Question

In: Accounting

1) The fixed costs at Harley Motors are $1 million annually. The main product has revenue...

1) The fixed costs at Harley Motors are $1 million annually. The main product has revenue of $8.50 per unit and $4.25 variable cost. Determine the following:

(a) Breakeven quantity per year.

(b) Annual profit if 200,000 units are sold and if 350,000 units are sold.

Solutions

Expert Solution

(PER UNIT)
SELLING PRICE 8.5
LESS VARIABLE COST 4.25
CONTRIBUTION 4.25
A) BREAK EVEN QUANTITY FIXED COST / CONTRIBUTION PER UNIT
1000000 / 4.25
235294.1 UNITS
B) ANNUAL PROFIT IF 200,000 UNITS ARE SOLD
CONTRIBUTION (UNITS* CONTRIBUTION PER UNIT) 850000 200000 * 4.25
LESS FIXED COST 1000000
PROFIT / (LOSS)                                                          (1,50,000)
ANNUAL PROFIT IF 350,000 UNITS ARE SOLD
CONTRIBUTION (UNITS* CONTRIBUTION PER UNIT) 1487500 350000 * 4.25
FIXED COST 1000000
PROFIT / (LOSS)                                                            4,87,500

ekkarill92 answered 1 year ago
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