165% more than it Avg Price.
So, Profit for X chips= 165% of 280 = $462
Selling price for X chips= Profit + Cost price = $462+ $280 = $742
SP for 1 chip = $742/X = P
Variable cost for 1 Chip = $160/X
Break even quantity when Sell price = cost price
break even Qty = Fixed cost /(P- Variable cost) = (120)/((742/x)-(160/x)) =0.206X million chips
ekkarill92 answered 2 years agoRelated Solutions
A manufacturer of computer memory chips produces chips in lots of 1000. If nothing has gone...
A manufacturer of computer memory chips produces chips in lots
of 1000. If nothing has gone wrong in the manufacturing process, at
most 5 chips each lot would be defective, but if something does go
wrong, there could be far more defective chips. If something goes
wrong with a given lot, they discard the entire lot. It would be
prohibitively expensive to test every chip in every lot, so they
want to make the decision of whether or not to...
Please thoroughly explain each answer. A manufacturer of computer chips has a computer hardware company as...
Please thoroughly explain each answer.
A manufacturer of computer chips has a computer hardware company
as its largest customer. The computer hardware company requires all
of its chips to meet specifications of 1.2 cm. The vice-president
of manufacturing, concerned about a possible loss of sales, assigns
his production manager the task of ensuring that chips are produced
to meet the specification of 1.2 cm.
Based on the production run from last month, a 95% confidence
interval was computed for the...
a. Project X has an up-front cost of $20 million. The project is expected to produce...
a. Project X has an up-front cost of $20 million. The project is
expected to produce after-tax cash flows of $7.5 million at the end
of each of the next 3 years (t = 1, 2, and 3). The project has a
WACC=10%. What is the project’s NPV? b. However, if the company
waits a year they will find out more about the project’s expected
cash flows. If they wait a year, there is a 50% chance the market
will...
A manufacturer is planning to produce and sell a new product. It would cost $20 million...
A manufacturer is planning to produce and sell a new product. It
would cost $20 million at Year 0 to buy the equipment necessary to
manufacture the product. The project would require net working
capital at the beginning of each year in an amount equal to 15% of
the year's projected sales; for example, NWC0 =
15%(Sales1). The product would sell for $30 per unit,
and believes that variable costs would amount to $15 per unit.
After Year 1, the...
A manufacturer is planning to produce and sell a new product. It would cost $20 million...
A manufacturer is planning to produce and sell a new product. It
would cost $20 million at Year 0 to buy the equipment necessary to
manufacture the product. The project would require net working
capital at the beginning of each year in an amount equal to 15% of
the year's projected sales; for example, NWC0 =
15%(Sales1). The product would sell for $30 per unit,
and believes that variable costs would amount to $15 per unit.
After Year 1, the...
Zeus Computer Chips, Inc., used to have major contracts to produce the Centrino-type chips. The market...
Zeus Computer Chips, Inc., used to have major contracts to
produce the Centrino-type chips. The market has been declining
during the past three years because of the dual-core chips, which
it cannot produce, so Zeus has the unpleasant task of forecasting
next year. The task is unpleasant because the firm has not been
able to find replacement chips for its product lines. Here is
demand over the past 12 quarters:
TWO YEARS
AGO
UNITS
LAST YEAR
UNITS
THIS YEAR...
Zeus Computer Chips, Inc., used to have major contracts to produce the Centrino-type chips. The market...
Zeus Computer Chips, Inc., used to have major contracts to
produce the Centrino-type chips. The market has been declining
during the past three years because of the dual-core chips, which
it cannot produce, so Zeus has the unpleasant task of forecasting
next year. The task is unpleasant because the firm has not been
able to find replacement chips for its product lines. Here is
demand over the past 12 quarters:
TWO YEARS
AGO
UNITS
LAST YEAR
UNITS
THIS YEAR...
a)Project X has an up-front cost of $20 million. The project is expected to produce after-tax...
a)Project X has an up-front cost of
$20 million. The project is expected to produce after-tax cash
flows of $7.5 million at the end of each of the next 3 years (t =
1, 2, and 3). The project has a WACC=10%. What is the project’s
NPV?
b)However, if the company waits a year
they will find out more about the project’s expected cash flows. If
they wait a year, there is a 50% chance the market will be strong...
Vu Hung is the assistant chief accountant at Lim Company, a manufacturer of computer chips and...
Vu Hung is the assistant chief accountant at Lim Company, a
manufacturer of computer chips and cellular phones. The company
currently has total sales of $20 million. It is the end of the
first quarter. Vu is hurriedly trying to prepare a general ledger
trial balance so that quarterly financial statements
can be prepared and released to management and regulatory agencies.
The credits on the trial balance add up to $1,000 more than the
debits.
In order to meet the...
Chiplist is a fast-growing manufacturer of computer chips. Direct materials are added at the start of...
Chiplist is a fast-growing manufacturer of computer chips.
Direct materials are added at the start of the production process.
Conversion costs are added evenly during the process. Some units of
this product are spoiled as a result of defects not detectable
before inspection of finished goods. Spoiled units are disposed of
at zero net disposal value. Chiplist uses the FIFO method of
process costing. Summary data and weighted-average data for
September 2017 are as follows:
Physical Units (Computer Chips)
Direct...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- An asset is purchased on January 1 for $48,700. It is expected to have a useful...
- Do we have any online or offline tool to convert c and cpp programs into MIPS...
- -what is the pH of HCl 0,1M and NaCl 0,1M mixed together solution? -What is the...
- function X=extractDWT(x_train,startS,endS,wStep,wRange) % x_train = input signal % startS = from second % endS = end...
- Do you agree that Social Loafing is similar to Theory X. Give an example to support...
- Computing Cost of Goods Sold and Ending Inventory. Bartov Corporation reports the following beginning inventory and...
- SQL FORMAT (11-13 are completed and correct) -- 11. what are the names of all students...
ADVERTISEMENT