Break-even-sales and units and bep chart

Assignment Help Finance Basics

Reference no: EM1315885

Break-even-sales, units and the BEP Chart.

1. East Publishing Company is doing an analysis of a proposed new finance text book. Using the following data, answer a through d.

Fixed costs per edition:

Development $18,000

Copyediting $ 5,000

Selling/Promo $ 7,000

Typesetting $40,000

Total $70,000

Variable costs per copy

Printing/bind $4.20

Admin costs $1.60

Sales comm. $0.06 2% of selling price

Royalties $3.60 12% of selling price

Discounts $6.00 20% of selling price

Total $16.00

Projected selling price $30.00

Tax rate is 40%

a. determine the company's breakeven volume for the book

i. in units

ii. in dollar sales

b. develop a breakeven chart for the text book

c. determine the number of copies they must sell to earn an operating profit of $21,000 on this book

d. Suppose East feels that $30 is too high a price to charge. It examined the market and determined that $24.00 would be better. What would the break even volume be at the new price?

2. Rodney Rogers, a business school grad, plans to open a wholesale dairy products firm. The business will be completely financed with equity. Rogers expects first year sales to total $5,500,000. He desires to earn a target pretax profit of $1,000,000 during his first year of operation. Variable costs are 40% of sales.

a. how large can his fixed operating costs be if he is to meet his profit target?

b. what is his breakeven level of sales at the level of fixed operating costs determined in (a)?

Reference no: EM1315885

Questions Cloud

Sketch indifference curves by using given data : Draw indifference curves to represent the following types of consumer preferences-I like peanut butter, but neither like nor dislike jelly.

Show comparisons of per capital gross domestic product : Multiple choice questions on CVP analysis, Profitability ratios, Variance analysis and Comparisons of per capital gross domestic product (GDP)between countries:

Hypothesis test using p-value : write down the hypothesis the test used the p-value and the interpretation then hand calculates a 95% CL for the odds ratio estimate on this last test.

Graph analysis of demand and supply curves : Sketch a graph of demand and supply curves that shows the effect of an increase in rainfall on the equilibrium price and quantity of corn. Do price and quantity increase or decrease?

Break-even-sales and units and bep chart : Break-even-sales, units and the BEP Chart - develop a breakeven chart for the text book and evaluate the number of copies they must sell to earn an operating profit of $21,000 on this book

Use the binomial theorem : Use the binomial theorem

Finding the expansion path : Suppose a production function is given by f(K;L) = KL 2 What combination of labour and capital minimizes the cost of producing any given output?

Margin of error for the population proportion : Find the margin of error for the 95% confidence interval used to estimate the population proportion.

Sample size when margin of error ids given : Find the sample size for the 95% confidence interval used to estimate the population proportion.

User Account

All Pages