Calculate volkswagen pre tax profit

Reference no: EM132083232

Question: Volkswagen Company has developed a "clean diesel" car called the TDI. The TDIis slightly more powerful and fuel efficient than its competitors. Volkswagen can sell 100,000 of these cars per year at a selling price of $25,000 while incurring fixed overhead costs of $750 million per year, and variable costs of $17,000 per car. The TDI is the only model car made in a factory that cost $1.3 billion to build. Please calculate Volkswagen's expected:

A) Annual pre tax profit from making and selling the TDI?

B) Break even point in number of TDI's Sold and in Dollars?

C) Margin of Safety?

Volkswagen marketers estimate that sales will triple if the TDI can be made both more powerful and more efficient without changing the selling price or cost structure. Engineers have stated "Yah this is possible, if we are cunning."

D) Calculate Volkswagen's pre tax profit if they are "cunning"?

E) Calculate the fixed overhead cost allocated per car under the "cunning" plan?

Can you please show the work so I can understand how to get to the answer.

Reference no: EM132083232

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